Canada’s residential construction sector saw labour productivity fall by more than a third over two decades, driven largely by the dominance of small firms, according to a new Statistics Canada report released Feb. 25.
The study found that labour productivity — measured as real gross output per worker — declined by a cumulative 37.3% from 2001 to 2023, a compound annual growth rate of -2.1% per year.
Small firms dominate the sector
Firms with fewer than 20 workers accounted for 66.1% of total employment in the residential construction industry in 2023, according to Statistics Canada. The productivity decline occurred across all firm sizes, but was slightly more pronounced among smaller employers.
Over the same period, the share of smaller firms decreased while the share of firms with 20 or more employees grew. That shift toward larger firms made only a modest positive contribution — less than 5% — to overall productivity growth, as the productivity advantage of larger firms in this sector remains relatively small.
Why this matters for HR and business leaders
The findings arrive as federal and provincial governments look for ways to boost housing supply and address affordability. Improving construction productivity is seen as a key lever for increasing the pace of homebuilding across the country.
For HR professionals in the construction sector, the data points to structural challenges tied to workforce organization and firm size. A workforce concentrated in small operations may face limitations in adopting new technologies, training programs, or productivity-enhancing practices that larger firms are better positioned to implement.
Related findings on immigration and labour
A separate study in the same Statistics Canada release examined the Provincial Nominee Program (PNP), which accounted for 41% of all economic immigrants admitted to Canada in 2024, making it the largest economic immigration program in the country.
The research found that nominees screened through the federal Express Entry system earned more than those selected outside it. Among applicants with similar backgrounds, Express Entry-screened nominees earned 7% more than their counterparts one year after admission for the 2016-to-2019 cohort, rising to a 16% gap for the 2020-to-2022 cohort. Three years after admission, the earnings gap for the earlier cohort grew to 12%.
Express Entry-screened nominees were also more likely to hold a university degree (78% versus 65%) and were nearly all destined for managerial, professional, or skilled and technical occupations, compared with roughly two-thirds of non-Express Entry nominees.
Health workforce retention holds steady
A third study tracked graduates from Canadian health degree programs between 2015 and 2021 and found that most remained in Canada three years after completing their studies. Tax filing rates — used as a proxy for continued residency — were high among Canadian graduates, reaching 96% for medicine, dentistry and optometry, 96% for nursing, and 97% for pharmacy and related programs.
International graduates showed lower retention rates. Three years after graduation, 44% of international medicine, dentistry and optometry graduates remained in Canada, compared with 52% of nursing graduates and 64% of pharmacy graduates.
Interprovincial movement was also notable among Canadian graduates. Only 75% of medicine, dentistry and optometry graduates stayed in their province of study, compared with 87% for nursing and 89% for pharmacy. Quebec and Ontario recorded net losses of medicine, dentistry and optometry graduates, while Alberta and New Brunswick saw net losses in nursing.
