The low productivity of Canadian companies threatens our living standards

[daftandbarmy]

Maybe the thousands of regulations are also playing a part. Several of the folks I've become acquainted with during my CO tenure have lamented that the feds are governing by regulation, and dragging down their ability to function as a business.

Oh hell yeah...

But Canadians love/hate businesses, so they don't really care that much until it hits them in the wallet....

Small businesses pay five times more per employee than larger businesses​

Regulation costs small businesses $38.8 billion annually, roughly 30 per cent ($10.8 billion) of which can be considered unnecessary, redundant, or overly burdensome regulation or red tape, according to the Canadian Federation of Independent Business (CFIB)’s Canada’s Red Tape Report. The report, released in partnership with Intuit Canada, launches CFIB’s 12th annual Red Tape Awareness Week™. Businesses with fewer than five employees spend $7,023 per employee to comply with government regulation, while businesses with 100 or more spend $1,237 per employee.

Regulatory costs due to the COVID-19 pandemic are not included in the estimate. However, 83 per cent of Canadian small businesses agreed COVID-19 substantially increased compliance costs.

Regulation costs Canadian businesses $39 billion annually, $11 billion of which is unnecessary red tape | CFIB

Toronto, January 25, 2021 – Regulation costs small businesses $38.8 billion annually, roughly 30 per cent ($10.8 billion) of which can be considered unnecessary, redundant,

www.cfib-fcei.ca

 

[ModlrMike]

That's because when Canadians hear the word "business" they picture the big, evil corporations. They have no idea that the average small business is the guy next door.

 

[daftandbarmy]

The Bank of Canada weighs in...

Glass half full: at least Italy is still behind us

A healthy economy depends on high productivity​

Strong productivity—which leads to faster growth, more jobs and higher wages—is an important way to protect the economy from the risks of high inflation.

Canada has seen no productivity growth in recent years. And over the past four decades, we have actually slipped significantly compared with some other countries. In fact, relative to the United States, among G7 countries we are now second only to Italy when it comes to productivity decline.

This is important because a number of factors threaten to drive inflation persistently higher in the future. These include global trade tensions, changing demographics and the economic impacts of climate change. We need to ramp up our productivity now, as a buffer against these and other forces down the line.

The productivity problem

Senior Deputy Governor Carolyn Rogers talks about some of the reasons for Canada’s poor productivity track record, and what we can do to turn the tide.

www.bankofcanada.ca

 

[daftandbarmy]

Slumping our way into the 'Socialist Paradise', as per the grand plan

Canada risks ‘drop in living standards’ amid worsening productivity: TD Economics​

Economists say in a new report that Canada risks decreased living standards if it doesn’t address labour productivity issues.

On Thursday, TD Bank’s Chief Economist Beata Caranci and Senior Economist James Marple released a report highlighting a “pronounced downshift” in Canada’s labour productivity across most industries following the pandemic. According to the report, the goods-producing sector accounts for the majority of the nation’s stagnant productivity growth, while the service sector has slowed to a lesser degree.

“If Canada does not play to win on labour productivity, it risks a continued drop in living standards, worsening wage stagnation and a dangerous deterioration in public services,” the report said.

The report noted that during the decade preceding the COVID-19 pandemic, business sector productivity rose by 1.2 per cent each year. However, since 2019 this measure has “ceased to expand at all setting Canada apart as one of the worst performing advanced economies,” the economists said.

Canada risks ‘drop in living standards’ amid worsening productivity: TD Economics

Economists say in a new report that Canada risks decreased living standards if it doesn’t address labour productivity issues.

www.bnnbloomberg.ca

 

[Good2Golf]

Not too surprising considered the massive debt, exponential growth of a non-productive public service and increasing tax burden that discourages capital investment, since…. “Because it’s 2015!”

 

[daftandbarmy]

Not too surprising considered the massive debt, exponential growth of a non-productive public service and increasing tax burden that discourages capital investment, since…. “Because it’s 2015!”

If there were only a plan to boost innovation coming out of the $2.6B government's invested so far....

How to Overcome Canada’s Innovation Paradox​

Canada has an innovation problem, and without a significant, continuous, and national effort to foster innovation and capture the value of intellectual property, economic growth in Canada will remain insufficient and our standard of living will continue to decline.

Canada is very good at public research and development and educating its population at the post-secondary level, but we struggle to turn these advantages into commercial success.

This has been referred to by some as the “Innovation Paradox”, where Canada is very good at public research and development and educating its population at the post-secondary level, but we struggle to turn these advantages into commercial success and innovation-based economic growth.  

