BUSINESS
11/16/2011 11:59 EST

Canada's Productivity Lag Cut $7,500 From Incomes, Conference Board Says

alamy

OTTAWA - A new report argues that Canadians are paying a huge price for not being as productive as their U.S. counterparts.

The Conference Board says per capita output would be $8,500 a year higher, and disposable income $7,500 more, if Canada had matched U.S. productivity gains between 1988 and 2008.

The Ottawa-based economic think tank says it hopes the study will drive home the point of the importance of improving Canada's lagging productivity.

As well, corporate profits could be 40 per cent higher and government revenues 31 per cent more.

During the 20 year period studied, Canada's productivity increased by an average 1.4 per cent a year, compared to 2.2 per cent in the U.S.

As a result, Americans were able to grow $13,000 richer every year than Canadians in terms of purchasing power.

The think-tank says that if Canada had kept up in its productivity, the gap would have been less than $7,000.

The Conference Board says its previous research suggests that while Canada's labour quality has been relatively stable, capital investment by firms in productivity-enhancing machinery and equipment have lagged the U.S.