Hours worked and labour productivity in the provinces and territories

View the most recent version.

Newfoundland and Labrador led the nation in labour productivity growth in 2007, while Alberta had the largest decline. In both cases, changes in the relative contribution of conventional crude oil extraction to their respective provincial economies played a large role.

Nationally, productivity increased 0.7% in 2007, similar to the pace of 2006, but much weaker than 2005. The increase occurred in the context of an appreciating Canadian dollar, and prices for natural resources that remained high because of strong global demand.

Productivity surged 9.2% in Newfoundland and Labrador, the fastest growth rate in the country, thanks to a recovery from the output disruptions that hindered oil extraction in 2006. In Alberta, the transition from the traditional oil industry to the more costly oil sands continued. At the same time, Alberta's booming population led to an expansion of the labour intensive service sector. Both of these changes in Alberta shifted the economy away from higher productivity activities.

Labour productivity increases also surpassed the national average in Prince Edward Island, Manitoba, Quebec, New Brunswick, Saskatchewan, Ontario, Yukon, and the Northwest Territories.

For the second consecutive year, Alberta and British Columbia posted the strongest gains in hours worked among the provinces. Conversely, Prince Edward Island was the only province to record a decrease in hours worked, while they remained unchanged in Newfoundland and Labrador.

Hourly compensation increased 4.0% nationally in 2007, virtually unchanged from 4.1% the year before, but slower than the 5.0% gain in 2005.

Strongest productivity growth in two of the Atlantic provinces

Provincial labour productivity growth was strongest in 2007 in two Atlantic provinces: Newfoundland and Labrador and Prince Edward Island.

It was the third time in six years that productivity growth in Newfoundland and Labrador eclipsed the other provinces. The increase followed stronger world commodity prices and a recovery from the technical troubles of oil extraction in 2006.

Hourly compensation in Newfoundland and Labrador declined following an exceptional increase in 2006, resulting from a one-time contribution to the public employees' pension plan. Excluding these special payments, hourly compensation increased faster than the national average.

In Prince Edward Island, productivity growth increased almost five-fold, from 0.7% in 2006 to 3.5% in 2007. Retail trade, agriculture, and food processing contributed to the growth. While its economic output rose at a slower pace than in 2006, Prince Edward Island experienced a decline in the number of hours worked in 2007, the only province to do so. Hourly compensation in Prince Edward Island rose 5.5% in 2007, following a slight increase the previous year.

In Nova Scotia, productivity rose a marginal 0.1% in 2007 after a growth rate surpassing the national average in 2006. Real gross domestic product (GDP) increased 1.6%, almost in tandem with the 1.4% gain in hours worked. Moreover, hourly compensation rose more slowly than the national average for a third consecutive year.

In New Brunswick, productivity rose 1.2%, the same rate as in 2006. The volume of hours worked in New Brunswick increased only 0.4% in 2007, but economic output was up 1.6%. Declines in hours worked have been particularly important in forestry, fishing and in administrative and support and waste management. In contrast, the rate of growth in hourly compensation accelerated in 2007.

Above-average productivity gains in Ontario and Quebec

Although economic growth was below the national average for a fifth consecutive year in both Ontario and Quebec, each province surpassed the national average in labour productivity in 2007, with increases of 1.5% in Quebec and 0.8% in Ontario.

In both provinces, the increase in the volume of hours worked remained steady. Large increases in the volume of work in the services-producing industries more than offset the decreases in manufacturing.

Manufacturers in Ontario and Quebec improved their productivity in 2007. In Quebec, manufacturing productivity rose 3.2%, double the rate in the previous year. In Ontario, it jumped 3.1%, following a sharp downturn in 2006.

Hours worked in manufacturing continued to fall in both provinces, reflecting the on-going restructuring in this sector. At the same time, manufacturing output fell 2.2% in Ontario, partly as a result of the declines for transportation equipment. In Quebec, output rose 0.8%, the result mainly of strong production of aerospace products, as well as machines and equipment.

In Quebec, increases in hourly compensation accelerated, mainly because of retroactive pay equity settlements for provincial government employees. These resulted in a 5.0% increase in average hourly compensation in 2007. In Ontario, the increase was only 3.3%, which was slower than the national average.

Alberta and British Columbia post strongest provincial growth in hours worked

Alberta and British Columbia posted the strongest increases in hours worked among the provinces for the second consecutive year in 2007. They were also the only two provinces where productivity declined.

In Alberta, the transition from the traditional oil industry to the oil sands continued to hamper productivity growth in the mining sector. In 2007, GDP in Alberta rose only 3.3%, half the growth rate in 2006, a slowdown that was due mainly to a drop in oil and gas exploration.

However, the volume of hours worked rose a significant 5.3%, mainly in Alberta's more labour-intensive industries. Hours increased fastest in construction, wholesale, educational services and health care.

In British Columbia, productivity declines occurred mainly in construction and manufacturing. The economy grew by 3.1%, while the increase in the volume of hours worked accelerated to 3.2%. Construction and retail trade were among the key sectors behind this acceleration in hours worked.

Manitoba's 1.6% gain in labour productivity was third fastest among the provinces, the result of four key sectors: agriculture, manufacturing, retail and finance. The volume of hours worked increased 1.6%, an acceleration from 2006.

In Saskatchewan, productivity outpaced the national average, rising 1.0% after falling in 2006. Stimulated by mining, Saskatchewan's GDP recovered from a decline in 2006, reaching 2.8%.

Hourly compensation in Saskatchewan increased 6.1% in 2007, while it increased slightly less in Manitoba and Alberta. These three provinces have all undergone a tightening in their labour markets in the past few years.

Mixed results in the territories

Labour productivity increased by 6.1% in the Northwest Territories and 6.3% in the Yukon, but declined 1.7% in Nunavut.

Despite a spectacular rise in output, Nunavut's productivity fell for a second consecutive year. Benefiting from a young population, Nunavut had a strong rise in the volume of hours worked, slightly surpassing the increase in its GDP. It also posted a drop in its hourly compensation for the second consecutive year.

In the Northwest Territories, labour productivity growth accelerated following a 3.9% gain in 2006, mainly because of a strong increase in diamond production.

In the Yukon, productivity recovered after falling in 2006. Output rose faster in the wake of the opening of a new mine, whereas hours worked fell slightly after posting a strong increase in 2006.

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.

Table(s).