Possibility of four-day workweek fading as economic growth prospects wane

It wasn’t long ago that researchers (including us) were discussing the real possibility of moving to a four-day workweek. But to achieve a reduction in the workweek, while maintaining or even increasing material living standards (as measured by hourly compensation), Canada must improve productivity—that is, get better at transforming inputs (raw materials, labour, ideas) into goods and services. Now, not only may we fail to reduce the workweek, but to simply maintain our living standards relative to other industrialized countries, we may need to increase it.

Consider the recent data.

A 2021 study published by the Organization for Economic Cooperation and Development (OECD) assessed the economic growth prospects for 32 industrialized countries including Canada between 2020-2030 and 2030-2060. Specifically, it forecasted per-person economic growth (adjusted for inflation) using the broad measure of GDP (the total value of goods and services produced in an economy in any specific year, adjusted for population). The results could not be worse for Canadians.

According to the study, Canada is expected to record the lowest level of growth in living standards over both periods as measured by changes in per-person GDP. Our relative rank among developed countries will fall from 16th in 2020 to 25th by 2060, which means countries such as the Czech Republic, Estonia, Israel, Italy, Korea, New Zealand, Slovenia and Turkey will surpass Canada in material standards of living. Indeed, by 2060 the OECD expects that Canada’s average per-person standard of living will be more than one-fifth less than the OECD average. In other words, the OECD expects Canadians to become markedly poorer compared to other industrialized countries.

The Trudeau government admitted as much in last year’s budget (see chart 28) but has taken no useful actions to actually improve economic growth and mitigate the slide in Canadians’ comparative standard of living. Indeed, this year’s federal budget was much the same as the previous eight years in terms of debt-financed government spending at historic levels, micro-management of the economy by Ottawa, a continued forced energy transition, and no badly-needed tax relief to improve incentives for entrepreneurs, businessowners, investors and workers. Ottawa continues to promulgate the same policies that got us into this mess.

To further illustrate Canada’s dire prospects, consider New Zealand. In 2020, Canada’s average standard of living was 4.0 per cent higher, but by 2060 will be a projected 15.5 per cent lower because New Zealanders are forecast to enjoy stronger economic growth. If our growth prospects do not improve, the average Canadian will have to work 5.9 days per week just to match the living standards of New Zealanders working 5 days per week.

Or take Australia whose economy, geography and history are quite similar to those of Canada. By 2060, the OECD estimates that Australian living standards will be 26.2 per cent higher than ours. To mitigate the difference and match the Australian standard of living by 2060, an average Canadian would have to work almost 7 days a week (6.8 days) compared to 5 days a week in Australia.

Working harder and longer just to match the living standards of other industrialized countries shouldn’t be acceptable to any Canadian and certainly not to our elected leaders. Governments should immediately enact policy reforms that focus squarely on improving economic growth, otherwise Canadians will face a choice between two bad alternatives: work longer and harder, or accept lower comparative living standards.