♪♪] >> Andrew: CANADA HAS A PRODUCTIVITY PROBLEM AND THE BANK OF CANADA SAYS IT'S URGENT. >> YOU KNOW THOSE SIGNS THAT SAY IN AN EMERGENCY BREAK THE GLASS, WELL IT'S TIME TO BREAK THE GLASS. >> Andrew: THAT'S CAROLYN ROGERS, THE SENIOR DEPUTY GOVERNOR OF THE BANK OF CANADA. YEAH, SHE SAYS THINGS ARE BAD. IN TERMS OF PRODUCTIVITY OVER THE LAST FEW DECADES, THE CANADIAN ECONOMY WENT FROM 88% AS PRODUCTIVE AS THE UNITED STATES DOWN TO JUST 71%. WE'RE NOW BEHIND ALMOST EVERY OTHER G7 COUNTRY. YEAH, WE LEAD THE G7 WHEN IT COMES TO HAVING THE MOST EDUCATED WORKFORCE AND WE WORK MORE HOURS. SO WHAT'S GOING ON? [♪♪♪] >> Andrew: WHEN ECONOMISTS TALK ABOUT PRODUCTIVITY, WE'RE TALKING ABOUT HOW MUCH A PERSON CONTRIBUTES TO THE ECONOMY FOR EVERY HOUR WORKED. FOR EXAMPLE, IN THE TIME A CANADIAN WORKER PRODUCES $1 WORTH OF GOODS AND SERVICES, A WORKER IN FRANCE HAS PRODUCED $1.20, IN THE U.S. IT'S $1.30. IT'S IMPORTANT TO KNOW BECAUSE IT TELLS US HOW EFFICIENTLY A COUNTRY IS USING ITS WORKFORCE. DO PEOPLE HAVE HIGH SKILL, HIGH-PAYING JOBS THAT PRODUCE GREAT OUTPUT? ARE THEY WELL SUPPORTED? DO THEY HAVE THE RIGHT TRAINING, THE RIGHT TOOLS? ARE THEY SET UP TO SUCCEED? NO NEEDLESS REGULATORY RED TAPE HOLDING BUSINESSES BACK? ALL OF THESE THINGS HELP MAKE A COUNTRY MORE PRODUCTIVE. >> A COUNTRY WITH A STRONG PRODUCTIVITY CAN HAVE FASTER GROWTH, MORE JOBS AND HIGHER WAGES WITH LESS RISK OF INFLATION. >> Andrew: BUT THE BANK OF CANADA GIVES THREE BIG REASONS THIS COUNTRY IS STRUGGLING TO KEEP UP. >> THE FIRST IS LABOUR COMPOSITION OR THE SKILLS WORKERS BRING TO THE JOB. >> Andrew: THE MORE SKILLS YOU HAVE, THE MORE VALUE YOU BRING TO THE TABLE. THIS COUNTRY IMPORTS A LOT OF SKILL. CANADA NOW HAS ONE OF THE HIGHEST RATES OF IMMIGRATION IN THE WORLD. MORE THAN 1 MILLION PEOPLE CAME HERE LAST YEAR ALONE MANY WITH ADVANCED DEGREES, EXCEPT. >> 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. >> Andrew: IMAGINE THE TRAINED ENGINEER DELIVERING FOOD, THE TRAINED TEACHER HAULING TRASH OR THE TRAINED SCIENTIST WORKING RETAIL. THESE AREN'T BAD JOBS BUT THESE ARE BAD MATCHES AND THOSE SKILLS THEY HAVE CANADA DESPERATELY NEEDS. TAKE HEALTH CARE, ACCORDING TO STATS CANADA, ONLY 36% OF FOREIGN-TRAINED NURSES ACTUALLY WORK IN NURSING IN 2021, COMPARED TO 87% OF PEOPLE WHO TRAINED AS NURSES IN CANADA. AND ABOUT A QUARTER OF ALL IMMIGRANTS WITH FOREIGN DEGREES ENDED UP WORKING IN CANADIAN JOBS THAT ONLY REQUIRED A HIGH SCHOOL DIPLOMA OR LESS. >> CANADA'S PRODUCTIVITY AND, IN FACT, OUR STANDARD OF LIVING WILL DEPEND IMPORTANTLY ON HOW WE LEVERAGE AND DEVELOP THE SKILLS OF THESE NEW WORKERS. [♪♪♪] >> IF I HAD TO PICK THE BIGGEST CONCERN IN THIS AREA, I WOULD SAY IT'S COMPETITION. >> Andrew: WE KNOW CANADA HAS A COMPETITION PROBLEM. JUST A FEW MONTHS AGO THE COMPETITION BUREAU