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More productivity, and quickly, otherwise Quebec is going straight to the wall

More productivity, and quickly, otherwise Quebec is going straight to the wall

In the early 1980s, the standard of living of Quebecers was, in 2021 Canadian dollars, only 5.8% lower than the OECD average (of 19 member countries).

The situation has deteriorated dramatically over the decades. In 2021, the delay is down to 20%. Our standard of living ($58,642/inhabitant) showed a difference of $11,956 per inhabitant compared to the OECD average ($70,598/inhabitant).

Compared to the average Canadian standard of living ($65,651 per inhabitant), Quebecers were behind by 12% in 2021, or $7,000 per person.

And our standard of living gap between Quebec and Ontario was $5,960 per person.

The study authors state that “about 48% of this gap is explained by Quebec’s lagging in productivity and the remainder by lower labor intensity and employment rate.” Productivity and Prosperity in Quebec, 2022 Report It has just been unveiled by HEC Montréal’s Center for Productivity and Prosperity (CPP).

What do researchers Jonathan Deslauriers, Robert Jani and Jonathan Barry recommend to improve our condition?

“Given that the catch-up in terms of employment has long been completed, and the process of aging of the Quebec population is on its way to peaking, productivity will be the only lever on which the Quebec government will be able to support the stimulation of the growth of its economy and thus offset the huge backlog accumulated over the past 40 years.” past years.”

the challenge

In 2021, the Quebec government granted about $2.4 billion in tax credits to businesses. This equates to an amount, all things considered, twice the value of the credits provided by the Government of Ontario.

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Was it good advice? Absolutely not, according to the authors of the annual Quebec Productivity Portrait Review.

This is why they make several recommendations to help the interrupt improve throughput performance.

“Without in-depth reform of many business-supporting policies, not only will Quebec meet its goal of equalizing the standard of living in Ontario by 2036, but the province risks being sucked into the same downward spiral that has plagued the Canadian economy since 2015,” argue Deslauriers, Gagne and Barry.

They add: “In the short term, Quebec risks hitting a wall if it does not undertake an in-depth reform of its industrial policy which, in its current form, is aimed at the wrong targets.”

our problem?

What is our big problem? More than 80% of the tax support given to businesses by the Quebec government is in the form of irrelevant tax credits: government assistance is intended to stimulate employment in times of labor shortages when there would be a stimulus of competitiveness.

consequences ? The first is that large companies benefit the most, at the expense of small companies. Second, Quebec’s productivity is still seriously lagging behind.

the solution ?

Quebec should review its industrial policy. Instead of paying billions in tax breaks, the study authors believe the Quebec government should reduce the tax burden on businesses instead. The study authors believe that this greater leeway will allow companies to compete “through a healthy competition mechanism.”

According to them, the issue of productivity is the only real lever for long-term economic growth that will eventually allow us to erase the economic backwardness accumulated over the past forty years.

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To do this, the Quebec government must provide more support for small businesses by improving the competitiveness of its tax system.