Canada must tackle its low productivity now that it has largely escaped the most severe economic challenges facing many countries around the world, says the head of the Organization for Economic Co-Operation and Development.
"The great challenge for Canada is productivity," Angel Gurria, secretary general of the global agency, told the 17th annual International Economic Forum of the Americas.
Gurria didn’t provide any specific prescriptions for boosting the persistent problem, but said the government needs to address the issue for Canada to maintain its global competitiveness.
He said Canada is doing better than other countries because of the surpluses it enjoyed for a decade before the worldwide financial crisis in 2008 as well as its subsequent efforts to reduce the deficit and accumulated debt.
It now has the stability of a majority government when so many other countries face years of caretaker or unstable political leadership.
"Count your blessings, Canadians. You just got a majority government and look what’s happening in the rest of the world," Gurria said.
Chronically high unemployment across most OECD countries is making it hard for politicians because there are no quick-fix solutions, he said.
About 50 million are unemployed in OECD countries, about 13 million to 14 million more than before the crisis. Youth unemployment averages 20%, but is as high as 30% or 40% in some countries.
Governments can’t change direction despite weak numbers in any given month and stubbornly high unemployment, he said.
The OECD’s long-term forecast through 2026 points to mediocre global economic growth, high deficits and debt levels and elevated unemployment rates that come down very slowly.
Gurria countered protectionistic views by saying governments must maintain open markets and investment flows and refrain from financial or currency exchange protectionism. He also said governments must take care of the most vulnerable in society even in the context of tight budgets.
Tiff Mackem, the Bank of Canada’s senior deputy governor, told the conference that central banks around the world have made progress in reforming the global financial system by creating a counter-cyclical capital buffer.
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