Sat. Jun 22nd, 2024

Canada’s Labour Productivity and Employment Landscape in 2023

By Fatih Sahin May21,2024

Canada experienced notable shifts in labour productivity and employment dynamics in 2023, as evidenced by recent data of Statistics Canada. The report highlights significant trends and variations across the provinces and territories, offering a comprehensive view of the economic landscape during a year marked by economic challenges.

In 2023, Canada saw a 2.2% decrease in annual labour productivity, measured in chained (2012) dollars, marking the third consecutive year of decline. This downturn was pervasive across all provinces and Yukon, with the combined economic weight of Ontario, Quebec, and Alberta accounting for more than 80% of the national decline. Specifically, Ontario contributed -0.97 percentage points, Quebec -0.55 percentage points, and Alberta -0.25 percentage points to the overall productivity drop. In these provinces, the construction sector was a significant contributor to the decline, with manufacturing also playing a role in Ontario and Quebec.

Both goods-producing and services-producing businesses recorded productivity declines across most provinces. An exception was British Columbia, where services-producing businesses saw an increase in productivity. The declines occurred against a backdrop of persistent inflation, high interest rates, and various climate change-related factors that collectively impacted economic activity and the labour market.

The productivity decline was further exacerbated by the growth of hours worked outpacing business output in nearly every province and territory. While the real gross domestic product (GDP) of businesses rose in all regions except Newfoundland and Labrador and the Northwest Territories, GDP growth was generally slower compared to 2022. The national growth rate of hours worked slowed to 3.0% in 2023, down from 5.0% in 2022, reflecting a broader deceleration in economic momentum.

Average hourly compensation for workers in the business sector continued to rise in 2023, albeit at a slower pace than in 2022. Growth rates ranged from 1.2% in Manitoba to 11.8% in Nunavut, with the latter benefiting from a surge in mining activity and high wage rates. Nationally, hourly compensation increased by 3.1%, a notable decline from the 7.0% increase observed the previous year.

The average hourly wage for full-time paid workers varied significantly across regions, from $30.61 per hour in Prince Edward Island to $56.92 per hour in the Northwest Territories. The national average hourly wage rose by 3.1% to $40.66 per hour. The contractual wage rate, which accounts for wages and salaries per hour paid, also saw a 3.5% increase, reaching $37.52 per hour. The difference between the actual and contractual wage rates is primarily due to the exclusion of paid leave and unpaid overtime in the latter measurement.

Employment trends in 2023 showed a varied picture across different regions. The Windsor–Sarnia region in Ontario experienced the highest relative growth in jobs at 10.2%, while the Toronto region saw the largest absolute growth with an increase of over 110,000 jobs. Conversely, the Stratford–Bruce Peninsula region recorded the largest absolute job loss, with a decline of more than 5,000 jobs. In relative terms, Saskatchewan’s Northern region experienced the greatest loss, with a 12.0% decline in jobs.

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