Productivity in Quebec’s construction industry: changes are needed
New CPP report
June 12, 2024
Even as the Government of Quebec just adopted the Act to modernize the construction industry, the Centre for Productivity and Prosperity – Walter J. Somers Foundation (CPP) released a study which concludes that this reform will not be enough to improve actual productivity in the construction sector.
“The construction industry is at a crucial juncture. In previous years, its inability to generate real productivity gains led to the creation of an unsustainable inflationary spiral, given the magnitude of the province’s infrastructure needs. If we fail to reverse the trend, the shock waves will be felt beyond industry frontiers, and the entire economy will be affected.”
Deteriorating performance
EIn contrast to the findings of a study published in 2012, the HEC Montréal research team demonstrated that the industry’s performance has deteriorated significantly over the last 10 years.
“The lack of real productivity gains has weighed more heavily on production costs in Quebec, due to the pressure of employers’ contributions. To put things in perspective, these expenses are twice as high as in Ontario, according to the most recent data available.”
Possible solutions
Given the scale of the planned projects in Quebec, the two co-authors feel that mere changes in professional mobility and versatility will not be enough to reverse the trend. The CPP proposes to ease regulations governing residential construction in an attempt to resolve the impasse: “In terms of productivity, this sector has always been the Achilles heel of the industry,” declares Jonathan Deslauriers. “By proceeding quickly, the government could accelerate productivity growth in the sector, thereby reducing pricing pressure.”
Both researchers also deem it necessary to conduct a thorough review of the governance framework that regulates the industry: “Not only did the governing bodies fail to diagnose the productivity shock in time, but they were also unable to develop coping mechanisms to contain production costs; in retrospect, their inaction has resulted in far-reaching consequences,” concludes Robert Gagné.
Find out more
Study – Productivity in Quebec’s construction industry: changes are needed [only in French]