The University of Alberta’s Alberta Centre for Labour Market Research (ACLMR) will play a major role in a $6-million federal project to study Canada’s productivity crisis.
This funding from the Social Sciences and Humanities Research Council is the largest single grant in the council’s history, and with the longest timeline at over 15 years, more than double any previous award on both accounts. It additionally brings together 30 researchers across 15 organizations, says Joseph Marchand, ACLMR’s founding director.
Trevor Tombe of the University of Calgary will lead the national partnership, and the ACLMR team will be responsible for the human capital and labour market research. The researchers will investigate how labour market policies and employment can drive productivity growth.
“It’s the creation of a network that will get people in the East talking to people in the West,” says Marchand. “We are building on a research strength that might have been here all along, but until now, we weren’t doing it together. Now, it’s a nationwide effort.”
Canada’s productivity has never been strong, and has never been at parity with that of the United States, since Confederation, although it has come close a few times, says Marchand. In a recent Globe and Mail article, economist Charles Lammam points out that in the past decade alone, performance has been lacklustre.
According to the OECD, Canadian labour productivity grew at just 0.3 per cent a year on average between 2014 and 2024 — less than a third of the American rate — with GDP per hour worked falling to 60 per cent of the U.S. level from 67 per cent.
“And the business investment crisis driving that gap has only deepened,” writes Lammam.
Some of ACLMR’s planned research includes exploring how technological change — such as the growth of artificial intelligence — is shaping the demand for skills, says Marchand, and how firm-sponsored training and reskilling could help meet that demand.
The centre will also look at the use of capital investments and tax credits to stimulate regional employment and earnings, employment pathways and entrepreneurship for immigrant populations, and designing retirement financing to increase labour force participation among older workers.
Another angle that could get Canada to higher productivity is greater interprovincial trade, or the lessening of interprovincial trade barriers. However, the biggest challenge will be in implementing the network’s policy recommendations, says Marchand.
Marchand also shares Lammam’s concerns about producing study after study, only to see policy-makers ignore them: “We have known for decades what drives productivity,” writes Lammam. “The evidence has been sitting on the shelf for years.”
Any meaningful increase in productivity will have to come collectively from all Canadians, says Marchand.
“Remember that sinking feeling that Canadians had in watching our national hockey teams lose to the U.S. at the Olympics?” It’s an apt metaphor for how we should all feel about productivity in this country, he says.
“We can each do something about losing to the Americans, in the productivity game at least. And it starts by each of us doing what we do best and doing more of it.”
“Canada needs to be ready to change, and want to change, for this to happen.”
He adds that Canada ranks among the top in the world for educational attainment, giving Canada a potential comparative advantage in closing the productivity gap with the U.S.
Robert Wood, dean of the Faculty of Arts, says ACLMR’s success in securing the project grant “reflects the U of A’s outstanding SSHRC record and elevation to second place in the Maclean’s rankings for funding in the humanities and social sciences,” adding that the new partnership is perfectly positioned to grasp “the complex, cross-sectoral and long-term problem of labour productivity.”