Canadian Productivity - Why so Low?

Bar Sinister

Executive Branch Member
Jan 17, 2010
8,252
19
38
Edmonton
A number of recent articles have raised the problem of Canada's low levels of productivity. I have included one such article below.

Canada's productivity trap - The Globe and Mail

It seems to me the reasons listed in the article are quite valid, however, one major factor seems to have been overlooked and that is the large percentage of foreign ownership in many key industries. Foreign owned companies tend to carry out major research in their home nations and then export the technology to their foreign subsidiaries. With so much of Canada's economy being foreign owned this would seem to me to be an obvious source of the problem, but it is one that is usually overlooked.
 

Northboy

Electoral Member
A number of recent articles have raised the problem of Canada's low levels of productivity. I have included one such article below.

Canada's productivity trap - The Globe and Mail

It seems to me the reasons listed in the article are quite valid, however, one major factor seems to have been overlooked and that is the large percentage of foreign ownership in many key industries. Foreign owned companies tend to carry out major research in their home nations and then export the technology to their foreign subsidiaries. With so much of Canada's economy being foreign owned this would seem to me to be an obvious source of the problem, but it is one that is usually overlooked.

I agree, we've got to get some Canadian skin in the game.

We have to open opportunities on our Lands to our own people.

Or strive to do so, with our brothers, of course.
 

countryboy

Traditionally Progressive
Nov 30, 2009
3,686
39
48
BC
A number of recent articles have raised the problem of Canada's low levels of productivity. I have included one such article below.

Canada's productivity trap - The Globe and Mail

It seems to me the reasons listed in the article are quite valid, however, one major factor seems to have been overlooked and that is the large percentage of foreign ownership in many key industries. Foreign owned companies tend to carry out major research in their home nations and then export the technology to their foreign subsidiaries. With so much of Canada's economy being foreign owned this would seem to me to be an obvious source of the problem, but it is one that is usually overlooked.

I agree - there is much validity to the reasons given for our productivity issues in that article. It is written by Kevin Lynch, former clerk of the Privy Council and secretary to the cabinet, and it is very much an academic/government viewpoint. Important of course, but not the only one.

A couple of simpler possibiities come to mind for me - one is our general work ethic. If it was measurable in a practical sense, I don't think we'd be too impressed with the results. I'm not suggesting we've lost our will to work - quite the opposite in many cases - but I do see some trends in that area that are less than encouraging.

Another is that of "a lot of government", which can work both ways. Government support/programs can be helpful in many ways, but too many of them (with their corresponding costs) can result in a stifling of entrepreneurial acitivty. I see examples of this all the time - a continuous stream of red tape and regulations that is both costly and confusing to small businesses (the backbone of the economy). Each one of those regs. by itself is well-intentioned and there for a good reason, but when you add them all up, they become an insurmountable burden for many businesses. Many are forced to limit their thinking to basic survival and shelve their great ideas for growth and improvements, as the controls are simply too big, complex, or restrictive to bother with.

Our convoluted tax system doesn't help matters, in that very small businesses are spending a lot of money on accounting/tax services...money that could be spent on "productivity-enhancing" activities. The game of "not getting screwed" on taxes has become an expensive one, which could easily be eliminated via a simplified taxation system.

Those are just a few "on the ground" thoughts on productivity, and I'm sure there are many more out there.
 

ironsides

Executive Branch Member
Feb 13, 2009
8,583
60
48
United States
On this subject, we all seem to agree. What seems an impossible task is ever recovering those jobs we sent to other places to be manufactured. It maybe possible to create new jobs, but look how long it took us to develop all those jobs we outsourced. (nice word developed just to say your fired) It will be a long time if ever before we see the recovery of a major manufacturing workforce again.
 

taxslave

Hall of Fame Member
Nov 25, 2008
36,362
4,337
113
Vancouver Island
We have a highly unionized workforce with a bad case of gimme gimme gimme with no thought for anything else. It is a basic of socialists that the world owes them a good living regardless of how poor their performance is. This attitude has caused the elimination of none government jobs because it is more cost efficient with better quality control to produce elsewhere.
Problem #2 is the overload of government regulations and taxes that makes Canada a high cost place to do business.
 

countryboy

Traditionally Progressive
Nov 30, 2009
3,686
39
48
BC
We have a highly unionized workforce with a bad case of gimme gimme gimme with no thought for anything else. It is a basic of socialists that the world owes them a good living regardless of how poor their performance is. This attitude has caused the elimination of none government jobs because it is more cost efficient with better quality control to produce elsewhere.
Problem #2 is the overload of government regulations and taxes that makes Canada a high cost place to do business.

