Future of work

Canada is facing a distinct and troubling economic challenge: Canadians work as much as Americans, but earn no more than Europeans.  

This has Canadians in the “worst of both worlds,” enjoying neither the high incomes of the United States nor the amount of time off that residents of many European countries receive. The root of this problem lies in low labour productivity, not a lack of effort.  

Since the 1970s, Canada’s real gross domestic product (GDP) per person (adjusted for purchasing power) has fallen significantly behind that of the United States. By 1975, the Canada’s output per person was nearly equal to that of the US, but by 2020, it had dropped to around 25% less.  

Europe has also lagged the U.S. in growth, but people in countries like France and Germany work significantly fewer hours. For example, French workers put in three-quarters as many hours as their American counterparts. This is a reflection of different cultural and policy choices.  

Canadians, in contrast, have maintained a high number of work hours since the 1980s, comparable to Americans. But despite this effort, Canada is seeing little economic payoff.  

This points to a deeper productivity problem. It’s not related to how much Canadians work, but how little Canada gets out of that work. In other words, the issue isn’t labour input, but rather the efficiency and value of the output generated by the work being done.  

It has been argued that the causes of Canada’s slump are harder to fix than those of Europe’s. While European countries can address their slowdown with tools like immigration or deregulation, or even accept it as a trade-off for working less, Canada lacks the capacity to do so, given differences in its societal and economic foundation.  

The challenge is rooted in structural factors, such as weak innovation, inefficient capital allocation, and institutional lag, which are much harder to address with standard policy levers.