Productivity is a cornerstone of economic prosperity, directly impacting our standard of living.

The recent cautionary note from the Bank of Canada regarding Canada’s lagging labour productivity and inadequate levels of business investment raises red flags about the nation’s economic competitiveness and prospects for long-term prosperity. While some aspects of the slowdown can be attributed to the accumulation of pandemic-related debts and subsequent labour market adjustments, the issue of low productivity has been a longstanding concern, dampening Canada’s economic potential and contributing to a decline in living standards, even before the onset of COVID-19. Senior Deputy Governor Carolyn Rogers has underscored the pressing need to confront these challenges, emphasizing the critical role of productivity enhancement in controlling inflation and bolstering living standards. For entrepreneurs and business enthusiasts alike, exploring innovative strategies to reinvigorate productivity in Canadian enterprises is imperative, ultimately driving growth and fostering competitiveness.

To better grasp the concept of productivity, it’s essential to understand that it is measured by the gross domestic product (GDP) generated per hour worked. 

The higher the GDP per hour, the greater the country’s productivity. According to OECD data for 2022, Canada generates USD 1.13 in GDP every minute. In comparison to some of its fellow G7 nations, such as France ($1.39), Germany ($1.45), and the United States ($1.50), as well as the G7 average of $1.31, there is ample room for improvement. Before delving into potential solutions to enhance productivity in Canadian businesses, it is crucial to identify several factors contributing to poor productivity performance.

Some factors contributing to poor productivity in the performance of Canadian Businesses include:


  • Lack of Innovation: Despite Canada’s robust foundation in research and development (R&D), a gap exists in effectively translating research outcomes into practical applications within commercial settings. Limited adoption of innovative practices within businesses impedes productivity growth and undermines global competitiveness.
  • Weak Business Investment: Canada grapples with insufficient levels of investment by businesses, particularly in critical areas such as machinery, equipment, and innovation—this absence of investment results in outdated technology and inefficient production processes, stifling potential productivity gains.
  • Labour Market Mismatches: Discrepancies often arise between the skills sought by employers and those possessed by the workforce. Such mismatches lead to underemployment, where individuals must leverage their full skill sets, ultimately contributing to improved productivity.
  • Labour Productivity Challenges: Canada faces several challenges related to labour productivity, including inadequate levels of automation, skills shortages, and an aging workforce. Addressing these challenges necessitates investments in training and education alongside efforts to promote technology adoption and foster workplace innovation.
  • Global Economic Uncertainty: External factors, such as shifts in global trade dynamics, geopolitical tensions, and economic instability, can exert considerable influence on Canada’s productivity and competitiveness. Businesses may exhibit caution when making investment decisions during periods of uncertainty, which may consequently impact productivity levels.

To surmount these barriers and foster productivity growth in the Canadian Businessesinnovative approaches must be explored:


  • Cultivating a Culture of Innovation: Prioritizing innovation within Canadian businesses is paramount for driving productivity enhancements. Fostering a culture of innovation encourages creativity, risk-taking, and continuous improvement, ultimately leading to breakthrough innovations that propel productivity growth.
  • Embracing Digital Transformation: Digital technologies offer immense potential for enhancing productivity across various sectors. By leveraging advanced technologies such as artificial intelligence, data analytics, and automation, Canadian businesses can streamline processes, optimize workflows, and drive efficiency gains, thereby bolstering competitiveness in the global market.
  • Investing in Talent Development and Diversity: A skilled workforce is indispensable for driving productivity and innovation. Investments in talent development initiatives and the promotion of diversity and inclusion are imperative to address skill shortages and unlock the workforce’s full potential.
  • Prioritizing Research and Development Investment: According to a report, Canada ranks second to last among G7 nations in terms of the percentage of GDP allocated to research and development (R&D). Investing in R&D is crucial for equipping, attracting, and retaining talent and driving innovation to maintain Canada’s competitiveness in the global market. Inadequate investment in R&D can lead to economic decline for both companies and countries. Canada requires an R&D ecosystem that supports talent and technology capable of addressing urgent challenges and seizing opportunities for economic growth.

In conclusion, revitalizing productivity in Canadian businesses necessitates a concerted effort to embrace innovation, digital transformation, talent development and R&D Investment. By implementing these innovative strategies, Canadian enterprises can elevate performance, stimulate growth, and ensure long-term competitiveness in the global arena.

Written by BIPOC Foundation

This blog is an Initiative of BIPOC Foundation, and is aimed at helping BIPOC (black, indigenous and people of colour) founders get all the support they need to scale their business in Canada. BIPOC Foundation has resourceful programs like the BFH Accelerator Program, LIFT, The Table, Mentorship, and the Learning Series Program. You can find more details about the programs here.

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