Labour productivity increases with age in Canada — until it doesn’t

The percentage of Canadian companies where the workers' average age was 55 and above has increased to almost 20 per cent. Photo by Getty Images

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Labour productivity at Canadian companies increases with age, but only until workers are in their late 40s, according to a new Statistics Canada report.

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The rate of decline varies based on the profession, the agency said. For example, productivity peaks for employees in their late 40s in the finance and insurance sector and shows a modest decline thereafter. But productivity in the construction and manufacturing sectors peaks when employees are in their late 30s and declines more sharply after that.

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Labour productivity, which is a measure of real gross domestic product (GDP) per hour worked, has been sluggish in Canada in recent years and the workforce is quickly aging.

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For example, the proportion of companies with an average worker age of more than 40 rose to 42.3 per cent in 2022 from 26.2 per cent in 2001, according to a Statistics Canada report in June. Similarly, the percentage of those companies where the workers’ average age was 55 and above increased to 18.8 per cent from 9.3 per cent in the same timeframe.

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“Businesses need to understand the sector that they are in and figure out how they can get the best out of all their workers regardless of age,” said Anil Arora, a board member at the Centre for International Governance Innovation and former chief statistician of Canada.

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“That may be taking advantage of the experience and wisdom of people above 50 and the energy, enthusiasm or tech savviness of those newly joining. We can’t afford to waste an ounce of talent or energy.”

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But older workers don’t automatically equate to lower productivity, according to a report published by Organization for Economic Co-operation and Development in 2020 and cited by Statistics Canada, which said an aging workforce can significantly boost GDP per capita with the right steps taken.

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That requires emphasizing aspects such as lifelong learning, healthy working conditions and flexible arrangements to help older workers remain engaged.

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Arora said Statistics Canada’s report isn’t surprising since demographics is a predictable trend, but the aging population combined with the lack of sufficient investments and a cohesive strategy to boost labour productivity should act as a wakeup call for businesses.

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“This isn’t a surprise, but it is happening now,” he said. “We have to tackle this on top of weak investment, slow technology diffusion, insufficient lifelong learning and insufficient investments. This is having a compounding effect.”

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