Canada’s poor productivity performance is holding back improvements in its standard of living, including wages. In particular, labour productivity has been virtually stagnant since 2000.¹ For the last few years, Canada’s Gross Domestic Product (GDP) per capita has hovered about $14,000 below that of the U.S.² In advanced services, manufacturing and energy industries, the workforce in the U.S. is twice as productive as Canada’s. The usual solutions to improved productivity include investing in more capital items such as machinery and information and communication technology or asking people to work harder. These solutions are not working. As more routine tasks are being assigned to machines, people are being asked to do more thinking, problem-solving and relational tasks. Rather than becoming less important, cognitive skills are becoming more important. It is clear that the Canadian economy needs to increase investment in another kind of capital: human capital.
Working smarter, not harder can improve both productivity and economic growth. Working smarter requires the skills to learn new ways of doing things. Advanced literacy skills increase a person’s ability to learn easily and efficiently. New evidence shows that improvements in literacy can also increase productivity and GDP per capita more than ever before. Research also indicates that improving the skills of the people with the lowest levels of literacy provides an even greater boost. Furthermore, Canadian experience has shown that literacy skills can be increased through inexpensive and efficient workplace learning programs.