According to senior Bank of Canada official Carolyn Rogers, the need to improve productivity in Canada has reached a critical level. In a recent speech, Rogers highlighted the urgency of the situation, comparing it to breaking the glass in case of an emergency. She emphasized that improving productivity is crucial as the economy faces a future where inflation may pose a greater threat than in previous decades.

Despite a small gain in Canadian labour productivity at the end of last year, Rogers pointed out that this came after six consecutive quarters of decline. In contrast, the United States has seen productivity gains as businesses found their footing post-pandemic, highlighting Canada's lag in this area.

Rogers noted that Canada's business sector's productivity has remained largely unchanged over the past seven years, indicating a chronic issue that needs to be addressed.

She highlighted the importance of improving productivity as many factors that previously kept inflation low are expected to fade or reverse in the future.

One of the key ways to combat inflation, according to Rogers, is through productivity gains. By enhancing efficiency and innovation in the economy, Canada can better withstand potential inflationary pressures.

This becomes especially relevant as global trade tensions and demographic shifts are expected to exert upward pressure on prices.

Looking ahead, the Bank of Canada's upcoming interest rate decision and monetary policy report on April 10 will be closely watched by economists. With inflation cooling in recent months but still above the central bank's target of two per cent, the potential for adjustments to the interest rate target will be a point of interest.

Addressing Canada's lagging productivity, Rogers emphasized the need for increased investment in machinery, equipment, and intellectual property. She also highlighted the importance of aligning education and training programs with the skills needed in the workforce, as well as creating a more competitive business environment to foster innovation and efficiency.

As Canada grapples with the challenge of stagnant productivity levels, the call to action from senior Bank of Canada official Carolyn Rogers serves as a reminder of the urgent need to enhance efficiency and innovation to safeguard against inflationary pressures in the future.

By addressing the root causes of low productivity and implementing strategies to drive growth and competitiveness, Canada can position itself for sustainable economic success in the years to come.