Linda Hasenfratz, executive chair of Linamar Corp., took aim at those in Ottawa who criticize Canada’s productivity, telling a Toronto audience Monday that it is the public sector’s flat record over the past 25 years that is pulling productivity down.
“The business sector (has) grown productivity about 50 per cent since roughly 2000 (but) the non business sector — this is government and not-for-profit businesses and workers — in those areas … productivity has been absolutely flat, zero growth, not one bit of productivity,” she said at the University of Waterloo’s Tech Horizons conference.
“I find it kind of frustrating because those people were telling us in business that we’re not productive when they’re the ones who are flat like pancakes.”
Concern over Canada’s lagging productivity was thrown into high gear last year when Bank of Canada senior deputy Carolyn Rogers declared it was a “break the glass” emergency for the country. She warned that the country risked stoking inflation if it did not reverse the trend, noting that Canada’s productivity had fallen from a “not great” record of producing 88 per cent of the value generated by the United States economy per hour in 1984 to just 71 per cent in 2022.
Hasenfratz countered that Canadian policymakers make a mistake when they compare the country’s productivity growth solely to the United States.
“Canada tracks pretty consistently with the rest of the world. All of us are lagging the U.S.,” she said, suggesting that the real reason to focus on the United States should be to figure out what they are doing right that is creating a gap with the rest of the developed world.
“Personally, I think it’s the tech sector,” Hasenfratz said. “There’s huge revenue (and) not a lot of employment. And I feel like that’s probably a big factor, but I haven’t dissected it.”
She has other beefs with criticism of Canada’s productivity, including that the analysis often doesn’t focus on sector differences when it comes to performance.
“Some sectors are actually growing productivity much faster than the U.S., and manufacturing happens to be one of them,” she said. “We have grown productivity in Canada at twice the rate of the U.S. over the last 15 years.”
Investment in manufacturing has also grown since 2010, she said.
“We’ve grown at six times the rate of the U.S. in terms of investing in manufacturing. So when people tell you Canadian business isn’t investing, that’s not true either,” she said.
Aggregating data tends to render it useless, Hasenfratz said, adding that even if Canada’s non-business sector remains part of the analysis, there is room for improvement despite some necessary functions that will never generate revenue.
“I think we need to dislodge a lot of people from this non-business sector and get them into revenue generating businesses,” she said. “That would make an enormous difference to overall Canadian productivity.”
• Email: bshecter@postmedia.com