The Royal Bank of Canada (RBC) has launched The Growth Project, aiming to tackle Canada’s prolonged economic stagnation.
According to RBC’s latest research, the country’s economy, adjusted for inflation and immigration, remains smaller than pre-pandemic levels and shows minimal growth over the past decade.
The Growth Project is designed to provide comprehensive insights into various economic sectors, including productivity, artificial intelligence, agriculture, immigration, trade, and skills development, it said. The initiative seeks to propose practical strategies to address these issues.
“Canadians are telling us that economic uncertainty — low growth yet higher prices — is their top concern,” said John Stackhouse, senior vice-president, office of the CEO, RBC. “Addressing these issues has become a key focus for RBC. We’re convening stakeholders across the country—exploring ideas and solutions that can put our economy on a better growth track. We’re also making strategic investments to help Canada’s workforce meet current and future labour market needs.”
Low productivity a pressing issue
The inaugural report from RBC Economics & Thought Leadership, titled “Canada’s Growth Challenge: Why the economy is stuck in neutral,” highlights the pressing issue of low productivity. Despite Canadians working more, their output has not increased proportionally. The report suggests that productivity is Canada’s most critical economic challenge.
“When we look at the Canadian economy since the turn of the century, it’s clear that our growth has stagnated. On average, we’ve seen productivity growth of less than 1% per year. The problem is even more acute when we compare Canada’s growth against that of the United States, where our per-capita GDP runs 30% below U.S. levels,” said Nathan Janzen, assistant chief economist, RBC Economics & Thought Leadership.
Janzen attributes the stagnation to several factors, including insufficient business investment and complex tax regulations. “Our research shows that the solutions are not easy to implement but are clear and attainable,” he said.
Five growth policies
The report outlines five growth-positive policies aimed at benefiting both business owners and workers:
Cutting red tape and reducing internal trade barriers: Accelerate project approval times and lower potential holding costs for businesses planning new investments in Canada.
Better utilization of immigrant skills: Recognize the credentials of foreign-trained professionals, particularly in healthcare, to increase productivity and earnings, addressing labor market shortages.
Improving tax competitiveness: Simplify tax rules to encourage compliance, especially for new businesses and lower-income households.
Adopting new technologies: Facilitate investments in technologies like artificial intelligence to enhance global competitiveness and streamline project approvals and tax systems.
Capitalizing on a highly educated workforce: Increase the use of work-integrated learning placements (co-ops and internships) to better match skills development with labor market needs.
The report emphasizes the importance of fostering a growth mindset in Canada, one that rewards innovation, celebrates competitiveness, and invests in both people and technology.
Funding to colleges in Atlantic Canada
In addition to providing insights, RBC is actively supporting workforce development. The RBC Foundation is donating $2 million to five colleges in Atlantic Canada to support green skills education and training.
The College of the North Atlantic and Collège communautaire du Nouveau-Brunswick will use the funds for Electric Vehicle education and applied skills training programs.
Nova Scotia Community College and New Brunswick Community College Foundations will focus on wind and solar technician training programs.
In Prince Edward Island, a donation to the Holland College Foundation will support a green retrofit project for campus residential property.