...and what really baffles me is that "we" keep asking for more! More programs, more government, more this, more that. If we didn't have our water, wood, minerals, etc., we'd have been screwed a long time ago. We're still screwing ourselves, it's just taking some time to get the job done. And we don't seem to realize it...I guess ignorance is bliss, at least for a while.
 

Cliffy

Standing Member
Nov 19, 2008
44,850
192
63
Nakusp, BC
It doesn't help when you have idiots like Campbell giving away everything to foreign interests like his old Socred buddies like Vanderscam and the Bennetts. Who do our governments work for, again?
 

countryboy

Traditionally Progressive
Nov 30, 2009
3,686
39
48
BC
It doesn't help when you have idiots like Campbell giving away everything to foreign interests like his old Socred buddies like Vanderscam and the Bennetts. Who do our governments work for, again?

Yep, I agree. Government problems come in two flavours - the quantity and the quality of them. We have "issues" with both. I think we should be focused on lowering the quantity and increasing the quality.

Of course, that would require "us" to do a bit more thinking for ourselves and take more responsibility for our own actions, and that's the part that concerns me.
 

Northboy

Electoral Member
On this subject, we all seem to agree. What seems an impossible task is ever recovering those jobs we sent to other places to be manufactured. It maybe possible to create new jobs, but look how long it took us to develop all those jobs we outsourced. (nice word developed just to say your fired) It will be a long time if ever before we see the recovery of a major manufacturing workforce again.

Actually, we had to outsource old modes of production to make way for the new ones. I was working with Sam on this one.

All has been done for God's good purpose. Have we learned lessons? yep.

Will we learn more, Yep, but I prefer gently.
 

VanIsle

Always thinking
Nov 12, 2008
7,046
43
48
We have a highly unionized workforce with a bad case of gimme gimme gimme with no thought for anything else. It is a basic of socialists that the world owes them a good living regardless of how poor their performance is. This attitude has caused the elimination of none government jobs because it is more cost efficient with better quality control to produce elsewhere.
Problem #2 is the overload of government regulations and taxes that makes Canada a high cost place to do business.
Uh yes - the unionized workforce. What has it done for us lately? Privitization has taken over and services are really bad for the most part. CB spoke about work ethic. Is there any left? Not in a unionized environment. I work for a union, and my husband works in a building full of union workers although he is not a part of the union. City workers get called out for a minute job that requires about 15 min. of their time and they can charge (I believe) 4 hours call out time. So everytime one of you is foolish enough to call about your trash not being picked up - try waiting to call on Monday morning (where most likely is the time you will find someone who cares anyway) and if you spot a dead animal in front of your home or down the road - call animal control so you don't help the union incur overtime expenses. I work with numerous lazy people who worked their butts off for the first 3 months to get past that "trial period" where they cannot be let go for poor job performance because after 3 months, they are protected by the union. The "old" unions did work for workers. They don't now but - old rules are in place. Rumour has it that in and around our city, Walmart is opening a Super Walmart. Soon. There is also word from the news (that doesn't state it's happening here) that Super Store is now opening new stores (I'm sure some of you have been to them already) called No Fringes. What both stores seem to be promising is lower cost products with staff being paid rock bottom wages. I like the store I work in. I like to shop there. I fear (just my thoughts) that these two stores along with Costco which all nearly surround the store I work in, will aid in closing it's unionized doors. I was told yesterday by a person of authority in the store, that Super Store plans a major campaign for their No Fringe stores. None of this matters very much to a worker like myself who won't be in the work force that much longer regardless of what happens. I look at some of the people there that do exactly the same job I do, except that because of the number of years they have been there get more than double the pay per hour that I do, get weekends off and get prime shifts but will lose their job more rapidly than everyone around them once (if it happens) a store like I am in changes to a non-union store.
I am amazed at how many people I work with that seem blissfully un-aware of what is taking place around them. I talked with one young fellow yesterday who is so angry because he has worked there for 4 years and he is now only working about 12 hrs. a week. Unfortunately, his dept. now closes at 8:00 PM as does 2 other depts. Some areas of the store are being downsized to the point of hardly being there - again a loss of staff and staff hours. Customer service should be a priority but it's lacking for two reasons. The first being the self scans which has driven vast amounts of customers away from the store and through which the amount of theft happening is phenomenal. The second being that in what employees feel is "their right", because they are not getting what they feel they deserve through the union, they don't give out the customer service they once did. A lovely busy busy store has gone to all but dead.
Maybe if we do get rid of unions and people have to actually work to keep a job or in particular, to move up the ladder, we will become a productive society. Taxes in Canada are too high for companies to keep running here and workers demands are too great for companies to hire them. This downturn in the economy allows stores like No Fringes and Walmart Superstores to take over and pay the low wages. They know that if the worker isn't working, there is always someone waiting in line.
 

