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Manitoba No. 2 in labour-productivity gains

Published by CME Manitoba on December 11, 2014

This article appeared in the Winnipeg Free Press on December 12, 2014
By: Murray McNeill

FOR the second year in row, Manitoba's business sector was one of the country's leaders in labour-productivity gains in 2013, which is usually a sign of a healthy economy.

Statistics Canada figures released Thursday show business labour productivity here grew by three per cent last year. That was 21/2 times the national average increase of 1.2 per cent and was second only to Newfoundland and Labrador's 8.4 per cent gain.

However, Newfoundland and Labrador also had the biggest decline in labour productivity in 2012, at 10.8 per cent, while Manitoba had the biggest increase at 2.1 per cent.

Labour productivity is a measure of real gross domestic product (GDP) per hour worked.

Productivity gains occur when the production of goods and services grows faster than the volume of work dedicated to their production.

Statistics Canada said business real GDP in Manitoba grew by 2.6 per cent last year, while the volume of hours worked edged down 0.3 per cent.

Wilf Falk, the province's chief statistician, said last year's three per cent growth was the highest annual growth rate for Manitoba in at least six years.

It also marked the fifth time in six years Manitoba's growth rate exceeded Canada's rate, he said.

Since 2007, Manitoba's cumulative increase of 12.6 per cent is nearly triple the national rate of 4.3 per cent, and the highest of any province.

Falk said solid labour-productivity growth is good news not only for the business sector, but for workers. If a company's productivity is up, that usually means it's in a better position to consider wage increases for its workers.

"If they're doing less and being less productive, there would be really no incentive to increase the cost of labour," he added.

University of Manitoba economist John McCallum also described the productivity numbers as welcome news for Manitobans.

"A good performance on productivity ranks right up there with a good performance on job creation as the two things you would most like to see... in your economy," he said.

He explained job growth plus productivity growth usually translates into economic growth, "so to have Manitoba growing productivity as much as it has is really good news."

He said it's encouraging to see some of the strongest productivity gains last year were within the manufacturing sector, where productivity was up 7.4 per cent from 2012.

He noted Manitoba manufacturers account for the bulk of the province's exports.

"The fact that sector has shown that kind of (productivity) growth, combined with a weaker Canadian dollar and a growing U.S. economy -- that's a really nice situation."

Ron Koslowsky, vice-president of the Manitoba division of the Canadian Manufacturers and Exporters, said all of the money local manufacturers have been investing in new technologies and in finding ways to reduce waste within their operations is starting to pay dividends in terms of productivity improvements.

"That's clearly a big part of that."

He said innovation, "or how can you build a better mousetrap, so to speak," has the potential to have an even bigger impact on productivity than either of those other two things.

"There are a few companies that are definitely looking into that, but we haven't seen many that have jumped into that in a big way," he added. "That's the next frontier for us."

The Statistics Canada figures show the goods-producing sector, which includes industries such as manufacturing, agriculture, mining and utilities, saw the biggest labour-productivity gains last year, at four per cent. The services sector's increase was two per cent.

Goods-producing businesses also posted a 0.7 per cent decrease in hours worked, the agency said, "while service-producing businesses saw virtually no change."

Prince Edward Island, New Brunswick and Ontario were the only provinces that didn't see an increase in business labour productivity last year.

All three territories -- Nunavut, Yukon and the Northwest Territories -- saw their productivity decline for the third year in a row.

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