Linda Hasenfratz, executive chair of Canadian manufacturing giant Linamar Corp., has delivered a sharp critique of Canada's productivity narrative, pointing directly at the public sector's stagnant performance over the past quarter-century as the primary culprit behind the nation's economic challenges.
Business vs Public Sector: A Tale of Two Productivity Stories
Speaking at the University of Waterloo's Tech Horizons conference in Toronto, Hasenfratz presented compelling data showing a dramatic divergence between private and public sector productivity. The business sector has achieved approximately 50% productivity growth since the year 2000, while the non-business sector - encompassing government and not-for-profit organizations - has recorded zero growth during the same period.
"I find it kind of frustrating because those people were telling us in business that we're not productive when they're the ones who are flat like pancakes," Hasenfratz told the audience, using vivid language to emphasize her point about the public sector's performance.
Bank of Canada's 'Break the Glass' Emergency
The comments come amid growing concern about Canada's productivity trajectory, which reached crisis levels last year when Bank of Canada senior deputy governor Carolyn Rogers declared the situation a "break the glass" emergency for the country.
Rogers had warned that Canada risked fueling inflation without reversing the productivity decline, noting that the country's productivity had deteriorated from producing 88% of the value generated by the United States economy per hour in 1984 to just 71% in 2022.
Manufacturing Sector Defies Broader Productivity Trends
Hasenfratz challenged the conventional wisdom about Canadian productivity, particularly taking issue with comparisons focused exclusively on the United States. "Canada tracks pretty consistently with the rest of the world. All of us are lagging the U.S.," she noted, suggesting that the real question should be what makes American productivity exceptional rather than why Canada underperforms.
The Linamar executive pointed to sector-specific data that reveals a more nuanced picture. Canadian manufacturing has actually grown productivity at twice the rate of the United States over the past 15 years, according to Hasenfratz. Even more impressively, manufacturing investment in Canada has expanded at six times the U.S. rate since 2010.
"When people tell you Canadian business isn't investing, that's not true either," she asserted, pushing back against common criticisms of corporate Canada.
Path Forward: Redirecting Resources to Revenue-Generating Sectors
Hasenfratz argued that aggregated productivity data often obscures important sectoral differences and called for more targeted analysis. While acknowledging that some public sector functions will never generate revenue, she proposed a concrete solution to boost overall productivity.
"I think we need to dislodge a lot of people from this non-business sector and get them into revenue-generating businesses," Hasenfratz said. "That would make an enormous difference to overall Canadian productivity."
The Tech Horizons conference appearance provided a platform for one of Canada's most prominent business leaders to reframe the national conversation about productivity, shifting focus from broad criticisms of Canadian business to specific challenges in the public sector that she believes have been overlooked for decades.
