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Canadians even less productive than thought over past 30 years

Statistics Canada says the largest impact to its revisions on productivity was in the years 1981 to 1990, when productivity growth was revised down by 0.3 per cent per year – to 1 per cent from 1.3 per cent.

Kevin Van Paassen/The Globe and Mail

Canadian workers are even less productive than originally thought – 0.1 per cent per year less productive, to be exact.

That's the conclusion of Statistics Canada after a series of recent revisions to more than 30 years of key economic data as the agency works to bring its calculations in line with international norms.

The result means business sector labour productivity was an average of 0.1 per cent lower per year from 1981 to the second quarter of this year.

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The largest impact was in the years 1981 to 1990, when productivity growth was revised down by 0.3 per cent per year – to 1 per cent from 1.3 per cent.

Canada's lagging productivity, particularly compared to the United States, has been a constant source of angst for policy makers and economists. In spite of intense efforts to boost competitiveness -- through policies such as free trade, deregulation, lower taxes and heavy investments in research -- the gap has persisted, and even widened in recent years.

Royal Bank of Canada economist Paul Ferley said the productivity revisions could also affect the Bank of Canada's calculation of the current output gap and possibly delay expected interest rate hikes.

Productivity is a measure of output per hours worked. Canada ranks in the middle of the pack among members of the Organization for Economic Co-operation and Development.

The latest revisions mean the Canada-U.S. gap is now wider – 0.8 percentage points per year from 1981 to 2012, up from 0.7 per cent.

Again, the revisions mainly affect the gap prior to 1990. The productivity gap remains largely unchanged in subsequent years. The average spread was 0.1 per cent in the 1990s and 1.5 per cent from 2000 to 2012.

On a positive note, productivity now looks better from 2009 to 2012 – 1.1 per cent per year versus 0.9 per cent.

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Statscan's revisions data touch everything from gross domestic product to provincial economic accounts and the balance of payments. New GDP data was released last week, showing that the last recession was even deeper than thought.

The changes align the Canadian system with 2009 international standards set out by bodies like the United Nations and the International Monetary Fund. The U.S. will release its changes based on the new standards next year.

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