The closing of offices and businesses during the COVID-19 pandemic helped prevent the spread of the disease, which was contained in record time. The economy and social activities soon recovered, in many instances much faster than expected.

But businesses continue to struggle with one of the lingering side effects of the shutdown:

lost productivity

.

A comparison of metrics for workers in the U.S. and Canada indicates that, prior to the pandemic, productivity in both countries grew at a similar rate. The seasonally adjusted output per person in U.S. business sectors and labour productivity in Canada’s goods and services sectors showed identical patterns pre-pandemic. Since then, U.S. and Canadian productivity trends have diverged, with American businesses reporting growth while Canadian ones experience a decline.

Economic productivity measures how efficiently we convert inputs like labour and materials into goods and services. Although it has been more than five years since the pandemic began, most of the significant disruptions it caused (to work environments, supply chains, etc.) no longer exist. So, what is behind the decline in productivity growth in Canada?

Canada is not the only country struggling with productivity. The residential construction sector in Australia faces similar issues. The average construction time, from permit approval to project completion, has increased across all housing types, especially for apartments. Before the pandemic, it took about 25 months to finish an apartment building; by 2024, the timeline had grown to 33.3 months.

Some employers believe

remote work

is partly responsible for the slowdown in productivity growth, and more and more companies are calling their employees back to the office. Consider Zoom, the software firm whose videoconferencing platform enabled remote work for hundreds of millions of employees. The company revised its own remote-work policy in 2023, mandating its staff back to the office at least two days a week.

The post-pandemic productivity gap is not the only difference between the U.S. and Canadian economies. Remote work is much more common in Canada than stateside. In December 2021, Statistics Canada reported that 50.4 per cent of public sector employees worked from home. In comparison, only 20.7 per cent of U.S. public sector employees work remotely.

Unionization rates

in the two countries also differ significantly. In Canada, the proportion of workers who belong to a union is notably higher than in the U.S., at 28.7 per cent as of 2022. This figure represents a downward trend over the past several decades, declining from 37.6 per cent in 1981.

In contrast, unionization rates in the United States are considerably lower. In 2022, only 10.1 per cent of American workers were union members — a substantial drop from 20.1 per cent in 1983. The data for both the United States and Canada highlight a persistent and long-term reduction in union membership across the United States.

Recently, companies’

return-to-work

mandates have become increasingly stringent — and employees are resisting. Worker surveys frequently show higher self-reported productivity for remote or hybrid work compared to working onsite. In contrast, most employers struggle to assess or report productivity for hybrid workers, making it difficult to obtain employer-based assessments through business surveys.

Ideally, firm-level data analysis should compare pre- and post-pandemic remote (or hybrid) work trends to assess their impact on productivity measured by sales or value added. Objective metrics are essential as self-reported evaluations are insufficient, but clear causal evidence may still be hard to find.

In Ontario, Premier

Doug Ford

’s government has requested that public sector remote workers be in-person full-time starting next year. Interestingly, the union representing the workers is challenging the government’s decision, citing the short notice as its main concern. Although this may be an essential issue, the pandemic has been over for years and employees should have anticipated the resumption of regular work arrangements.

A company’s decision to allow employees to work remotely or in designated workspaces should be based on what maximizes productivity. Managers should not conflate attendance with productivity, and workers should not assume they are significantly more productive because of the flexibility.

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Unions and employers need objective measures to assess whether employee productivity is affected by remote work arrangements. Differences in productivity trends between Canada and the United States and the greater prevalence of remote work and unionization in Canada highlight the complexity of evaluating productivity outcomes. Multiple factors influence productivity, which makes drawing definitive conclusions a challenge.

Murtaza Haider is the executive director of the Cities Institute at the University of Alberta and the Radhe Krishna Gupta Executive Chair in Cities and Communities at the Alberta School of Business. Stephen Moranis is a real estate industry veteran.