You’ve heard the old chicken and the egg debate about which came first, and that seems to be the case with Canada’s construction industry, as according to Statistics Canada, the lack of affordable housing in Canada is cyclically impacting the competitiveness of the construction industry, which has been tasked with expediting the construction of more homes to drive affordability.
The study links the lagging construction industry, particularly small businesses, to the persistent housing affordability issue, citing decreased productivity nationwide as “smaller firms accounted for the overall decline in labour productivity.”
The study measures labour productivity by dividing real gross revenue by annual average employment, meaning productivity equals output divided by the number of employees. The findings showed that between 2001 and 2023, labour productivity in housing construction dropped by 37.3 percent. While job figures grew, output did not.
Instead of improving processes and adopting new technologies, companies, particularly smaller ones, were putting all their emphasis on hiring to gain productivity. For example, integrating robots or utilizing prefabrication could help these companies better achieve economies of scale, and thus, productivity.
Increasing the efficiency of construction, “is the long-term key to improving housing affordability,” said Aled ab Iorwerth, Canada Mortgage Housing Corporation (CMHC) deputy chief economist and a co-author of the report, to CTVNews.ca. “It’s not going to be a quick process,” said ab Iorwerth. “It’s going to take years of consistent building of more housing.”
