What Is Productivity?

From the standpoint of individual workers, productivity is a measure of how much we produce, or get done, for every hour we work. When we’re more productive, we can do more, and earn more, for every hour we work.

We become more productive when we work smarter and get things done more efficiently, for example by using the latest machinery and software, not by working more hours. In fact, when we have to work more hours to create the same value, we’re less productive, not more.

Ultimately, our goal is to produce as much as possible for each hour we work so we can earn more by working the same or fewer hours. Moreover, this leaves us more time to spend with our families and do things we enjoy.

Productivity describes the value of what an economy, in this case Manitoba, is producing, when compared to what it puts in. Productivity is driven by a combination of several factors:

  • Capital intensity, which reflects workers’ access to tangible capital assets, like buildings and machinery, as well as access to intangible assets, like intellectual property and software.
  • Labour composition, which reflects the skills and knowledge of the workforce.
  • Multifactor productivity, which refers to how efficiently labour and capital work together to produce outputs.

Increasing productivity is essential to economic growth and for improving living standards over time. Sustained productivity growth is a key indicator of economic success – as seen in countries like Norway, which enjoy both high productivity and a high standard of living. Growing productivity also helps to keep inflation in check because it leads to a greater supply of goods and allows companies to better absorb costs, both of which help to stabilize prices.

Increasing productivity doesn’t mean working harder or longer but rather applying continually improved technologies and management practices to grow the economy, increase wages, improve workplace safety, and create more good jobs.


What the Bank of Canada is saying about Productivity

“Canada has seen no productivity growth in recent years. And over the past four decades, we have actually slipped significantly compared with some other countries. In fact, relative to the United States, among G7 countries we are now second only to Italy when it comes to productivity decline.

This is important because a number of factors threaten to drive inflation persistently higher in the future. These include global trade tensions, changing demographics and the economic impacts of climate change. We need to ramp up our productivity now, as a buffer against these and other forces down the line.”

-The Bank of Canada, “The Productivity Problem”


An Economic Definition of Productivity

“Productivity measures the economic value of a good or service produced against the amount of work it took to produce it. Measuring productivity requires an estimate of both the total value of an economy or industry and the total number of hours the employees in that economy or industry worked. The ratio between these is then reduced to its simplest form: the number of dollars of value produced for a single hour of work.”

-The Bank of Canada, “How high productivity helps fight inflation”