A Detailed Analysis of Canada's Post-2000 Productivity Performance and Pandemic-Era Productivity Slowdown

Labour productivity growth in Canada has diminished considerably relative to the pre2000 period, dropping from 1.74% per year in the 1973-2000 period to an average of 0.86% per year for the past two decades. Work by many productivity researchers, including those at the Centre, evinces a second step-wise reduction in the annual growth rate of labour productivity following the year 2000, resembling the substantial slowdown observed in the 1970s. This report serves to both contextualize Canada’s productivity performance and to identify the sources of the slowdown, leveraging recent Statistics Canada and OECD data to provide stylized facts on the post-2000 productivity slowdown in the country. Through comparisons with the United States and other peer countries in the OECD, we characterize Canada’s productivity performance as relatively poor but hardly exceptional. We also identify a substantial differences in the size of the Canada-U.S. productivity gap depending on the aggregate chosen. Moreover, by utilizing the CSLS’s own decomposition framework as well as Statistics Canada growth accounting estimates, we find that a) the post-2000 slowdown has been driven primarily by trends in withinsector productivity and b) the slowdown reflects broad deterioration in all three primary sources of growth. Ultimately, given the persistent challenges facing the Canadian economy like enduring supply chain constraints and fading investment (particularly in ICT) we frame the path back to 1% annual productivity growth as a narrow one.