Labour Productivity
Services-Producing Industries (NAICS 41-91)

Under this topic you will find indices of labour productivity for the Services-Producing Industries (NAICS 41-91). You can use this information to identify trends in labour-productivity and to gain insight into factors that affect it, such as innovation, efficiency and labour market flexibility.



Labour productivity index

Labour productivity can be viewed as the ratio of the quantity of output (real gross domestic product) to the quantity of input (number of hours worked) in the Canadian economy. Productivity is an important determinant of standard of living in the long run. It is influenced by a broad range of factors, from those controlled by firms (such as innovation and the mix of labour and capital) to the dynamics of the global economy (such as trade liberalization and commodity prices).

Labour Productivity Index: 2002-2011 (2002=100)
Business Sectors
NAICS
Code
Sector Productivity Index CAGRFootnote1
2002-2011
% Change
2010-2011
2002 2011
41 Wholesale Trade 100.0 128.2 2.8% -0.3%
44-45 Retail Trade 100.0 121.9 2.2% 1.7%
48-49 Transportation and Warehousing 100.0 110.5 1.1% 1.8%
51 Information and Cultural Industries 100.0 108.1 0.9% 1.2%
52, 53, 55 Footnote3 FIRE and Management 100.0 109.1 1.0% 3.3%
54 Professional, Scientific and Technical Services 100.0 99.0 -0.1% -0.8%
56 Administrative and Support, Waste Management and Remediation Services 100.0 96.7 -0.4% -0.4%
61 Educational Services N/A N/A N/A N/A
62 Health Care and Social Assistance N/A N/A N/A N/A
71 Arts, Entertainment and Recreation N/A N/A N/A N/A
72 Accommodation and Food Services 100.0 103.7 0.4% 0.1%
81 Other Services (except Public Administration) 100.0 102.5 0.3% 0.7%
91 Public Administration N/A N/A N/A N/A
41-91 Services-Producing Industries 100.0 110.2 1.1% 0.7%

Source: Statistics Canada, CANSIM table 383-0012, 2002 to 2011.

Between 2002 and 2011 labour productivity in the services-producing industries increased 2.3% per year on average. Over the most recent year, labour productivity increased 2.3%, thanks in part to the global economic turnaround, which strengthened domestic demand for services.

Productivity growth may occur for a number of reasons. For example, labour productivity may rise if output increases and at the same time employment levels decrease or stay on par. This phenomenon may occur from firms becoming more capital intensive, that is increasing their use of technology and capital inputs, in order to become more productive.

The graph below illustrates changes in labour productivity for the business sector of the services-producing industries between 2002 and 2011.

Labour Productivity Index: 2002-2011
(Business Sector)

Labour Productivity for the goods-producing industries, 2002-2011

Source: Statistics Canada, CANSIM table 383-0012, 2002 to 2011.

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Important notes on labour productivity data

The annual indices on productivity presented in Canadian Industry Statistics are derived using values from CANSIM Table 383-0012. As the data in this table are presented on a quarterly basis, the average of the 4 values was computed to obtain an annual average index value. In this section data are available for the years 2002-2011.

At the Canadian economy level, the labour productivity index is presented in terms of all economic activities that have been realized within the country. That is, it covers both the business and non-business sectors. Below the level of the Canadian Economy, only the activities of the business sector are factored into the calculation of the indices. Caution should be used when comparing index values at the Canadian Economy level with all other levels.

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Understanding labour productivity

Labour productivity measures the extent to which labour is efficiently used. An increase in labour productivity is associated with increases to real incomes and the standard of living for an economy. It is determined by its capital intensity (or changes in the amount of capital per hour worked), investment in human capital, and multifactor productivity which includes technological change, organizational innovation, and economies of scale.

Annual measures of labour productivity are helpful in indentifying sources of economic growth, indicate how efficiently labour is used in production, and compute unit labour costs. However, these measurements must be interpreted carefully, as labour productivity estimates reflect change in other factors of production (such as capital) in addition to growth in productivity efficiency.

Labour productivity defines its hours worked, as the total number of hours a person spends working, whether paid or not. Time lost to strikes, lockouts, sick leave, etc. is not included but travel time, time training, and overtime hours are comprised in the total.

At the Canadian Economy level, the labour productivity index is presented in terms of all economic activities that have been realized within the country. That is, it covers both the business and non-business sectors. Caution should be used when comparing index values at the Canadian Economy level with all other levels, which are presented in terms of the business sector only.

Labour productivity measures the extent to which labour is efficiently used. An increase in labour productivity is associated with increases to real incomes and the standard of living for an economy.

Changes in labour productivity may result from changes in one or more of the following factors:

  • Changes in productive labour efficiency:
    • size and composition of the work force
    • amount and type of employee training and work incentives offered; and
    • degree to which work flows are adjusted over time.
  • Changes in other factors of production:
    • the level of capital investment (e.g. more efficient equipment)

Labour productivity may fall if an industry does not adequately invest in the competence of its labour force, in modernizing its plants and factories, or in improving the efficiency of its operations.

Indices on labour productivity are unavailable for a number of NAICS sectors since certain activities are excluded. Also, data for the Finance and Insurance, Real Estate and Rental and Leasing, and Management of Companies and Enterprises sectors are combined.

Footnotes

Footnote 1

Compound Annual Growth Rate

Return to footnote 1 referrer

Footnote 2

FIRE= Finance and Insurance (NAICS 52) and Real Estate and Rental and Leasing (NAICS 53) and the Management of Companies and Enterprises (NAICS 55) combined. Other sector names may appear in abbreviated form for display purposes

Return to footnote2referrer