Labour productivity measures the amount of goods and services produced by one hour of labor; it measures how efficiently goods and services are produced. Labour productivity is driven by several factors such as: human capital, investment, innovation, business and policy environment as well as other global forces. The burden to improving productivity falls on not just governments, but on individual firms and their management.
Nova Scotia continued to have the second lowest labour productivity among the ten provinces in 2018. Labour productivity in Nova Scotia was lower than the national level in all industries, except for two areas in the services sector; information & cultural industries 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 as a result of being resource and/or capital intensive tend to have high levels of labour productivity and drive up the national average.
Due to resource and capital intensity differences among provinces, it is also important to look at productivity growth rates. The chart below shows that Nova Scotia had the weakest productivity growth among the provinces in the 2014-2018 period, whereas Newfoundland and Labrador had the highest level of labour productivity growth for the same period. However, during the previous 5-year period, Newfoundland and Labrador had the lowest labour productivity growth.
Examining growth on an annual basis, the data demonstrate that in Atlantic Canada 2018 was a poor year for labour productivity growth; all four provinces experienced either negative or no growth. Between 2014 and 2017 the average annual growth in labour productivity was positive in Nova Scotia (1.7%), New Brunswick (1.2%), Ontario (1.8%) and British Columbia (1.6%) all had positive labour productivity growth.