L Gilbert

Winterized
Nov 30, 2006
23,738
107
63
70
50 acres in Kootenays BC
the-brights.net
I think it bases upon everything from low work ethics (slack-assed craftsmanship) and morale, to the inability or the indifference of gov't to support the workers of Canada, including what was mentioned in the article.
Take the 2010 budget for instance, gov't budgets extremely little for research & development, seems to reward the banks for simply doing what banks do, stiffs students and the elderly, and does little do get people back to work.
 

darkbeaver

the universe is electric
Jan 26, 2006
41,035
201
63
RR1 Distopia 666 Discordia
Next door, the American worker, is the most productive in the world, it's gotten them nothing but a failed state and the worst recession in memory. There is no cure for deregulation but more regulation because corporate self regulation has proven to be a net job reducer. There is no hope of economic recovery in any region that does not have industrial capacity, corporate self regulation long ago shipped that capacity to the slave nations, at the north American workers expence, last but certainly not least it destroyed hundreds of thousands of domestic businesses unable to compete with slave manufactured goods. So while we perrenially hear the same tired old whining about the lazy unproductive N. American worker he/she is definitely not responsible for the economic downturn. Unionized or not we are all victims of free trade. Remember Mr Mulbloneys promised hundreds of thousands of new jobs well we got sucked in by the bankers, again.
 

Northboy

Electoral Member
We have a highly unionized workforce with a bad case of gimme gimme gimme with no thought for anything else. It is a basic of socialists that the world owes them a good living regardless of how poor their performance is. This attitude has caused the elimination of none government jobs because it is more cost efficient with better quality control to produce elsewhere.
Problem #2 is the overload of government regulations and taxes that makes Canada a high cost place to do business.

In answer to first - small business...We have a structural problem.

Economic development will deal with it.

In answer to 2- Flat tax. You guys figure out the amount.

Shift tax base to products and off people's backs- the old tariff system

HST is a move in the right direction, now flat tax income.

Corporations are not Kings. Flat tax them as well.
 

darkbeaver

the universe is electric
Jan 26, 2006
41,035
201
63
RR1 Distopia 666 Discordia
In answer to first - small business...We have a structural problem.

Economic development will deal with it.

In answer to 2- Flat tax. You guys figure out the amount.

Shift tax base to products and off people's backs- the old tariff system

HST is a move in the right direction, now flat tax income.

Corporations are not Kings. Flat tax them as well.

I'll vote for that and back in the early eighties I marched and worked to support it when I opposed free trade for the exact reasons that have crippled western manufacturing and destroyed western economies. So some very great encouragement of domestic industries must be done to stop the decline. If we cannot rebuild domestic industrial capacity to serve domestic markets first and formost we will simply never recover. We have every tired old suggestion offered here today that we have heard for the last thirty years from those directly responsible for our decline, anti-union, low productivity , innovation, research and development even networking but the simple fact is it takes no research at all to determine that if we don't make shoes and socks we can hardly expect to sell any. How many millions in research will it take to determine a domestic market for domestically manufactured goods. We the people don't have to compete with the slave factories when we can simply shut the borders to their products.
 

darkbeaver

the universe is electric
Jan 26, 2006
41,035
201
63
RR1 Distopia 666 Discordia
RE: small business.
It's a fact that small business is the backbone of our economy, yet this gov't and the previous half dozen (at least) spend an awful lot of time and money catering to big business and banks.

