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II. Why Productivity is a Tough Sell
There is an elite consensus in Canada that productivity is very important, but few
governments or political parties directly address or talk about the productivity issue.14
Indeed, politicians often avoid the P word in public pronouncements, preferring
euphemisms such as prosperity and innovation (Gardiner, 2005). This behaviour in a way
is understandable because politicians know that productivity does not poll well or
resonate as an issue for Canadians.
This part of the paper will explore why the general public appears allergic to
productivity discourse, arguing that this situation largely reflects misconceptions of what
productivity is all about.
A. Productivity myths and misconceptions
In a nutshell, public distrust or ambiguity about productivity stems largely from a
number of misconceptions and a lack of knowledge about what productivity is and how it
works. These misconceptions are dissected below.
People associate productivity increases with working longer hours. A person who
works longer hours may indeed produce more than someone working fewer hours, and
hence may be considered more productive on a worker basis. But the relevant metric for
productivity measurement is output per hour, not per person. Working longer hours does
not represent an advance in productivity in this sense.
Exhortations by employers to improve productivity are sometimes seen by
workers as a way to trick them into working faster and harder. It is true that greater
worker intensity is a potential source of productivity growth, although its sustainability
can be questioned. But few advocate this measure as a means to increase productivity. It
is widely recognized that the key for productivity growth is to “work smarter, not
harder.”
Many also fear that higher productivity at the industry or firm level translates into
layoffs. Striving for productivity advance just means that one is working oneself out of a
job. This can be true in an industry or firm characterized by strong productivity gains and
limited potential for increases in demand for output. An example is agriculture where
productivity has soared and employment plummeted over the last half century. But at the
total economy level, there is no long-run negative relationship between productivity and
employment. Productivity growth increases potential real income, which in turn increases
demand, resulting in employment opportunities in new industries. There is therefore no
reason why productivity growth should have negative long-run consequences for total
employment. Indeed, there is reason to believe that aggregate productivity growth will
14 See Drummond (2006) for a discussion on what explains the lack of influence of economists on the
productivity agenda.