PUT OUT A REPORT SAYING THE LEVEL OF COMPETITION IN CANADA HAS BEEN DROPPING STEADILY OVER THE PAST TWO DECADES. AND JUST INTUITIVELY WHEN YOU THINK ABOUT WHAT A TRULY COMPETITIVE LANDSCAPE LOOKS LIKE, IS THAT REALLY WHAT YOU HAVE WITH YOUR PHONE PLAN, YOUR BANK, YOUR GROCERY STORE, OR THE AIRLINE YOU CHOOSE? >> IN CANADA, THERE ARE SECTORS IN OUR ECONOMY WHERE COMPANIES FACE LIMITED LEVELS OF COMPETITION, WHETHER FROM NEW ENTRANTS OR FROM FIRMS FROM OUTSIDE THE COUNTRY OR EVEN FIRMS FROM OTHER PROVINCES. >> Andrew: COMPETITION CAN BE A BIG DRIVER OF PRODUCTIVITY. IT APPLIES PRESSURE TO INNOVATE, TO DIFFERENTIATE, TO FIND EFFICIENCIES, BUT A LACK OF COMPETITION CAN LEAD TO WHAT THE BANK OF CANADA HAS IDENTIFIED AS A THIRD MAJOR PROBLEM. [♪♪♪] >> WHEN YOU COMPARE CANADA'S RECENT PRODUCTIVITY RECORD WITH THAT OF OTHER COUNTRIES, WHAT REALLY STICKS OUT IS HOW MUCH WE LAG ON INVESTMENT IN MACHINERY AND EQUIPMENT AND IMPORTANTLY ON INTELLECTUAL PROPERTY. >> Andrew: OKAY, SO LET'S BREAK THAT DOWN. THE FIRST PART OF THIS, THE MACHINERY AND EQUIPMENT, IS ABOUT INVESTING IN THE TOOLS WORKERS NEED TO BE AS PRODUCTIVE AS POSSIBLE. IF YOU'RE IN MANUFACTURING, HOW SMOOTH IS THE PRODUCTION LINE? IF YOU'RE IN CONSTRUCTION, DO YOU HAVE EXCAVATORS OR SHOVELS? IF YOU'RE IN RETAIL, DO YOU HAVE THE TECH TO SPEED THINGS UP? ACCORDING TO A REPORT BY THE FRASER INSTITUTE, CANADA'S INVESTMENT IN THESE TOOLS IS DROPPING FROM ABOUT $18,000 PER WORKER IN 2014 TO LESS THAN $15,000 IN 2021 WHEN ADJUSTED FOR INFLATION. MEANWHILE, U.S. COMPANIES WERE INVESTING NEARLY $27,000 PER WORKER. A.I. IS ANOTHER EXAMPLE, POTENTIALLY A BIG PRODUCTIVITY BOOSTER, RIGHT, BUT THIS REPORT SHOWS THAT BY 2021 ONLY 3.7% OF CANADIAN FIRMS WERE USING A.I. AT WORK. MEANWHILE, TAKE A COUNTRY LIKE DENMARK. THE STUDY FOUND SO FAR THEY'VE HAD DOUBLE THE RATE OF ADOPTION. THE OTHER PROBLEMATIC SIDE TO CANADA'S INVESTMENT PICTURE ACCORDING TO THE BANK OF CANADA IS ALL ABOUT INNOVATION. THE DEPUTY GOVERNOR MENTIONED INTELLECTUAL PROPERTY. SO THINK ABOUT R&D. ACCORDING TO STATS CANADA, PRIVATE-SECTOR SPENDING ON RESEARCH AND DEVELOPMENT GREW ONLY 0.5% IN 2022 AND IN TERMS OF COMPANIES THAT ACTUALLY INCLUDE R&D IN THEIR BUSINESS STRATEGY, IT'S FEWER THAN 2%. COMPARE THAT TO R&D SPENDING IN OTHER G7 COUNTRIES, CANADA RANKS NEAR THE BOTTOM. SO WHILE GLOBAL COMPETITORS FIND NEW WAYS TO INCREASE OUTPUT AND OPTIMIZE PROCESSES, CANADA FALLS BEHIND. THE BIG PICTURE ISN'T HOPELESS, HOWEVER. THESE PROBLEMS ARE FIXABLE, BUT THE "IN CASE OF EMERGENCY BREAK GLASS" SOLUTION THE BANK OF CANADA HAS IN MIND LIE WITH PRIVATE ENTERPRISE AS MUCH AS WITH GOVERNMENT, REDUCING RED TAPE, ENCOURAGING COMPETITION, MATCHING SKILLS TO JOBS, CREATING THE RIGHT CONDITIONS FOR CANADA'S WORKFORCE TO HIT PEAK PRODUCTIVITY. [♪♪♪]
