Report highlights 3 key areas for HR to focus on to improve productivity
Human resources (HR) leaders have a major role to play in addressing Canada’s productivity crisis. Many reforms in a C.D. Howe Institute report released Oct. 15, 2026, touch on areas they manage.
“Productivity depends on the skills, knowledge, and adaptability of the workforce,” the blueprint states.
For HR leaders, the report points to three priorities:
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Rethink how foreign credentials are judged. The report says employers, especially smaller ones, need better tools to judge what a foreign credential is worth.
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Build artificial intelligence (AI) skills beyond the tech team.Canada ranks second globally for AI researchers but 20th among Organisation for Economic Co-operation and Development (OECD) countries for business AI adoption, according to research by Kevin Leyton-Brown of the University of British Columbia and colleagues. The report calls for AI training that extends to workers already on the job.
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Negotiate change before rolling it out.One port terminal that installed automated cranes before reaching a labour agreement faced years of disputes and a lockout, while a nearby terminal that negotiated first has had no labour disruptions in five years, according to institute research by senior adviser Charles Lammam, who recommends earlier mediation.
The Productivity Blueprint, authored by Lammam, senior vice-president Daniel Schwanen and research officer Zachary Andom, sets out more than 100 recommendations across eight pillars: tax reform, regulation, competition, human capital, innovation, business growth, trade and transportation, and fiscal policy.
Why has Canada’s productivity stalled?
Between 2014 and 2024, Canada’s real gross domestic product (GDP) per capita grew just 3.5%, the slowest among nine advanced economies, according to the institute’s analysis of OECD data. The U.S. figure rose 20.2%.
Canada has invested less than most peers in machinery, equipment and technology for three decades, ranking second last among the countries compared in 2024, the report says.
In a March 2024 Halifax speech, Carolyn Rogers, senior deputy governor of the Bank of Canada, called weak productivity a “break the glass” moment. “Increasing productivity means finding ways for people to create more value during the time they’re at work,” she said. HRD Canada has since examinedwhat HR leaders can do about Canada’s productivity problem.
What does weak output mean for employers?
The authors tie productivity directly to pay: without it, employers struggle to fund lasting wage increases. Canada also has too many small firms that stay small, they write, even though larger companies tend to pay more and invest more in technology.
That limits HR capacity at small and medium-sized enterprises (SMEs). “Canada is a country of SMEs, and most SMEs don’t have HR people or IT people,” Wendy Cukier, professor of entrepreneurship and strategy at Toronto Metropolitan University, told HRD Canada.
“There’s historic underinvestment in training by employers in Canada … compared to other OECD countries,” Toronto Liberal MP Karim Bardeesy told a Future Skills Centre conference on Oct. 14, 2026
Pressure is building: aFraser Institute study showing the Canada-U.S. income gap has doubled since 1999, and some commentators argueCanada’s productivity malaise is now an HR emergency.
“If Canadians want stronger wages and living standards over the long term, raising productivity needs to be Canada’s number one priority,” said Jeremy Kronick, president and CEO of the Toronto-based C.D. Howe Institute.
