About the productivity accounts

The Canadian productivity accounts produce and disseminate estimates of labour productivity, multifactor productivity and related measures for the Canadian business sector and its main components (sectors and industries). Each estimate includes a comparison of output growth with one or more inputs, yet each one is estimated by a different methodology. In addition, the estimates are periodically compared with the estimates for other countries, notably the United States.

Productivity measures

Productivity measures how efficiently inputs are used in production. Productivity measures can apply to a single input, such as output per hour worked (labour productivity) or to the combined inputs of labour and capital (multifactor productivity).

Labour productivity, measured by output per hour worked, is an indicator of how efficiently labour is used in production. It is influenced by a number of factors: capital intensity per hour worked, labour quality in terms of education and experience as well as a number of factors associated with technological progress. Multifactor productivity is a complete measure of the efficiency of all inputs (labour and capital) used in production. It reflects the impact of economies of scale, improvements in the organization of production and technological change.
Summary table

Importance of productivity measures

Over the long term, productivity growth helps improve standards of living (per capita income, wealth, etc.) and business competitiveness. For more information see: Productivity Performance in Canada, 1961 to 2005.

Quarterly measures of labour productivity should be useful for analyzing the short-term relationship between variations in output, employment, compensation and hours worked. Annual measures of labour productivity are helpful in identifying sources of economic growth and computing unit labour costs.

Annual measures of multifactor productivity are of value in quantifying the overall efficiency of all inputs.

To provide a more complete picture of the economy, productivity measures must be combined with a number of other measures: output growth, employment growth, investment, profitability and unemployment.

Type of output measure

Various measures of output and inputs can be used in calculating productivity: expenditure-based GDP for the aggregate business sector, value added for major sectors and industries, gross output, and gross output net of intra-industry sales for industries. The choice of measures depends on the analytical requirements. Value added is an important measure because it can be used to make international comparisons and because it avoids double counting in measuring industry activity. On the other hand, the proper measure for determining the efficiency of all inputs (KLEMS) used in production is gross output.

It is important to note that real output at the aggregate level is derived from expenditure-based GDP at market prices, whereas at the industry level, output is measured in terms of GDP at basic prices. Since the valuation of output at the aggregate level differs from that used at the industry level, the two measures are not directly comparable.

Type of input measure

Inputs are economic resources used in a firm’s production process. A distinction is usually drawn between two primary inputs taken individually or combined and intermediate inputs (energy, raw materials, purchases of contract services).

Labour input

This measures the services derived from the labour used in production. In the measurement of labour productivity, the labour input is the unadjusted total of hours worked. In the measurement of multifactor productivity, hours worked are adjusted for the change in labour composition: labour services are obtained by aggregating the hours worked by all employees, classified by education and work experience.

Capital input

This measures the services derived from the stock of physical assets, including software, used in production. The assets consist of business machinery and equipment, buildings and structures, inventories and land.

Principal indicators other than productivity

• Capital per hour
• Capital cost
• Labour cost
• Unit labour cost
• Unit labour cost in US$
• Unit capital cost
• Capital input
• Labour input
• Primary inputs
• Implicit price deflator
• Weighted capital intensity
• Hours worked
• Average hours worked
• Total employment
• Labour share
• Nominal gross domestic product
• Real gross domestic product
• Weighted labour quality
• Total compensation
• Total compensation per hour worked
• Unit non-labour payments
• Non-labour payments

Provincial labour statistics consistent with the System of National Economic Accounts

Estimates of employment, hours worked, labour productivity and labour costs are provided annually for each province and territory. These annual statistics are published at the same time as the provincial economic accounts.

KLEMS multifactor productivity

The Canadian productivity accounts produce annual data for KLEMS multifactor productivity at the industry level. Those data in turn provide measures of gross output per combined input unit.

Historical data

Canadian productivity account estimates currently go back as far as 1981, but by the beginning of 2006, they should be available back to 1961. Historical revisions follow revisions of the System of National Economic Accounts and the Labour Force Survey. Occasionally, historical revisions are made following changes in concepts or methodologies.
Canada/U.S. labour productivity revisions in the business sector.

Frequency

Quarterly Canadian productivity accounts are released 10 days after the publication date of the national income and expenditure accounts.

Preliminary annual estimates of labour productivity for the business sector and at the industry level are available in mid-May and revised in mid-December.

Preliminary annual estimates of multifactor productivity for the aggregate business sector are available in mid-July, and industry-level estimates are released in mid-December.

Revision policy

Productivity estimates are produced from various data sources. They are often revised when additional, more precise sources of information become available.

The figures for the year’s previous quarters are revised when data for the current quarter are published. When first-quarter data are released, the data for the four previous years are revised in conjunction with the National Accounts revision process.

Preliminary annual productivity estimates are revised in mid-December following the reference period.