Carney’s budget isn’t enough - we need to work harder and smarter

For years, Canada’s productivity troubles have been treated as the province of economists, policymakers and the occasional op-ed. But a new study from the Fraser Institute makes clear that the issue is no longer lurking in the realms of macroeconomics. It has arrived at the workplace doorstep — and it’s HR leaders who now find themselves at the centre of the storm. 

According to the report, between 1981 and 2024, labour productivity in Canada rose a modest 61 per cent. In the same period, the United States recorded an increase of 127 per cent, widening a gulf that has now become structurally entrenched.  

The picture in recent years is more troubling still. From 2017 to 2024, Canadian business-sector productivity fell slightly, while the U.S. enjoyed a rise of more than 10 per cent. For HR directors across the country, the implications are immediate and unavoidable: productivity has become a workplace problem — and therefore a people problem. 

A slow decline felt in everyday workplaces 

Productivity may be an economic term, but its consequences are felt acutely in corridors, meeting rooms, and HR dashboards across the country. 

Canadian teams are routinely being asked to deliver more without the requisite tools, systems or investment. Workloads creep upward. Meetings multiply. Administrative tasks linger. And employees — particularly those in hybrid environments — find themselves compensating for processes that remain stubbornly manual. 

Burnout, inevitably, follows. 

When productivity stalls, it’s employees who are asked to bridge the gap, and HR departments must then manage the fallout — strained engagement scores, rising turnover intentions, presenteeism, and a talent market increasingly impatient with outdated systems. 

The technology deficit behind the talent strain 

The Fraser Institute’s report identifies a single, overwhelming factor driving Canada’s decline: a chronic shortfall in investment in information and communications technology (ICT).  

“Entry conditions into the software and computer services sector of the ICT industry are not much different in Canada and the United States,” said the report. “What does appear to be different is the enhanced commercial success of a subset of formerly small US ICT companies compared to their Canadian counterparts. Simply put, the apparent capability of the United States to nurture the growth of start-ups to become the dominant companies in the software sector seems to far exceed Canada’s capability.” 

For HR leaders, this is no longer an abstract deficiency. It shapes everything from talent attraction to retention and capability-building. 

Canadian employees are routinely working with systems that would be considered antiquated in many U.S. or European organisations. HRIS platforms that cannot integrate with finance, ATS systems that offer little automation, learning systems that cannot scale — these are not mere irritants. They are productivity anchors. 

Modern organisations rely on digital foundations. Canada, all too often, doesn’t provide them. 

The result is a labour force attempting to perform 2024’s work with 2014’s tools. 

The U.S. contrast: a labour market equipped for the future 

American employers, by contrast, have invested heavily in digital infrastructure, data systems, automation, and advanced analytics. They offer employees the tools to do their work efficiently, and they reward high performance accordingly. 

The result is predictable: 

• U.S. organisations are more productive. 

• U.S. employees experience fewer operational bottlenecks. 

• U.S. firms can offer more competitive compensation. 

• And talent — especially in analytics, AI, engineering and technical fields — gravitates toward these environments. 

Canadian HR leaders see this disparity play out in recruitment searches, compensation benchmarking, and exit interviews. 

AI: the turning point for Canadian workforces 

If there’s a silver lining, it’s that the rise of artificial intelligence offers Canada a rare opportunity to close the gap. 

AI is no longer the preserve of data scientists; it’s rapidly becoming a mainstream workplace tool. For HR, this represents a fundamental shift in workforce design. 

Hiring, performance management, learning and development, capability planning, and organisational design are all poised for reinvention. HR will be responsible for ensuring that employees are not only equipped to use new tools, but also supported through the cultural and behavioural changes that accompany them. 

This means that HR needs to blend agility and empathy in their organizations, where technological innovation is happening quickly, according to Rita Perepelitsky, Chief Human Resources Officer at Masco Canada. “I think as we progress in digital transformation and how AI is impacting organizations, [HR] has to think about their ability to be agile while at the same time be empathetic as we move forward with changes, while embracing analytics,” she says. 

It’s a moment of risk — but also of extraordinary opportunity for Canada to accelerate past historical patterns. 

A new mandate for HR leaders 

The times might well observe that this moment calls for a degree of strategic clarity rarely demanded of HR functions in the past. Productivity is no longer a ledger item; it’s a leadership agenda. 

“HR really needs to be looked at as a business function rather than a cost centre, and I think that mind shift needs to happen across the entire organization,” says Julie Denton, Chief People Officer and Chief Technology Officer at Recipes Unlimited. “But it starts in HR and how we approach it ourselves, thinking of it as a pillar of the business strategy.” 

HR leaders should: 

1. Put productivity at the heart of workforce strategy 

This includes digital adoption metrics, workflow efficiency, and redesigning roles for higher-value work. 

2. Modernise the organisation’s HR technology architecture 

Without integrated, automation-friendly systems, productivity improvements will stall before they begin. 

3. Build an AI-ready workforce 

From foundational AI literacy to advanced analytics pathways, skill-building must become continuous and targeted. 

4. Attract and retain global talent 

Canada’s immigration advantage is meaningful, but only if workplaces offer the technological sophistication skilled workers expect. 

5. Strengthen managerial capability 

Managers require new tools, new mindsets and new confidence to lead digital, hybrid and AI-augmented teams. 

6. Advocate for investment 

HR must now speak credibly about the cost of not investing — not only in people, but in the technology that enables them to excel. 

The role of HR in Canada’s next chapter 

Canada doesn’t lack talent, ambition or resilience. What it lacks is the organisational architecture required to let its workforce thrive. 

HR has the rare opportunity to bridge that divide. 

In doing so, it will not only transform organisations — it will play a central role in shaping Canada’s economic future.