If Canada wants to re-examine how it measures productivity, Ontario Tech University political science professor Timothy MacNeill suggests starting not with numbers—but with questions. 

“You have to come in touch with your cultural ideas as a nation,” said MacNeill. “What do we want to produce here? Is it just gross domestic product, or is it a clean environment and a high gross domestic product? Is it well-being? Is it quality of life?”

Bank of Canada senior deputy governor Carolyn Rogers has described Canada’s productivity problem as an emergency, saying in a speech last year that it’s “time to break the glass” to fix it. But many academics—particularly feminist and decolonial scholars—have long-standing criticisms of how exactly we measure productivity. They argue incorporating factors like equality, environmental degradation and unpaid care work—as well as intangible assets such as data and artistic creations—might lead to very different conclusions.

Canadian economist Armine Yalnizyan said it’s time to update the way we measure and think about productivity.

“We’re not in the Industrial Revolution anymore. We’re in the digital revolution,” she said. “They’re just using 1970s and 1980s logic to explain why we’re doing poorly today. It’s a new world.”

Statistics Canada and other countries have for decades calculated economic productivity using the same three inputs: labour, capital and gross domestic product, or GDP. Labour productivity measures how much economic output is created per worker, while capital productivity measures how efficiently physical capital, such as office equipment, warehouse supplies and vehicles, is being put to work to produce goods and services.

Canada’s productivity has been stagnant or falling for years, in contrast with other advanced economies that have made productivity gains since the pandemic. Economists are concerned this will cause our standard of living to deteriorate through stagnant wages and higher taxes.

How to measure a country’s economic growth and standard of living is a matter of debate, however. In 1988, New Zealand academic and former politician Marilyn Waring’s book If Women Counted popularized the idea that GDP is a poor measure of well-being because it doesn’t include such factors as unpaid care work disproportionately performed by women, safe drinking water and a pollution-free environment. 

Women’s groups spent years pressuring Statistics Canada to measure the value of unpaid care work and its contribution to the economy. Inspired by renewed attention on the issue during the COVID-19 pandemic, Statistics Canada released a 2022 study that valued unpaid household work between $516.9 billion and $860.2 billion, or between 25.2 and 37.2 per cent of the country’s GDP—more than manufacturing, wholesale and retail industries combined. 

Carter Mann, a spokesperson for Statistics Canada, said in an email that the organization does not include the value of unpaid household work in its official GDP statistics because it must follow the international standard, called the System of National Accounts, which excludes it. Adding this information in the international standard could make GDP data less useful for policymaking and economic analysis because unpaid care work is isolated from traditional markets and hard to measure accurately, he said.

On the other hand, while environmental degradation isn’t captured in GDP, some of its effects are—in the form of lower land valuations, capital destruction and changes to insurance, he said. Mann said “Canada has been a leader” in valuing natural resource wealth and has proposed the System of National Accounts add data measuring the depletion of natural resources during the process of doing business.

Robert Fay, a senior fellow at Waterloo’s Centre for International Governance Innovation who studies the digital economy, said Canada has also been a leader in studying how to value intangible assets, such as data, original artistic creations and worker knowledge. These assets are also excluded from official GDP calculations, leading some academics to question whether their omission could partially explain the “productivity puzzle,” in which wealthy economies have seen slumping productivity in recent decades. 

Fay is a skeptic of the idea, however. “We can’t remeasure our way out of our productivity problem in Canada,” he said. “It is true that there are intangibles that are not included in our measures of output, and they should be. But my guess is that even if they were included, it wouldn’t change our productivity picture.”

Yalnizyan is not so sure. She noted a disproportionate number of countries with high GDP per capita, such as Luxembourg and Ireland, are known tax havens—not the type of economic growth to which she thinks Canada should aspire. But she pointed out another common trait among countries on the list, which include Denmark, Norway and Sweden: they often have strong social safety nets.

Economists sometimes propose more capital investments, research and development spending or a favourable environment for tech startups to address Canada’s productivity problem. But Yalnizyan said she thinks Canada would see better results by trying to solve its housing and health-care crises.

“Until we fix those two things, housing and health, we will have a productivity problem that is far deeper than how much capital are we investing in oil and gas or manufacturing or data scraping,” she said. “And it will last for much, much longer. It will scar the economy.”

MacNeill, the Ontario Tech professor, has worked with the North Shore Tribal Council on the northern coast of Lake Huron on economic development projects, including delivering income assistance and conducting a labour market study. He and his colleagues flipped the traditional order of business around, surveying the community and asking what would make their lives better rather than relying on traditional metrics like unemployment rates and income to determine success. They determined employers highly valued Indigenous knowledge and care work, suggesting community well-being could be improved by training locals in these areas and introducing workers with these skills to employers seeking them—findings that wouldn’t have come from a traditional study.

“Ask the people who really have skin in the game—that is, the communities—what their values are,” he said. “You have to take equity into account when you’re talking about productivity.”