Canadian workers need less regulation, more capital #CanadaFinance

As trade tensions with the United States escalate, putting tens of thousands of Canadian jobs at risk, our home-grown productivity problem continues to erode the country’s economic strength. Without a change of strategy, Canada faces stagnating wages, declining competitiveness, slowing GDP growth and eroding living standards.

Our recent labour market review for the C.D. Howe Institute highlights key concerns. Employment has grown, as the federal government has kept emphasizing. But it has not kept pace with the rapid influx of workers. Hence last year’s rise in the unemployment rate. Meanwhile, our productivity continues to lag behind peer nations and in fact has recently trended downward, despite strong employment growth in high-skilled occupations.

A major factor behind this decline is Canada’s reliance on labour-intensive growth rather than productivity-enhancing investment. With many recent immigrants and non-permanent residents concentrated in lower-paid, lower-skilled roles, businesses have little incentive to invest in automation or workforce training. This overreliance on expanding the labour supply without matching investments in technology, equipment and skills has long-term consequences. More workers alone will not drive higher living standards if they lack the necessary tools and training to enhance output.

Now trade uncertainty is making things worse. Nearly 1.8 million jobs are in sectors where at least 35 per cent of employment relies on American demand. U.S. tariffs on key industries like oil and gas, pipeline transportation and primary metal manufacturing will send shockwaves through the labour market. Ample evidence shows that when trade barriers rise, businesses hesitate to invest, economic growth slows and workers face layoffs. The impact will be nationwide, particularly in regions where manufacturing and resource industries are economic cornerstones.

With these challenges mounting, it is more important than ever to ensure workers can transition into available opportunities. One of the biggest obstacles for Canadian workers, especially immigrants, is the rigidity of our credential recognition and labour mobility. Skilled newcomers often face long, complex and inconsistent licensing that keeps them from fully contributing to the economy. Outdated credential recognition also stops workers from moving to where they are needed most. With economic uncertainty prompting more workers to seek opportunities across provinces, now is the time for regulators to streamline these processes. Canada cannot afford to let red tape keep highly trained professionals — both domestic and immigrant — under-employed. Addressing these barriers is a low-cost, high-reward way to strengthen the labour market and ensure skilled workers are in the right jobs at the right time.