11 In addition, American job losses are unusually high in small and medium enterprises (SMEs) while they have been proportionally lower in Canada, where SMEs have been supported by relatively strong domestic demand. Unlike Canada, however, U.S. productivity growth has surged, and wage growth has slowed. The net result is lower unit labour costs, which have boosted competitiveness and should, ultimately, encourage job creation.
Canada’s productivity record is puzzling. The flipside of the apparent labour hoarding is that Canada’s productivity growth fell in the latest recession – something that has not happened in any recession in the past three decades. 12 Moreover, in sharp contrast to the United States, Canada’s productivity performance was abysmal over the decade prior to the recession.