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March 2007
Vol. 8, no. 3

Perspectives on Labour and Income

GDP and employment growth
Philip Cross

  • Typically, output growth exceeds employment growth by over 1%, reflecting the generally upward trend of productivity. But what happened in 2006 was a slowdown in output and an increase in employment.
  • Several transitory factors (such as weather, unusual events, production disruptions) help explain this convergence of growth in output and employment—a phenomenon that is hardly unique to 2006.
  • Most of the downturn in output per employee originated in goods-producing industries, almost all of which posted lower productivity during the first three quarters of 2006.
  • Output per hour worked declined by nearly 10% in the resource sector, by itself shaving a full 1% from productivity growth last year. Mining, oil and gas led this drop, as output grew slowly while employment raced ahead by over 10%, the most of any industry in 2006.
  • As well, oil production was hampered by a number of disruptions. But given the shortage of labour in the oil patch, firms kept their workers on the payroll during these interruptions.
  • With tight labour markets and shortages, employers had to turn to the youngest and oldest workers—who are the least productive—and spend more time training them. In Alberta, people with no more than high school education accounted for over half of all employment growth in 2006.

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Philip Cross is with the Current Economic Analysis Division. He can be reached at 613-951-9162 or

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