Labour Productivity Slides as Economy Turns Down

Via Canada.com

By John Morrissy, Canwest News Service

OTTAWA- Canadians were spending more time at work, yet the country's productivity fell in 2008, Statistics Canada said in a report Wednesday.

Nationally, productivity fell 0.5 per cent over the course of the year despite the volume of hours of work rising in every province.

``What you're seeing over the course of 2008 is some slacking off in capacity utilization,'' said Finn Poschmann, vice-president of research at the C.D. Howe Institute, referring to the effect of plants reducing shifts to meet lower demand.

``Productivity is closely tied to where you are in the business cycle, so as the cycle turns down, your productivity turns down.''

If, for instance, worked rises five per cent and output rises four per cent, the country would still log a one per cent decline in productivity.

Declining commodity prices weighed in, as a reduction in the value of goods produced also lowers productivity levels, Poschmann said.

As well, as prices declined, so did the volume of commodities produced, particularly in Alberta, where natural gas prices plummeted, he said.

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