The primary drivers of productivity are investment/competition, innovation, skills/human capital, business policy and regulatory environment
In Canada, especially in Alberta, we are in an unparalleled place of advantage. With our resources, capabilities and stability we could become a leading competitor in the global marketplace.
Canada is one of the few countries – others include Norway and Australia, for example – with a rich physical and human capital. But, oddly, Canada’s competitiveness has flattened over the past 15 years. Measured against our peers, we have fallen behind in economic prosperity, foreign direct investment and trade activity.
Canada’s growth in productivity isn’t as high as the top countries, and we’ve been settling for this situation for decades. Bottom line: it’s affecting our international competitiveness. In 2008, Canada’s Productivity Report Card (by the Conference Board of Canada) pegged our labour productivity growth rate at 1.2% for 2004-2006, making us eighth of 17 peer countries. Top countries such as Finland and Sweden had productivity growth rates of 2.7% and 2.5% respectively – more than double the rate of Canada.
What is Alberta’s productivity performance?
At first glance, it looks as though Alberta is a shining example of productivity in Canada, with a higher labour productivity level than other provinces. But look closer. In the past 10 years, Alberta’s productivity growth rate has been below the national average, and well below the growth rate in the U.S. and European countries. If it keeps going like this, Alberta will be left behind in a few years’ time.
This trend is partly due to the fact that in the past decade, Alberta’s energy sector has experienced declining productivity. It takes more labour and capital effort to extract conventional oil and gas. Production in the oil sands requires more effort per barrel, and there is a longer lag time in investment in oil sands to increase production. The declining price per barrel has exacerbated the problem and thrown the need to address productivity into sharp relief.
Fortunately, in Alberta we have a trove of small- and medium-sized enterprises that have been working towards increasing their productivity and driving Alberta Finance and Enterprise to step up and facilitate the process. At AFE we’ve been listening and learning and we know that the time is right to formalize the process and launch Productivity Alberta.