Intellectual property (IP) is a critical asset and driver of the innovation economy. Organizations that successfully develop, protect, and commercialize their IP enhance their competitiveness and position themselves for global growth. Innovation and IP are also important for communities, regions, and countries. Those with strong innovation activity and the ability to commercialize their IP see improvements in productivity, economic growth, and job creation.

Canada’s Innovation Paradox: Our Challenges​

Unfortunately, this is where we lag behind. Innovation in Canada has always been seen as an uphill battle. The Global Innovation Index’s 2022 report ranked Canada 15th of 132 nations in its innovation rankings, behind Germany, Finland, Denmark, Japan, and the United States. The same study also ranked Canada 30th in infrastructure and 24th in knowledge and technology outputs. 

Canada’s real per capita GDP growth between 2007 and 2020 was less than 1% and we stand dead last (38th) among OECD countries in per capita growth until 2060.

Furthermore, according to recent Organisation for Economic Co-operation and Development (OECD) data, Canada’s real per capita GDP growth between 2007 and 2020 was less than 1% and we stand dead last (38th) among OECD countries in per capita growth until 2060. This weak economic growth is costing Canada more than $500 billion in lost economic potential – dollars that could be invested in critical areas such as innovation, health care, human capital, or growing the green economy.

For those who have been following the challenges of the innovation paradox in Canada, those statistics are unlikely to be surprising and the question inevitably comes to, where do we go from here? 

Government’s Role: Untangling the Innovation Paradox​

The federal government’s recent budget earmarked $2.6 billion for the new Canadian Innovation Corporation (CIC), which was elaborated on further in this blueprint. While these are steps in the right direction, at this point there lacks a clear plan, directions, or desired outcomes. 

How to Overcome Canada’s Innovation Paradox

Canada has an innovation problem, and without a significant, continuous, and national effort to foster innovation and capture the value of intellectual property, economic growth in Canada will remain insufficient and our standard of living will continue to decline.

www.conferenceboard.ca

 

[daftandbarmy]

The new Canada: where immigrants show Canadian workers how to hustle, but they suffer as a result...

Why are Canadian employers leaving highly skilled talent on the bench?​

'They were effectively weeding people out without knowing it': ICC CEO explains underemployment of high-skill immigrants – even during labour shortages

The issue of immigrant underemployment remains a persistent problem in Canada, despite policies aimed at integrating highly skilled global talent into the workforce.

But why?

“For the longest time, research has focused on racism and discrimination as the key drivers, and these certainly exist,” says Daniel Bernhard, CEO of the Institute for Canadian Citizenship (ICC).

While that explains why a company would hire John instead of Ahmed, for example, even with labour shortages in 2022 and 2023, highly skilled immigrants were still being overlooked.

“John wasn't around, and Ahmed still wasn't getting hired. And so we were wondering how it was possible for a high-skilled labour shortage to coexist with underemployment of an extremely highly skilled group.

“And that caused us to probe a little bit deeper and realize that these companies were actually leaving millions of dollars on the table by keeping this talent parked on the bench.”

Culture of non-ambition in Canadian organizations leading to lost revenue​

A new report by the ICC and Deloitte shines light on the challenges employers are facing when hiring newcomers to Canada, in talking to over 40 business leaders from a range of sectors such as mining, energy, technology, not-for-profit, finance and education.

Further, 30 per cent of new Canadians under 35 are planning to leave the country within the next two years, mostly due to underemployment.

One major roadblock to hiring immigrant talent is what Bernhard describes as a “culture of non-ambition” within Canadian workplaces.

Many corporate leaders reported that even when data showed that teams including immigrants outperformed others, there was resistance to change within their own organizations, including apathy towards innovation and feelings of being threatened by newcomers. This closed mindset holds Canadian businesses back from realizing the full potential of global talent, Bernhard says.

“Hiring managers felt threatened by people who worked harder than they did, and who came from countries with more of a hustle culture, and they were able to shut these people down by saying that they needed to have better respect for work-life balance,” Bernhard says.

Why are Canadian employers leaving highly skilled talent on the bench?

'They were effectively weeding people out without knowing it': ICC CEO explains underemployment of high-skill immigrants – even during labour shortages

www.hrreporter.com

 

[Eaglelord17]

A huge part of that is lacking the paper qualifications. We look down on the concept of people being capable of doing a job without having a certification/degree behind it. It goes against our university/college worshipping we do in Canada.

We also do hate innovation in the workforce. I worked at one private company where if you brought forward a good idea and justified it they would give it a try generally. Alternatively where I currently work they are very risk adverse and would rather the status quo than rocking the boat a little as it makes more work in the short term.

