Three Policies to Improve Productivity Growth in Canada

13

GDP per capita, labour productivity, average hours worked per week, and the
employment /total population ratio as well as the contribution of these latter three factors
to GDP per capita growth.

Notes:

1. GDP per capita and labour productivity are expressed in 1997 chained dollars. Hours are expressed as hours per week. The
employment-population ratio is expressed in per cent.

2. From 2006-2026, labour productivity is assumed to grow at 1.5 per cent per year; average hours worked per week are held at the
2006 level; employment is assumed to grow at the same rate as that of the labour force; and labour force growth is based on projected
15-64 years old population growth with 2006 labour force participation rate for the 15-64 age group held constant.

3. Numbers might not add up to 100 due to rounding

Source: Table 2

Over the 1947-2006 period, GDP per capita grew by 2.12 per cent per year on
average. This was driven entirely by productivity growth, at 2.39 per cent per year. In
other words, productivity growth accounted for all the increase in living standards (113
per cent).⁷ Over the 1947-73 period very strong productivity growth meant that
productivity accounted for 146 per cent of living standards growth. Slower productivity
growth after 1973 reduced the contribution of productivity to GDP per capita growth to
82 per cent.

In absolute terms growth in GDP per capita in Canada fell from a 2.55 average
annual rate of increase in the 1947-1973 period to 1.79 per cent in the 1973-2006 period.

⁷ The employment-population ratio grew modestly over this period on an annual per cent basis, making a
small contribution to GDP per capita growth. Average hours of work, on the other hand, declined from 51
hours per week in 1947 to less than 35 hours per week in 2004, representing a serious drag on GDP per
capita growth.

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