Ottawa Looking for Solutions to Increase Productivity and Improve Standard of Living in Economy

Treasury Board President Anita Anand has announced the establishment of a working group by the federal government to investigate low economic productivity and a stagnating standard of living.

The working group, as revealed by Anand on August 27 during the Liberal cabinet retreat in Halifax, will consist of experts from both the private and public sectors, as well as representatives from across the country. Details on the composition, timetables, and objectives of the working group are yet to be provided, with unions also set to be involved.

Anand emphasized the need for improvement in GDP per capita and productivity in Canada, despite the country’s strong economic indicators such as a triple-A credit rating and low net debt to GDP ratio.

Canada’s net debt-to-GDP ratio ranks favorably in the G7, surpassing countries like the U.S. and the UK. However, when comparing gross government debt as a percentage of GDP, Canada lags behind. GDP per capita data shows that Canada’s growth has stagnated in recent years compared to countries like the U.S. and Euro area member countries.

Senior Deputy Governor Carolyn Rogers of the Bank of Canada has highlighted the urgency of addressing Canada’s poor productivity record, citing it as an emergency. Investing in fields like artificial intelligence and streamlining processes to improve efficiency are some initiatives the government is taking to address the productivity issue.

Anand also mentioned the impact of rapid population growth on the muted growth of GDP per capita in recent years. Economists have referred to Canada being in a “population trap,” which hinders the increase in GDP per capita due to a fast-growing population.

Immigration has significantly contributed to Canada’s economic growth, but Anand stressed the need to reevaluate immigration policies to ensure the optimal levels of immigrants. Recent changes to programs like the Temporary Foreign Workers Program and international student visas aim to manage immigration numbers effectively.

The government’s target of welcoming 500,000 new permanent residents in 2025 and 2026 is under close scrutiny to align with the current economic context.