The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Productivity and national prosperity are important issues that economists and public policymakers have been grappling with for some time now. Productivity growth has not been one of CanadaÕs strengths, as our average annual growth in GDP per hour worked since 2001 has fallen short of most industrialized countries. This is a major concern as productivity is a key source of economic growth and competitiveness. Paul Krugman, the noted economist, once said, ÒProductivity isnÕt everything, but in the long run it is almost everything. A countryÕs ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.Ó Growth in labour productivity is sometimes misunderstood to imply working longer hours or increasing the number of days worked. This is not the case. Indeed, it is more accurately described as working smarter. Our poor track record on productivity is an important reason why CanadaÕs GDP per capita lags way behind the US. The so-called prosperity gap between Canada and the US has grown significantly over time and hit almost $9,000 per capita in 2006. Reducing this gap by finding more efficient ways to produce the same level of economic output with the same amount of effort is a laudable goal that all Canadians should be able to get behind. But, there is another part of CanadaÕs prosperity gap with the US that is not due to productivity. It is, however, directly linked to how much we work. In fact, the Institute for Competitiveness and Prosperity has estimated that a significant chunk Ð approximately $4,500 Ð of the prosperity gap is due to working less. Canadians take more vacation time than Americans and work shorter weeks. While it may be true that working more could significantly increase our standard of living as measured by GDP per capita, I believe in the idea that working less makes us happier and contributes to a higher quality of life. After all, many of the great things in life are not captured in the bottom line of GDP per capita. One last thing, working less should not be confused with laziness. There is no logical contradiction between working fewer hours and taking vacation time, and being a productive worker while on the job. And, who knows, perhaps working less and taking more vacation time actually makes a positive contribution to our productivity when we are at work.
