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