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 2020. 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; 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 2016-2020 period. Prince Edward Island and Newfoundland and Labrador also had the highest levels of labour productivity growth during this period, whereas Manitoba, Saskatchewan and New Brunswick had the lowest. However, during the previous 5-year period (2011-2015), Prince Edward Island and Newfoundland and Labrador had negative labour productivity growth.
Examining growth on an annual basis from 2016 to 2020, the data demonstrate that Atlantic Canada experienced labour productivity growth except for 2018. In 2019, the productivity growth in four Atlantic provinces all significantly exceeded the national average (0.7%).
The year of 2020 witnessed a surge in the labour productivity across the country. However, this can mostly be attributed to the significant loss of low-productivity jobs to multiple COVID pandemic shutdowns. The total hours worked in 2020 dropped by 11% from last year, disproportionally impacting the low-wage jobs in accommodation & food services and wholesale & retail trades.