Hours worked and labour productivity in the provinces and territories

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Labour productivity rose in four provinces and one territory in 2008, led by Saskatchewan with a gain of 1.8% and Nunavut with an increase of 9.5%. The largest productivity declines were in British Columbia and in the Northwest Territories.

Nationally, productivity declined 0.5% in 2008, after rising 0.5% in 2007. This occurred as the growth in real gross domestic product (GDP) decelerated significantly. At the same time, hours worked continued to rise, albeit at about half the pace as in the previous two years.

In terms of employment, the volume of hours worked rose in every province. However, Saskatchewan, Manitoba, Nova Scotia and Prince Edward Island were the only provinces in which the growth in economic output outpaced growth in the volume of hours worked.

At the national level, productivity in the goods-producing sector declined 2.2%, the first decline in four years. In the services sector, it rose 0.4%.

The continued expansion of the job market for most of the year led to a 3.7% increase in hourly compensation at the national level in 2008, slower than the 4.0% gain in 2007.

Alberta posted the strongest provincial increase in hourly compensation (+7.0%) followed by Saskatchewan (+5.0%) and Manitoba (+4.3%). These three provinces posted the strongest gains in jobs among all provinces in 2008.

Atlantic provinces

In Nova Scotia, productivity rose 0.9% in 2008, almost twice the 0.5% gain in 2007. Led by a rise in personal and public expenditures, real GDP increased 2.2%, a faster pace than the 1.3% increase in hours worked.

In Prince Edward Island, productivity edged up 0.2% after a sharp increase of 3.9% in 2007. The financial and construction sectors contributed to this slowdown.

In New Brunswick, productivity fell 0.6%, near the national average. The volume of hours worked rose 0.7%, but economic output was almost flat because of weak exports.

Productivity fell 1.6% in Newfoundland and Labrador; it had led all the provinces with a 9.4% gain in 2007. The volume of hours worked rose 1.5% in 2008, but production declined for the first time since 2004 because of a strong drop in oil extraction.

Central Canada

Labour productivity in Ontario fell 0.6% in 2008, similar to the national average. This was the first contraction since 2003, when the Canadian dollar started to appreciate relative to its US counterpart. The drop was due mainly to productivity declines in three sectors: manufacturing; construction; and finance, insurance, real estate and leasing.

Economic output in Ontario fell 0.2% in 2008 because of weak demand for exports, particularly in the United States. At the same time, the volume of hours worked increased 0.3%. In Ontario's manufacturing sector, productivity fell 1.8%, the first decline since 2004. This occurred as a 7.4% decline in production outpaced the drop in the volume of hours, despite heavy layoffs.

In Quebec, productivity fell 0.2%, the first decline since 2004. Growth in hours worked accelerated, while the growth of economic output slowed as export demand fell for forest products, furnishings and textiles.

Hourly compensation in Quebec rose 1.3%, following an unusually strong payroll increase in 2007 (+4.9%) that was due to a large pay equity settlement for provincial public servants. Excluding the impact of these special payments, Quebec's hourly wages would have risen 2.3% in 2008 and 3.8% in 2007.

Western provinces

In Saskatchewan, growth in real GDP and hours worked both accelerated, posting the strongest increases of all the provinces. The volume of hours worked rose 2.7%, in the wake of strong net in-migration. The sharpest gains in hours worked were in construction and manufacturing.

Manitoba had a productivity gain of 0.8%, third highest among the provinces. Real GDP in Manitoba rose 2.5%, while the volume of hours worked rose 1.7%, almost the same rate as in 2007. The sectors that made the largest contribution to the increase in hours worked were mining, oil and gas, utilities, construction, retail trade and finance, insurance and real estate.

Productivity fell for a second consecutive year in both Alberta and British Columbia. In Alberta, it dropped 1.4% as real GDP declined mostly as a result of a reduction in oil and gas production. Hours worked increased 1.2% in 2008, well below the previous year, due to slower growth in several sectors, including construction, wholesale and transportation.

In British Columbia, labour productivity declined 1.7% in 2008, the largest drop among the provinces. Declines occurred mainly in the mining, manufacturing, wholesale and financial sectors. Output fell 0.1% in 2008, while hours worked rose by 1.6%, less than half the growth of 2007. The forestry, manufacturing and retail sectors accounted for much of the slowdown in hours worked.

The territories

Following strong increases in 2007, labour productivity did not grow in the Yukon and declined in the Northwest Territories. In Nunavut, it rose 9.5%, the strongest rate in the country.

As mining extraction intensified, output in the Yukon rose 5.5%, maintaining the pace started in 2004. This was accompanied by a similar increase in hours worked. Growth of hourly compensation slowed compared with the preceding four years.

In the Northwest Territories, labour productivity declined 2.9%, after posting a strong increase in 2007. This was a result of a sharp drop in diamond mining extraction because of weak global demand. Hours worked fell 3.4%.

In Nunavut, labour productivity returned to its 2004 level after declining in 2006 and 2007. Output was up, although at a slower rate than in the previous year, with a surge in construction at the Meadowbank mine site. Hours worked fell after rising strongly in 2006 and 2007.

Available on CANSIM: table 383-0009.

Definitions, data sources and methods: survey number 5103.

For more information, or to enquire about the concepts, methods or data quality, contact Jean-Pierre Maynard (613-951-3654; fax: 613-951-3618; productivity.measures@statcan.gc.ca), Income and Expenditure Accounts Division.