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Productivity: Canada a laggard among G7 countries

  • The value produced per hour worked in Canada is 17 per cent lower than the G7 average.

Montreal, August 10, 2023 – The Canadian economy lags behind in terms of productivity due to a lack of investment, concludes a study published this morning by the Montreal Economic Institute.

“Canada’s productivity gap is worrisome and has a direct impact on our standard of living,” explains Renaud Brossard, senior director of communications at the MEI and one of the authors of the study. “The less value that is created by an hour of work, the less that hour can be remunerated.”

At purchasing power parity, each hour worked in Canada in 2022 produced a value of US$53.30 (constant 2015 dollars). That puts Canada in next-to-last place among G7 countries, ahead of Japan.

In comparison, the G7 average for value produced per hour worked was US$63.90. The United States was in first place, with US$72.10 of value produced per hour worked.

Considering the average number of hours worked, this translates to a standard of living that is 30 per cent lower in Canada than in the United States.

The Institute explains that Canada’s low productivity is due to a lack of private investment. Canada was at the bottom of the pack compared to similar economies as measured by non-residential private investment per job in 2018.

“Canada’s regulatory and fiscal framework is not attractive enough for investors,” explains Mr. Brossard. “And our governments can try all they want to mitigate this problem with subsidies, but their capacity for investment pales in comparison to that of the market.”

The MEI study is available here.

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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship. 

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Renaud Brossard
Senior Director, Communications
Cell: 514 743-2883

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