Labour productivity measures the amount of goods and services produced by one hour of labor. This captures how efficiently goods and services are produced. Labour productivity is driven by factors like human capital, investment, innovation, business, and policy environments as well as other global forces. The burden to improving productivity falls on governments and on individual firms and their management.
Nova Scotia continued to have the second lowest labour productivity among the ten provinces in 2019. Labour productivity in Nova Scotia was lower than the national level in all industries, except for three areas in the services sector: information and cultural industries; finance, insurance and holding companies; and educational services.
Labour productivity is calculated by dividing the real value added by the estimated number of hours worked. Therefore, provinces such as Alberta, Saskatchewan, and Newfoundland and Labrador that have high value-added because resource and/or capital-intensive industries tend to have high levels of labour productivity and drive up the national average.
It is also important to look at productivity growth rates due to resource and capital intensity differences among provinces. The chart below shows that Nova Scotia had the one of the top three productivity growth rates among the provinces in the 2015-2019 period. Prince Edward Island and Newfoundland and Labrador had the highest levels of labour productivity growth during this period, whereas Alberta, Manitoba and British Columbia had the lowest. However, during the previous 5-year period (2009-2014), Prince Edward Island and Newfoundland and Labrador had the lowest labour productivity growth.
Examining growth on an annual basis, the data demonstrate that in Atlantic Canada 2019 had improved labour productivity growth substantially from the previous year when all four provinces experienced either negative or no growth. Productivity growth in 2019 was positive for most provinces; Nova Scotia, New Brunswick and the Province of Quebec hit their highest annual growth rates since 2015. Nova Scotia’s 2.6percent increase in labour productivity was the result of a 2.4percent growth in real value added as total hours worked in the economy declined 0.2 percent.