Quebec little affected by recession: Report

But province still lags behind its neighbours in terms of productivity, standard of living
|hrreporter.com|Last Updated: 10/26/2010

Quebeckers' standard of living emerged relatively unscathed from the recent recession, but it will need to boost productivity to maintain its standards of living in the years to come, according to a new report.

Productivity and Prosperity in Quebec, 2010 Overview
, from the HEC Montréal Centre for Productivity and Prosperity, found Quebec remained between the 19th and 20th-ranked Organisation for Economic Co-operation and Development countries in 2009 in terms of standard of living, just behind Spain and slightly ahead of Italy.

"Quebec's relatively good performance basically changed nothing in the province's lagging economy, and it failed to catch up significantly (with other provinces) following the recent recession," said Robert Gagné, director of the Centre for Productivity and Prosperity and a professor with the Institute of Applied Economics

"This gap is more the result of such structural factors as flexibility in the labour market and the general level of competition in our economy, for instance."

Labour productivity, measured by GDP per hour worked, remains one of the main sources of the standard-of-living gaps between Quebec, the rest of Canada and the United States, said Gagné.

In 2009, labour productivity explained close to 27 per cent of the standard of living gap with Ontario, 57 per cent of that with the rest of Canada and 78 per cent of that with the United States.

These gaps cannot be explained by differences in the industrial structure of the three economies. However, most of the labour productivity growth observed overall in Quebec (80 per cent) occurred in the service sector.

"Quebec will very soon experience a substantial decrease in its pool of potential workers, a direct result of the ageing population," said Gagné.

Current projections show that the demographic dependency rate, that is the ratio of the number of people under 15 or over 64 to the number of people between 15 and 64, will rise to 0.7 by 2036, as compared with the current ratio of about 0.4.

To maintain a growth rate of 1.42 per cent in its standard of living, Quebec will have to boost its average annual labour productivity growth rate to 1.61 per cent, or more than 50 per cent higher than the 1.05 per cent rate historically observed.

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