It is rare for the Bank of Canada to say that we face a national economic emergency. But that is exactly what Deputy Governor Carolyn Rogers did on March 26. She was referring to Canada’s dismal record on labour productivity, which is indeed a major, albeit long-standing issue. Her widely publicized speech put a sharper focus on very weak Canadian economic performance, especially relative to the US.
Two points I found interesting:
I don’t know if there’s data but it could explain why the correlation between wage growth and productivity decoupled over the last 40-50 years. The standard assumed causation is
productivity -> wage growth
, but that’s shown to be false by the decoupling. If however we assumewage growth -> productivity
causation then at least that doesn’t violate the decoupling data.You’re saying that our economy is addicted to using low wage earners (like TFWs) keeping businesses profitable without having to invest in improving labour productivity.