Which industries have the highest labour productivity in Canada, and why does it matter?
Labour productivity measures the hourly output of a nation’s economy, or the contribution to the economy per hour of labour put in. As a function of capital intensity, labour force quality and use of advanced technologies (to name a few), labour productivity is an effective tool to measure which industries “pay the bills” for our country.
Historically we Canadians have enjoyed a high standard of living when compared to other nations across the world. While all sectors have made fair contributions to that standard of living, some have gone further than others.
A recent study by the Business Council of British Columbia (BCBC) shows various Canadian industries and their labour productivity - the amount of value they add to the economy per hour of labour worked.
Post-COVID19 our country will need to rely on all sectors to get the economy kick-started, especially those that add immense value as seen below.
Canada’s Labour Productivity by Industry (2018)
Canada’s largest contributor is mining, oil and gas extraction which generates $304 for our economy per hour of labour worked, almost double that of utilities with $183. The full list:
• Mining, oil and gas extraction - $304
• Utilities - $183
• Real estate, rental and leasing - $135
• Information and cultural industries - $99
• Finance and insurance - $76
• Manufacturing - $65
• Wholesale trade - $64
• Agriculture, forestry, fishing and hunting - $53
• Professional, scientific and technical services - $52
• Transportation and warehousing - $50
• Construction - $50
• Health Care - $45
• Administrative, support, waste management and remediation - $33
• Retail trade - $33
• Arts, entertainment and recreation - $29
• Other private services - $24
• Accommodation and food services - $22
• Educational services - $22
We Need to Support Canadian Industry
How can Canada make a fast comeback post-COVID19? By supporting all industries that contribute to our economy like the mining, oil and gas extraction sector which generate substantial income per unit worked.
Canada needs to take a step further and look for new regulatory approaches towards our wealth-generating natural resource sector post-COVID19. Our economy and environment are not mutually exclusive; both can, and should in balance to create healthy habitats but also promote prosperity for all Canadians.
Municipal, provincial and federal governments must start cutting red tape to ensure these economic engines of our country have all valves firing, much like Norway is doing with its own offshore oil sector.
We Need to Support Canadian Exports
Canada’s recovery can also be aided by considering how much wealth exports generate for our nation and focus on supplying more of our goods and services to international markets.
In 2019 for example, the energy sector – including oil and gas, coal, electricity, nuclear fuel and refined petroleum products – accounted for approximately $140 billion, or 1/5th of Canada’s export earnings.
Energy and manufacturing exports combined account for roughly 2/3rds of our country’s total export earnings every year.
Let's Supply the U.S. with More!
Moving past the COVID19 pandemic, we must look towards expanding access to markets around the world if we are to continue to enjoy our high standard of living.
Advocating for growing our crude oil exports to the world’s largest energy consumer is a good start. In 2018, the U.S. accounted for 96% of our crude oil exports but has also become one of our top oil-market competitors in recent years.
If Canada was to build pipelines to the west and east coasts, we could export our oil to other world markets at a higher price given that the U.S. would no longer have a monopoly on our product.
New pipelines like Keystone XL and Line 3 would also expand our access to refinery markets other than in the U.S. Midwest.
Peter Tertzakian with ARC Energy Research Institute said it best:
“If there’s anything this pandemic has proven to Western Canadian producers is the excessive reliance not only on the U.S., but the excessive reliance on one segment of the U.S., which is the midwestern refinery market. So, pipelines like the Keystone XL pipeline need to be built to even diversity within the U.S., down to the Gulf of Mexico.”
The U.S. currently imports millions of barrels of oil a day from countries like Brazil, Nigeria, Iraq, Saudi Arabia, Ecuador and Colombia, nations who do not have the same level of regard for human rights, regulatory transparency and environmental responsibility as Canada.
Canadians should be fighting for every barrel of the current and future global oil and gas market as we can. Because if we don’t produce it, another nation will!
We Love Canada!
Let’s recognize the importance of our industries and the significant contributions they can make in our economic recovery post-COVID19.
After all, Canada will need every single sector running at full throttle if we are to emerge from the pandemic-induced economic downturn in the best shape we can!