Reducing the Work Week Through Improved Productivity

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Reducing the Work Week Through Improved Productivity

Summary

  • Increased leisure time is an important contributor to a higher standard of living for Canadians. Obviously, so is increased monetary income which allows Canadians to buy more goods and services. Higher real (inflation adjusted) workplace compensation is therefore obviously critical to allowing Canadians to enjoy more leisure time without suffering a decline in their material standards of living.
  • The key to increasing workplace compensation is improved labour productivity performance. Economic theory and empirical evidence show a tight linkage between labour productivity growth and increased hourly compensation to workers.
  • This bulletin illustrates the potential for Canadian workers to enjoy substantially increased leisure time, while maintaining, and even increasing, their total monetary compensation, through improvements in labour productivity.
  • Specifically, if labour productivity growth averages 2 percent per year from 2018 to 2030, Canadian workers in 2030 could work a four-day work week year-round while enjoying a higher material standard of living than they enjoyed in 2018.
  • How realistic is it to aim for a 2 percent per year increase in labour productivity in Canada? It would about double the productivity growth rate experienced in recent years. However, since labour productivity in Canada’s business sector increased at around 2 percent a year from 1961 to 2012 the target is not unrealistic, and the goal of returning to the country’s long-run productivity growth performance deserves a prominent place on the policy agendas of the federal and provincial governments.

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