Productive diversification: Preserving Alberta's productivity edge
ATB Financial Special Economic Report
EDMONTON, AB, Aug. 13, 2024 /CNW/ - ATB Financial's latest economic special report delves into the critical productivity challenges facing Canada. Sustained increases in labour productivity are essential for real per capita income growth, making it a vital issue as Canada's population ages and more individuals exit the workforce.
While the national productivity problem has been extensively documented, this report shifts the focus to Alberta. The report offers an in-depth analysis of industry-level data, revealing Alberta's unique productivity dynamics.
"Productivity is often perceived as simply doing more with less, but it's about working smarter, not harder," said ATB Financial's Chief Economist, Mark Parsons. "It involves upgrading skills, investing in machinery and technology, commercialising and developing higher-value products, and expanding into new markets."
The report poses a critical question for Alberta: What are its unique strengths now and in the future, and how can the province continue to build on them? Successfully answering this question will facilitate 'productive diversification,' driving continued improvements in living standards.
Key Findings:
- Higher Labor Productivity in Alberta: Alberta consistently shows higher labour productivity compared to other provinces. While it's primarily driven by the energy sector, this advantage spans most major sectors.
- Narrowing Productivity Gap: The gap between Alberta's productivity and the national average has narrowed recently, coinciding with a decrease in energy investment and a shift towards service employment.
- Energy Sector Challenges: Over the past decade, Alberta's energy sector has faced numerous shocks, leading to a challenging adjustment period. The number of workers in the oil and gas industry has decreased, and Alberta's wage premium relative to the rest of Canada has narrowed.
- Emerging Growth Drivers: New sectors such as hydrogen, aerospace, food manufacturing, and technology are emerging as growth drivers. These developments are positive and will enable Alberta's economy to compete in the future.
Despite these new drivers, the energy sector remains the primary source of Alberta's labour productivity advantage. It is one of the most productive sectors in Canada. Maintaining a significant role in the global energy supply chain will be crucial for sustaining this productivity advantage even as other sectors expand.
"New and emerging growth sectors offer future opportunities for workers. At the same time, our findings suggest that leveraging its strength in energy has been an important driver of Alberta's productivity advantage in the past and will remain an important determinant in the future," added Parsons.
For further details and a comprehensive analysis, please refer to the full paper here.
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ATB Financial's Economic Outlook is intended for general information and educational purposes only and should not be considered specific legal, financial, tax or other professional advice or recommendations. Information presented is believed to be reliable and up-to-date but it is not guaranteed to be accurate or a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the authors as of the date of publication and are subject to change. The actual outcome may be materially different. ATB Financial and any of its affiliates are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by ATB Financial or any of its affiliates and related entities.
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SOURCE ATB Financial
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