The Bank of Canada is sounding the alarm on the country’s lagging productivity vis-à-vis other nations.
Carolyn Rogers, the central bank’s Senior Deputy Governor, said in a speech that the need to improve productivity in Canada has reached an “emergency level.”
“You know those signs that say: 'in an emergency, break the glass?' Well, it's time to break the glass,” she said.
Rogers highlighted that Canada’s labour productivity has declined for six consecutive quarters and that the country faces an uncertain future due to threats such as inflation, climate change, and technological disruption.
The Senior Deputy Governor also noted that the U.S. has seen productivity gains coming out of the Covid-19 pandemic as businesses found their footing, but Canada has not seen any gains in recent years.
“The level of productivity in Canada’s business sector is more or less unchanged from where it was seven years ago,” said Rogers.
The comments from the Bank of Canada executive come days after data from Statistics Canada showed that the number of Canadians receiving unemployment benefits in January of this year was up 18% from a year earlier and above pre-pandemic levels.
Rogers stressed that Canada's lagging productivity has been a chronic problem that is now reaching crisis levels.
She said that when you compare Canada’s recent productivity record with that of other countries, what jumps out is how little the country invests in machinery, equipment and intellectual property.
She also said that Canada needs to focus on making sure training and education teach the skills that are needed today, while a more competitive business environment would help drive greater innovation and efficiencies.
Inflation in Canada is steadily cooling, falling to an annualized rate of 2.8% in February of this year. The central bank targets inflation at an annual rate of 2%.
The Bank of Canada's next interest rate decision and monetary policy report are scheduled for April 10 of this year.
