Bank of Canada deputy governor Carolyn Rogers spoke on Canadian productivity in Halifax Tuesday.Photo by Justin Tang/Bloomberg/file Photo
Canada must tackle weak productivity to inoculate the economy against factors that will drive future inflation, such as the pullback from globalization, said Carolyn Rogers, senior deputy governor of the Bank of Canada.
“An economy with low productivity can grow only so quickly before inflation sets in. But an economy with strong productivity can have faster growth, more jobs and higher wages with less risk of inflation,” she said in a March 26 speech in Halifax, adding that other drivers of inflation will include changing demographics, the economic impact of climate change and global tensions.
Canada’s productivity has fallen from a “not great” record of producing 88 per cent of the value generated by the United States economy per hour in 1984 to just 71 per cent in 2022, she said. And while weak investment has been a problem in Canada for the past 50 years, the gap between the level of capital spending per worker by Canadian firms and the level spent by their U.S. counterparts has become worse over the past decade or so.
“While U.S. spending continues to increase, Canadian investment levels are lower than they were a decade ago,” Rogers told her audience, adding that Canada has also fallen behind most of its G7 peers, with only Italy seeing a larger decline in productivity relative to the United States.
“You’ve seen those signs that say: In emergency, break glass — Well, it’s time to break the glass,” she said.
Increasing competition is among the solutions that Rogers proposed. She also urged policymakers to focus on sectors and companies that add greater value to the economy and to set the stage for increased investment, including in technologies that will improve productivity and efficiency.
“When a company increases productivity, that means more revenue, which allows the company to pay higher wages to its workers without having to raise prices,” Rogers said. “The bottom line is that the benefits from raising productivity are there no matter what your role is: for workers, for businesses and, yes, for central bankers, too.”
Rogers said policymakers should also focus on labour composition, or the skills workers bring to the job to improve Canada’s productivity.
This includes training and “re-skilling“ for existing workers and taking advantage of immigration.
“Too often, new Canadians are working in jobs that don’t take advantage of the skills they already possess. And too often these people wind up stuck in low-wage, low-productivity jobs,” she said. “Doing better at matching jobs and workers is crucial to the future of Canada’s economy.”
Rogers said her biggest concern, though, is competition, especially because certain sectors in Canada are not facing competition from firms in other provinces, foreign rivals or new entrants.
“Of course, every country has certain sectors that it champions, and there can be valid reasons to protect local businesses,” she said. “However, too much protection can lead to problems. It can also help to explain Canada’s weak record in business investment.”
Rogers urged policymakers to create more regulatory certainty and speed up processes so businesses can have the confidence to make the investments required to improve productivity.
The Bank of Canada, for its part, will remain focused on providing price and economic stability, which she said is most conducive to risk taking and the kind of investment that will improve productivity.
“Increasing productivity is a way to protect our economy from future bouts of inflation without having to rely so much on the cure of higher interest rates,” Rogers said.
MONTREAL – Quebec’s ombudsperson is warning that public services are becoming “dehumanized” in the province amid a rise in demand for them.
Marc-André Dowd released his annual report today, which highlights several examples of people receiving inadequate care across the health network in the 12 months leading to March 31.
One dying man who lived alone was denied help cleaning his cat’s litter box by his local health clinic, a service Dowd says should have been given for “humanitarian reasons.”
Dowd also describes staff at a long-term care home feeding residents “mechanically” and talking among each other — despite health ministry guidelines directing staff to maintain eye contact with residents.
The ombudsperson says his office received a record number of problems to investigate across the province’s public services — 24,867 compared with 22,053 last year.
He says his office investigated 13,358 cases between April 2023 and March of this year.
This report by The Canadian Press was first published Sept. 19, 2024.
OTTAWA – French President Emmanuel Macron will visit Canada next week after a planned trip in July was cancelled amid political turmoil in France.
Prime Minister Justin Trudeau announced in a statement today that Macron will be in Canada Wednesday and Thursday after the leaders attend the United Nations General Assembly in New York City.
Trudeau will welcome Macron in Ottawa on Wednesday, where they are expected to discuss collaboration on geopolitical issues including their ongoing support for Ukraine.
They are also expected to discuss ways to strengthen the response to emerging threats, such as disinformation.
In Montreal, Trudeau intends to show off the city’s artificial intelligence sector, while both countries reaffirm their commitment to work with counterparts on responsible use of AI.
The leaders will also discuss promoting the French language ahead of the Francophonie summit being held in France next month.
This report by The Canadian Press was first published Sept. 19, 2024.
Health Canada has authorized Novavax’s updated COVID-19 vaccine that protects against currently circulating variants of the virus.
The protein-based vaccine, called Nuvaxovid, has been reformulated to target the JN.1 subvariant of Omicron.
It will replace the previous version of the vaccine, which targeted the XBB.1.5 subvariant of Omicron.
Health Canada recently asked provinces and territories to get rid of their older COVID-19 vaccines to ensure the most current vaccine will be used during this fall’s respiratory virus season.
Earlier this week, Health Canada approved Moderna’s updated mRNA COVID vaccine.
It is still reviewing Pfizer’s updated mRNA vaccine, with a decision expected soon.
This report by The Canadian Press was first published Sept. 19, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
Note to readers: This is a corrected story. A previous version erroneously described the Novavax vaccine as an mRNA shot.