 

[dimsum]

A huge part of that is lacking the paper qualifications. We look down on the concept of people being capable of doing a job without having a certification/degree behind it. It goes against our university/college worshipping we do in Canada.

I mean yes? But I would argue that in some professions (medical, legal, etc) a recognized certification is a must. And even between Canada and the US, degrees aren’t the same. For example, a US Masters of Social Work is equivalent to a Canadian Bachelors of Social Work.

We also do hate innovation in the workforce. I worked at one private company where if you brought forward a good idea and justified it they would give it a try generally. Alternatively where I currently work they are very risk adverse and would rather the status quo than rocking the boat a little as it makes more work in the short term.

I would say that it’s more of a “private startup” vs “established company” divide, more than a country-specific thing.

 

[Halifax Tar]

A huge part of that is lacking the paper qualifications. We look down on the concept of people being capable of doing a job without having a certification/degree behind it. It goes against our university/college worshipping we do in Canada.

We also do hate innovation in the workforce. I worked at one private company where if you brought forward a good idea and justified it they would give it a try generally. Alternatively where I currently work they are very risk adverse and would rather the status quo than rocking the boat a little as it makes more work in the short term.

You have to view post secondary education as an industry now.

 

[Edward Campbell]

Just a reminder:

• History and geography blessed Canada with French culture, American know how and British political wisdom;
• How come we ended up with American culture, British know how and French political wisdom?

 

[Kirkhill]

From today's Telegraph -

Adversity makes for creativity – just watch and admire Ukraine’s ingenuity

Here in Blighty, with war far away, it is almost impossible to imagine that we were once savvy enough to save the world from Hitler

www.telegraph.co.uk

War makes you creative, especially if you’re on the losing side. David was more ingenious than Goliath.

Israel, surrounded by enemies constantly trying to kill its people and destroy the nation, does things like blow up the enemy’s walkie-talkies and pagers.

And in Ukraine’s response to the ongoing outrage of the Russian invasion, we are witnessing again and again the kind of intensity of brainpower – the chutzpah and the derring-do – of those who are determined to fight back against the bully and, crucially, to win.

Here in Blighty, where war seems far away, it is almost impossible to imagine that we were once too like the Ukrainians and the Israelis.

Liz Truss is about to relinquish her mantle as agent of economic chaos

The ex-Tory leader has a worthy successor snapping at her heels to unleash financial meltdown

www.telegraph.co.uk

The British state – government spending as a share of GDP – is simply too big. This isn’t an ideological point – more a matter of the immutable laws of mathematics, financial stability and the overwhelming importance that those who govern us, in whom voters place trust, avoid causing yet another systemic crisis with all the related economic chaos and massive societal damage.

Government spending hit 44.7pc of GDP in 2023-24,

Fat, dumb and happy. The trajectory is towards governments paying government employees and collecting taxes from government employees and the employees wanting more pay and less taxes.

Once government spending equals 100% of GDP and everybody is an employee of the government where is the money coming from? Where is the National Income?

....

Looking for signs of hope, a sign that everything is reversible

Poland’s stunning success should be discomforting for Britain

Can the looming Budget kickstart a much-needed UK comeback? Over to you, chancellor

www.telegraph.co.uk

Roger Bootle, a City of London economist who writes in the Telegraph, asks:

Have you noticed how much more difficult it is these days to get a Polish plumber, builder or other tradesperson? The reason is that fewer Poles are coming to this country to work than used to be the case.

Indeed, quite a few have gone home. The number of Poles in this country is now about 700,000, down from about a million at the peak in 2017.

At the time of the fall of communism in 1989, Polish GDP per capita was about 40pc of the UK equivalent. It then dipped a bit, before recovering. In 2004, when Poland joined the EU and it was possible for Polish workers to come to this country without any restrictions, Polish GDP per capita was roughly 45pc of the UK level.

Today the figure is 80pc. The figures for real incomes and consumption per head will be broadly comparable.

This change has happened as a result of both the UK’s poor productivity performance and Poland’s own stunning success. Since the global financial crisis (GFC), the Polish economy has grown at an average rate of 3.4pc per annum. The equivalent figure for the UK is 1.7pc.

...

All that is necessary is to run out of money and run out of options. Things will improve after they break. Once they are broken then folks will be forced to innovate and government will be in no position to regulate.

Government imposed pain before things break will only make things break faster.

 

[Kirkhill]

Just a reminder:

• History and geography blessed Canada with French culture, American know how and British political wisdom;
• How come we ended up with American culture, British know how and French political wisdom?

Entropy wins.