The Economics and Statistics Division maintains archives of previous publications for accountability purposes, but makes no updates to keep these documents current with the latest data revisions from Statistics Canada. As a result, information in older documents may not be accurate. Please exercise caution when referring to older documents. For the latest information and historical data, please contact the individual listed to the right.
<--- Return to Archive
For additional information relating to this article, please contact:
March 04, 2021CANADA BUSINESS SECTOR LABOUR PRODUCTIVITY, Q4 & ANNUAL 2020 
Labour productivity of Canadian businesses declined 2% in Q4 2020 as the gains in hours worked outpaced the increase in business output. Statistic Canada noted that while the decline was much smaller than the 10.6% declined registered in the third quarter, this was the largest fourth quarter decline since Q4 1986 (-2.1%).
The containment measures introduced in several provinces to limit the spread of the second wave of the COVID-19 pandemic weighted on the economic recovery which began in the third quarter with the partial reopening of economies. The second round of measures also lowered the pace of growth in business output and hours worked.
As businesses adjusted to the new public health restrictions, they were able to shift how they operated. As a result, the impact of the second wave of COVID-19 is estimated to be smaller than the effects of the first wave. However, a slower pace of employment growth combined with a larger increase in hours worked per job resulted in a decline in labour productivity in Q4.
There has been unprecedented volatility in labour productivity throughout 2020 driven by the impacts of the pandemic. Canadian labour productivity increased 5.5% in the first quarter, saw a record 12.3% gain in the second quarter and another record drop of 10.6% in the third quarter of 2020.
Compared to Q4 2020, labour productivity was up 3.8%. Labour productivity was higher year-over-year in each of the first three quarters of the year.
Businesses’ real gross domestic product (GDP) growth slowed from 11.0% in Q3 to 2.5% in Q4. While the business output continued to return to its pre-pandemic levels, it was 4.6% below its level a year earlier in Q4 2020. Total compensation per hour worked declined 2.0% in the fourth quarter.
Unit labour costs remained the same in the final quarter following a decline in 1.6% in the third quarter.
Measured in US dollars, Canada’s unit labour cost increased 2.2% in Q4 2020, following a 2.4% increase in the previous quarter. Unit labour cost in US dollars is up 4.0% compared to the same quarter in 2019.
ANNUAL – 2020
Canadian businesses’ labour productivity increased 8.8% in 2020, following a 1.0% gain in 2019. This was the largest annual gain since the quarterly data series began in 1981. Statistics Canada noted that this historic increase in labour productivity was primarily due to the large gains in the first and second quarters being partly offset by the declines posted in the last two quarters of the year.
The widespread economic shutdown from mid-March to early May 2020 had an impact on economic activity in the first half of the year while activity started to recover in the second half as businesses started to reopen.
In 2020, unit labour costs for Canadian Businesses increased 4.0% posting the largest annual increase since 2007 (+4.4%). This annual growth was mainly due to growth in hourly compensation (+13.2%) outpacing growth in productivity (+8.8%). Measured in US dollars, unit labour costs for Canadian business increased 2.9% in 2020.
Note: Labour productivity, GDP and unit labour costs cover the business sector only. Labour productivity is a measure of real GDP per hour worked. Unit labour cost is defined as the cost of workers' wages and benefits per unit of real GDP.
Statistics Canada. Table 36-10-0206-01 Indexes of business sector labour productivity, unit labour cost and related variables
<--- Return to Archive
