RBC's Growth Project addresses Canada's economic challenges, focusing on productivity and skills development
Canada's economy, adjusted for inflation and immigration, is smaller than before the pandemic and remains at the same level as a decade ago.
In response, RBC has introduced The Growth Project, a multi-part initiative aimed at improving Canada's economic growth. This initiative will provide insights into productivity, AI, agriculture, immigration, trade, and skills development, offering actionable strategies to address these challenges.
John Stackhouse, SVP of the Office of the CEO, stated, “Canadians are telling us that economic uncertainty -- low growth yet higher prices -- is their top concern. Addressing these issues has become a key focus for RBC. We're convening stakeholders across the country -- exploring ideas and solutions that can put our economy on a better growth track. We're also making strategic investments to help Canada's workforce meet current and future labour market needs.”
RBC Economics & Thought Leadership has released the first research report under The Growth Project, titled ‘Canada's Growth Challenge: Why the economy is stuck in neutral.’
This report examines why Canadians are working more but producing less, identifying low productivity as the main economic issue.
Nathan Janzen, assistant chief economist at RBC Economics & Thought Leadership, explained, “When we look at the Canadian economy since the turn of the century, it's clear that our growth has stagnated. On average we've seen productivity growth of less than 1 percent per year. The problem is even more acute when we compare Canada's growth against that of the United States where our per-capita GDP runs 30 percent below US levels.”
Janzen also noted, “It's a multitude of issues contributing to the problem -- from a lack of business investment to cumbersome tax regulation. What our research shows is that the solutions are not easy to implement but are clear and attainable.”
The report outlines five growth-positive policies:
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Cutting red tape and reducing internal trade barriers: Speeding up project approval times and lowering holding costs for businesses planning new investments.
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Better utilization of immigrant skills: Recognizing foreign-trained professionals' credentials in fields like healthcare to increase productivity and address worker shortages.
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Improving tax competitiveness: Making tax rules easier to understand to encourage compliance, particularly for new businesses and lower-income households.
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Adopting new technologies: Encouraging investments in AI and simplifying project approvals and the tax system to maintain global competitiveness.
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Capitalizing on a highly educated workforce: Increasing work-integrated learning placements to better match skills development with labour market needs.
The report emphasizes the need for Canada to adopt a growth mindset, focusing on an economy that rewards innovation, celebrates competitiveness, invests in people and technology, and delivers efficient returns.
