What closing the “productivity gap” means
This is how we fix the East
Photo: Bruce A. Stewart
By Bruce A Stewart
Canada has a productivity gap when it comes to doing anything other than extracting resources and selling them off.
We usually measure it relative to the United States, where it suggests we’re between 12% and 20% less productive.
You don’t want to know the numbers relative to South Korea, Japan, Germany, even France and Italy.
Mind you, if we do get the free trade deal with the European Union that’s being negotiated, and do get the Trans-Pacific Partnership we’re trying to join, we’re going to have to deal with it.
Politicians (think Ontario’s Premier) simply blame the resource-producers for the “high dollar”.
It’s true, of course, that you can make the “gap” go away for a while by suppressing the Canadian dollar. Cheap does sell, at least until some other country’s currency is debased to match.
Our dollar has the value it does for good structural reasons, and busting its chops to suit Ontario and Québec doesn’t make much sense.
Instead, we need to focus on what “productivity gap” really means — and this applies to all provinces and territories.
Most people like to focus on growth. The GDP rose, yay! (House values rose on my street, yay!)
This is the wrong way to look at it, though, to manufacture and deliver services internationally.
There, growth gets defined as more revenue per employee.
There are two ways to get growth. One is to actually get more revenue. More likely, it’s to generate the same revenue with fewer staff.
Automation, work streamlining, information technology … we know the ways.
Trouble is, that doesn’t help the overall economy. All those unemployed or underemployed people have to go somewhere.
And there’s not a lot of productivity found in “Welcome to Wal-Mart” or “would you like fries with that?”
The other way to close a productivity gap is to focus on quality.
Build a better product. Innovate, create what markets want.
If RIM and its iconic BlackBerry are in trouble, it’s because they stopped to grow markets and ignored their product.
This sort of growth works for all kinds of things. Make a better sprocket, sprocket users beat a path to your door.
It doesn’t have to be all about high tech, provincial “target industries”, “innovation agendas”.
There’s a company in Germany that makes bread ovens for restaurants, so they can offer fresh bread to patrons.
It has 93% global market share. Why?
Its people are used to teach better bread baking to customers. And it’s an ever-improving energy-efficient oven.
That’s how you close the “productivity gap”.
Germans have the world’s highest average labour rate: Germans are very well paid, both salaries and benefits.
They’re also the biggest exporter of quality machine tools, industrial goods, and not too shabby in consumer products.
That could be us. If we want to work at it.
Bruce Stewart is a consultant, educator and philosopher with a passion for public affairs currently located in Toronto. He is well known across the Internet for his blogs on management (Getting Value from IT) and social affairs (Just a Jump to the Left, then a Step to the Right) and for his daily stream of commentary on Facebook, Twitter and Google+. You can reach him at bastewart.toronto@gmail.com.
Category: Business Stategy, Canada
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