Productivity and the declining currency are linked and important issues for Toronto. In fact productivity and our declining dollar might be the two most serious economic issues confronting Toronto, and the most complex to solve. Resolving our declining productivity involves all levels of government and a change to the statist, corporatist culture that permeates Canadian business and politics. However Toronto with a preponderate economic influence can have enormous leverage in enacting needed changes with all parties involved.

In mind that in general Canadian businesses are adding workers and not technological improvements. This has a severe long term consequence for our productivity. We are replacing technology and capital investment with cheaper labor. This is not a sustainable long term strategy to build wealth.

What is Productivity ?
Productivity is the measure of the amount of labor and other inputs it takes to produce a given unit of output. The more efficiently and flawlessly a firm can produce a unit of output the greater the productivity level and the greater the potential aggregate output. Capital investment, technology, skilled labor, quality and energy sources are all components which comprise the inputs in productivity.

Why is Productivity a Problem in Canada ?
Canada’s rate of productivity is about 50 % of that of the United States and lags even that of Europe. This means that in the future Canada will produce less wealth and its enterprises correspondingly less profit than its trading partners. This is the most serious economic problem facing Toronto and it is exacerbated by a damaged dollar. A low dollar impedes importation of needed capital and technology and further compounds productivity issues. In general the country keeps getting poorer in relations with nations who possess higher productivity rates.

Some Facts:

- Canadians earn 68.4 % of their peers in the States (down from 78 % 10 years ago)

- Lower incomes reflect lower productivity rates.

- US productivity grows at about 2.5 % per annum, while Canadian rates are at about 1.2%.

- Canadian workers on average can only produce about 78 % of what US workers produce or about U$60,163.