That's because they only pose as our government, they belong to the bankers. So it will literally take the revolution of small businesses to heal our dying economy. I know the will to work and produce good products exist in this country I also know who dosn't want their apple cart tipped over by the unwashed mob as they refere to us.
 

countryboy

Traditionally Progressive
Nov 30, 2009
3,686
39
48
BC
That's because they only pose as our government, they belong to the bankers. So it will literally take the revolution of small businesses to heal our dying economy. I know the will to work and produce good products exist in this country I also know who dosn't want their apple cart tipped over by the unwashed mob as they refere to us.

The majority of us have to get our information on this subject - on which we base our opinions and decisions - from the mass media. I don't think most of the stuff we're fed is objective, factual, or complete. It tends to pick out the "sensational" bits, usually exceptions to the rule, and portray them as being "the reality." Why is this? Well, the news media is an industry unto itself, and it - like any other business - relies on increased "sales" (audience ratings) to keep going. Let's face it - real facts don't always attract new viewers/listeners...it just ain't "news", for the most part.

Take free trade for example - it's great to get all excited about it, either positively or negatively, but I've never seen an accurate portrayal of it in the mass media. It's always sensationalized, politicized, and twisted so that it's more "attention-getting."

As I see it, it's pretty simple. The benefits of free trade work for both businesses and consumers. Businesses get expanded markets for their products/services, while consumers get a broader choice of goods to buy.

The downsides? If businesses have costs that aren't competitive, they won't be able to take advantage of expanded markets. If the consumers don't have sufficient money or jobs, they will buy cheaper imported goods because they can't afford "Made in Canada."

I don't agree with restricted trade - like building a firewall around the country - because it negates the possiblity of those first two advantages. Instead, I'd like to see us get to the bottom of the reasons why we might not be competitive in our chosen business sectors, and then fix them.

When that onion starts to get peeled, it won't take long to figure out why some industries can't be competitive with foreign sources. Costs are too high. Regulations are too cumbersome. Controls are all over the map. The tax system - amounts and structure - are a big problem.

There is no sweeping singular thing that will fix these problems. It would require a careful, step by step analysis to get to each and every root cause. But if it were done, it would be easier to fashion a real plan that could address the things that hold us back and get on with becoming competitive. And building factories to produce things. And hiring more people to work in them.

That involves a lot of work, but why would it not be worth it?

Here's one small example of one of the nagging issues - cost of labour vs. output, or the return on that labour. There are a lot of "controls" on companies that hire people to do work for them. Everything from employment standards, minimum wages, union contracts, etc. Given that cost of labour is usually the highest single cost in a company, it's a good place to look for improvements.

An innovative thought (or an off-the-wall idea, to some)...what if the company was free to set their own employment policy? Pay rates, the whole thing. If they set up a pay system that was tied directly to the output of the job and how it fits into the company's results, they would likely end up with a some kind of measurement system that could be represented as a % of sales (or total cost - either would work).

That would remove the risk to the company of a fixed overhead burden that is there, no matter what the company produces. Incidentally, that's why layoffs of people are the first thing to be considered when the company runs into a problem. No point in cutting the paper clip expense in a downturn.

Anyway, the benefits to a system like this are many...good, productive employees would get paid more, the company could be free to make R & D and capital expansion decisions without worrying about labour costs sinking the ship (if you make nothing, you pay nothing or conversely, you makes lots and you pay lots).

To make the whole thing work right, employees would have to be treated like contributors to the business, as opposed to an expense line on the books. If each one is trained to do the job, empowered to make decisions on the job, given the necessary tools and facilities to get the job done, kept informed of the company's progress regularly, relieved of stupid control policies, and paid handsomely for all of it, it will work. In fact, if you take it to an extreme, why not treat every employee like their own boss? It would lessen the need for lots of supervisors and managers, and free up more money for more workers to produce more value for the company. Managers and supervisors don't generate value - they "manage" it, adding more money to the cost of running the company.

Now overlay that concept on top of what we have today, and you have a picture of the "worst case scenario" in terms of bad fit. Government structures have been crreated over a period of years to interfere with all aspects of running a business. Employees have generally not been trained or developed to think independently and perform with miminal supervision. Pay rates have been set that have nothing whatsoever to do with output, results, or productivity. So a complete overhaul of the whole employment system would be necessary, and that would take time. Lots of it.

