REGINA – The latest study from the Fraser Institute is raising alarms about a decline in business investment per worker in Canada.
According to their study that came out Thursday, titled Comparing Business Investment per Worker in Canada and the United States 2007-2024, business investment per worker has gone down in Canada from a level slightly lower than in the United States at 87.3 per cent in 2014, to 54 per cent in 2024, according to the latest data available.
The study noted that adjusted for inflation, business investment per worker in Canada went down by 18.8 per cent, from $20,310 in 2014 to $16,493 in 2024.
During the same period, business investment per worker in the U.S. went up 31.3 per cent, from $23,263 to $30,555 ($CDN).
“The economic well-being of Canadians depends in large part on the strength of business investment, so poor investment performance is bad news for workers,” said
Tegan Hill is senior economist at the Fraser Institute and a coauthor of the study. She said business investment per worker is an indicator that is “vital to helping make Canadian workers more productive so that businesses can improve their profits and pay higher wages and lead to an overall higher living standard for Canadians. So it's very worrying data.”
From a Saskatchewan point of view, the province has been an outlier as one of the few provinces with a higher business investment per worker than the U.S.A.
Hill noted that in 2014, Saskatchewan was one of three provinces with significantly higher business investment per worker than the U.S., along with Alberta and Newfoundland and Labrador. It was at $48,715, more than double U.S. levels of $23,263.
“Now every single province falls below the U.S. average, excluding Saskatchewan,” said Hill, with Saskatchewan at $33,386.
“But it has still declined in Saskatchewan,” said Hill. “It declined by 32 per cent. So while Saskatchewan's a little bit of an outlier in that it does have a higher level per worker right now, it still has seen a deterioration in business investment over time.”
Saskatchewan is also now barely ahead of the U.S., which climbed to $30,555 in 2024. Hill outlined what the implications for Canada are as a whole from these numbers.
She noted business investment “includes spending on equipment, machinery, factories, new technology, intellectual property, things that can help make Canadian workers more productive.”
“It's really, really important to achieve higher living standards. We know that living standards, income levels per person, have stagnated in recent years. And so there's clearly a link here with a lack of business investment and a lack of higher productivity and these stagnant living standards.”
Hill said Canada needs to “look at our regulatory environment, our tax environment, all the things that are making us less competitive and deterring business investment. And we need to start fixing some of those big pillars.”
As for what the next steps are for Canada, Hill noted that Prime Minister Mark Carney has “expressed a different attitude and approach to attracting business investment. I think that's an important start.”
“But we need to see actual action. There are still numerous federal policies that are deterring business investment in Canada. When you're looking at energy industry, for example, a lot of (Justin) Trudeau's policies are still there. We have the No Pipelines Act, Bill C-69. We have the oil tanker ban. There's still a lot of regulatory hurdles out there. And then at the same time, our taxes are much higher than the U.S. And so we need to be tackling some of those issues.”
Hill also pointed to the need for Canada to “get our fiscal house in order to be able to implement some of that tax reform. And then, again, really simplifying, clarifying the regulatory process so that businesses can have more certainty on what their investment would look like in Canada. There's just been too much going on in the past 10 years or so that has really created a lot of uncertainty and instability for investors.”
