OTTAWA, April 29 /CNW/ - Decades of inadequate investment in machinery
and equipment (M&E) (http://www.conferenceboard.ca/hcp/hot-topics/investProd.aspx) may explain why Canada's labour productivity growth is one of the
poorest among its global peers, according to a Conference Board of
Canada analysis released today.
Canada's average M&E investment as a share of GDP in the 1970s, 1980s,
and 1990s was the second lowest among peer countries assessed in the
Conference Board's How Canada Performs analysis—only France had a
poorer investment record. In the 2000s, Canada ranked 11th among 16
peer countries, a modest improvement that reflects lower investment
shares in other countries rather than an increased investment share in
"On the surface, Canada seems to be doing well. We came out of the
recent economic crisis relatively unscathed compared with our
neighbour, the United States," said Glen Hodgson, Senior Vice-President
and Chief Economist.
"But we remain at the back of the class on labour productivity, which is
a key economic challenge for Canada. Labour productivity can be a
confusing concept. It's not about working harder, longer hours. It's
about working smarter and getting higher value for the same hours
Historical data for the peer countries reveal a strong positive
relationship between investment in M&E and labour productivity.
However, Canada's labour productivity growth (http://www.conferenceboard.ca/hcp/Details/Economy/measuring-productivity-canada.aspx) ranks 12th among 17 countries in the Conference Board's How Canada
Performs analysis (http://www.conferenceboard.ca/hcp/default.aspx).
By investing in M&E, companies provide their workers with the latest
technologies, allowing them to produce more and higher-quality goods
and services. Firms can contain their costs and increase their output,
while substituting capital for labour—important as labour markets
become tighter in Canada.
In the past, Canada's under-investment in M&E was attributed to the low
value of the dollar. When the loonie rose relative to the U.S. dollar,
real M&E investment grew by 13.8 per cent in 2005 and 10.7 per cent in
2006. Despite this recent growth, Canada's M&E investment as a share of
GDP, as of 2009, remains below that of most of its peers.
Canada's shortfall in M&E investment - specifically information and
communications technologies (ICT) (http://www.conferenceboard.ca/hcp/hot-topics/investProd.aspx#anchor3) - has been a key contributor to the labour productivity gap between
Canada and the United States. In the late 1980s, the U.S. invested $500
more per worker in ICT. By 2009, the U.S. was investing $1,500 more per
How Canada Performs is a multi-year research program at The Conference
Board of Canada to help leaders identify relative strengths and
weaknesses in Canada's socio-economic performance. The How Canada
Performs website presents data and analysis on Canada's performance
compared to 16 peer countries in six performance categories: Economy,
Innovation, Environment, Education and Skills, Health, and Society.
This year, the Conference Board is assessing Canada's performance on 10
Hot Topics (http://www.conferenceboard.ca/hcp/hot-topics/investProd.aspx#anchor3).
SOURCE CONFERENCE BOARD OF CANADA
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448