Canadians work longer hours but less efficiently than Europeans

There seems to be a never-ending series of studies and polls showing that, in almost every field, Western Europeans, and particularly the Scandinavians, are doing it right. Or at least better than everyone else. Certainly, better than us here in Canada.

The latest such is a comparative analysis of productivity and working hours by the New York-based Conference Board. What it shows is that Scandinavians work fewer hours but produce significantly more goods and services than Americans and Canadians per hour of labour.

For example, workers in Germany and Denmark work 20% and 18% respectively fewer hours than Canadians. The Netherlands, Norway, Austria, Sweden and Finland are close behind them. The only countries in the study that worked longer hours than Canadians were the Italians and Americans. 

Even more dramatic though, are the differences in productivity. Norwegians pruduce 19% more GDP per hour than Americans, Danes 13% more, Swiss 8% more, Swedes 4% more, etc. Oh, and Canadians? We produce 21% LESS than the Americans, even worse than Italy, Britain and Australia. That puts us at about 66% of the productivity of Norway, by my calculations.

Why the stark differences? The main reason seems to be that Canadian businesses invest less in research and development, new equipment and new technologies than the Europeans, and even than the Americans - all things that boost output per worker. Canada has narrowed the productivity gap in recent years, but we are still languishing well behind Western Europe, and we try to make up for it by working longer hours.

UPDATE

It should be said that some people believe that this simplistic measure of productivity - output divided by hours worked - is not the most useful one. A better measure is "total factor productivity" - output divided by inputs used (both labour and capital).

Interestingly, if we look at total factor productivitity, Canada does not fare so badly. Indeed, if we were to strip out the oil and gas industry, which is notoriously (and increasingly) capital intensive, Canada's non-oil total factor productivity is actually higher than the USA's non-oil TFP.

Well, make of that what you will. It may be a desperate search for a silver lining, or it may be a blanket condemnation of the oil industry (which gobbles up a bigger proportion of Canadian capital investment every year, and now stands at about 30%). Or it may just be both.