Canada's productivity crisis has found a vocal critic in Linda Hasenfratz, executive chair of manufacturing giant Linamar Corp., who delivered a stark assessment of the nation's economic challenges at a Toronto conference this week.
Public Sector Performance Under Fire
Speaking at the University of Waterloo's Tech Horizons conference on Monday, Hasenfratz directed sharp criticism toward Ottawa policymakers who frequently point fingers at Canadian businesses for productivity shortcomings. She presented compelling data showing that while the business sector has achieved approximately 50 percent productivity growth since 2000, the non-business sector encompassing government and not-for-profit organizations has recorded zero growth over the same period.
"The business sector has grown productivity about 50 percent since roughly 2000, but the non-business sector—this is government and not-for-profit businesses and workers—in those areas productivity has been absolutely flat, zero growth, not one bit of productivity," Hasenfratz told the audience.
The manufacturing leader expressed particular frustration with public sector critics who admonish private enterprise while their own performance remains stagnant. "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," she remarked.
Canada's Productivity Emergency
The concern over Canada's productivity gap reached emergency levels last year when Bank of Canada senior deputy governor Carolyn Rogers described the situation as a "break the glass" emergency for the nation. Rogers warned that failing to reverse the trend could exacerbate inflation, noting that Canada's productivity had deteriorated from producing 88 percent of the value generated by the United States economy per hour in 1984 to just 71 percent in 2022.
Hasenfratz challenged the conventional wisdom of comparing Canada exclusively to the United States, arguing that this perspective overlooks important context. "Canada tracks pretty consistently with the rest of the world. All of us are lagging the U.S.," she observed, suggesting that the more productive approach would be to study what makes American productivity exceptional rather than focusing on Canada's relative underperformance.
Manufacturing Sector Shines Amid Criticism
Contrary to popular narrative, Hasenfratz highlighted that certain Canadian sectors, particularly manufacturing, have outperformed their American counterparts. "Some sectors are actually growing productivity much faster than the U.S., and manufacturing happens to be one of them," she revealed. "We have grown productivity in Canada at twice the rate of the U.S. over the last 15 years."
The investment picture in Canadian manufacturing also tells a different story from the common criticism that businesses aren't investing sufficiently. According to Hasenfratz, manufacturing investment has grown at six times the rate of the United States since 2010, challenging the notion that Canadian businesses are holding back on capital expenditures.
Hasenfratz criticized the practice of aggregating productivity data across all sectors, arguing that it obscures important sector-specific performances and makes the information essentially useless for targeted policy improvements.
Looking toward solutions, the Linamar executive proposed a strategic shift in workforce allocation. "I think we need to dislodge a lot of people from this non-business sector and get them into revenue generating businesses," she suggested. "That would make an enormous difference to overall Canadian productivity."
The comments come at a critical time for Canada's economic policy discussions, as policymakers grapple with persistent productivity challenges that threaten the nation's long-term economic competitiveness and standard of living.
