Higher productivity no longer guarantees wage gains

A recent article in the International Productivity Monitor calls into question the assumption that higher productivity means higher wages.

Since 1981, gains in productivity have not been matched by wage gains. Had wages kept pace with productivity, the average worker would be taking home an extra $9,540 a year.

The authors attributed the growing gap to neoliberal policies, such as weaker labour laws, trade and investment agreements, and cutting corporate taxes. As these policies have weakened workers’ bargaining power, employers have kept a larger share of the gains from increased productivity.

One of the principles of a modern industrial strategy is that it should reduce inequality. As the article from the International Productivity Monitor shows, the policies of many governments in Canada have worked to undermine that principle.