Statistics Canada reports that labour productivity has been slowed down due to lack of investment.

Business leaders are expressing concerns over the capital gains tax hike proposed in the latest budget, stating that it will only worsen the already declining productivity growth in Canada. According to a recent study by Statistics Canada, the country’s labour productivity growth rate has been on a downward trend for the past two decades, with a significant slowdown observed in recent years.

The study revealed that labour productivity grew at a rate of 1.8% per year between 1980 and 2000 but slowed down to around 0.8% from 2015 to 2022. The decline in productivity has been attributed to a lack of innovation and investments in businesses. The contribution of business investments to labour productivity fell from 0.9% during the 1980-2015 period to 0.4% during the 2015-2022 period.

Furthermore, the study highlighted a decline in innovation rates over the past two decades compared to the 1980s. The contribution of multifactor productivity growth to labour productivity also decreased from 0.5% per year between 1980 and 2000 to 0.1% from 2015 to 2022.

Business leaders have criticized the government’s decision to increase the capital gains tax, stating that it will deter new investments and job creation. They argue that attracting investments is crucial to boosting productivity and economic growth in Canada.

Overall, the concerns raised by business leaders and the findings of the study highlight the urgent need for policies that promote innovation, investments, and productivity growth to ensure Canada’s economic competitiveness and prosperity in the long run.