The question is, is it worth it? The answer is, we might have no choice. Running to the government to "fix it" will just make things worse. That's how we got here in the first place. Governments really can't cope with this kind of thing because they make political decisions instead of objective ones.

Naysayers will oppose this kind of thinking by worrying about the nasty CEOs who will screw people for their efforts. Well, if you have a competitive and healthy employment market, the employee should have a choice as to where he/she will work. The bad companies will just die on the vine - as they should - because they won't be able to attract good employees. After all, who wants to work for a bad company anyway.

On the other side of the coin, could employees handle the responsiblities? Not currently, but a long term period of training would fix that. You can't expect a person who's never had to think about the long term impacts of his/her job on the whole company to just do an about-face, but it can be learned. People aren't naturally stupid, lazy, or selfish even if some appear that way. Those habits require time and training and some corners of industry (and government) have worked hard at it for many years. Lots of "undoing" to do.

Crazy thinking? Sure, to some. But the crazy times are here and they're only going to get crazier unless some dramatic changes take place. It's likely time for some "crazy" (innovative) thinking!
 

countryboy

Traditionally Progressive
Nov 30, 2009
3,686
39
48
BC
Uh yes - the unionized workforce. What has it done for us lately? Privitization has taken over and services are really bad for the most part. CB spoke about work ethic. Is there any left? Not in a unionized environment. I work for a union, and my husband works in a building full of union workers although he is not a part of the union. City workers get called out for a minute job that requires about 15 min. of their time and they can charge (I believe) 4 hours call out time. So everytime one of you is foolish enough to call about your trash not being picked up - try waiting to call on Monday morning (where most likely is the time you will find someone who cares anyway) and if you spot a dead animal in front of your home or down the road - call animal control so you don't help the union incur overtime expenses. I work with numerous lazy people who worked their butts off for the first 3 months to get past that "trial period" where they cannot be let go for poor job performance because after 3 months, they are protected by the union. The "old" unions did work for workers. They don't now but - old rules are in place. Rumour has it that in and around our city, Walmart is opening a Super Walmart. Soon. There is also word from the news (that doesn't state it's happening here) that Super Store is now opening new stores (I'm sure some of you have been to them already) called No Fringes. What both stores seem to be promising is lower cost products with staff being paid rock bottom wages. I like the store I work in. I like to shop there. I fear (just my thoughts) that these two stores along with Costco which all nearly surround the store I work in, will aid in closing it's unionized doors. I was told yesterday by a person of authority in the store, that Super Store plans a major campaign for their No Fringe stores. None of this matters very much to a worker like myself who won't be in the work force that much longer regardless of what happens. I look at some of the people there that do exactly the same job I do, except that because of the number of years they have been there get more than double the pay per hour that I do, get weekends off and get prime shifts but will lose their job more rapidly than everyone around them once (if it happens) a store like I am in changes to a non-union store.
I am amazed at how many people I work with that seem blissfully un-aware of what is taking place around them. I talked with one young fellow yesterday who is so angry because he has worked there for 4 years and he is now only working about 12 hrs. a week. Unfortunately, his dept. now closes at 8:00 PM as does 2 other depts. Some areas of the store are being downsized to the point of hardly being there - again a loss of staff and staff hours. Customer service should be a priority but it's lacking for two reasons. The first being the self scans which has driven vast amounts of customers away from the store and through which the amount of theft happening is phenomenal. The second being that in what employees feel is "their right", because they are not getting what they feel they deserve through the union, they don't give out the customer service they once did. A lovely busy busy store has gone to all but dead.
Maybe if we do get rid of unions and people have to actually work to keep a job or in particular, to move up the ladder, we will become a productive society. Taxes in Canada are too high for companies to keep running here and workers demands are too great for companies to hire them. This downturn in the economy allows stores like No Fringes and Walmart Superstores to take over and pay the low wages. They know that if the worker isn't working, there is always someone waiting in line.

VI - That's a pretty sad picture you've painted, and I know it's all true. Nobody's going to win when the employment/employer relationship becomes one where one side is going to win at the other's expense. Nobody wins.

That's only part of the productivity problem, but it's an important piece of the puzzle.