At the global level, income inequality rose sharply around the world between the 1980s and the mid-1990s, before levelling off and then falling after 2000. Even with the recent decline, 42 per cent of total world income today goes to those who make up the richest 10 per cent of the world’s population, while just 1 per cent goes to those who make up the poorest 10 per cent. Countries with very high inequality are clustered in South America and southern Africa. Countries with low inequality are mostly in Europe. Canada and the U.S. have medium income inequality. And unlike most other countries, income inequality has continued to rise in Canada and the U.S. since the mid-1990s, with Canada outpacing the United States.
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Income inequality in Canada has increased over the past 20 years. The richest group of Canadians increased their share of total national income, while poor and middle-income individuals lost ground. The gap between the real average income of the richest group of Canadians and the poorest group grew from $92,300 in 1976 to $117,500 in 2009. Another worrisome trend is the rise in elderly poverty since the mid-1990s, following 20 years of dramatic reductions. Between 2006 and 2009, nearly 128,000 more seniors were living in low income. Of that amount, 70 per cent were women.
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Countries have long recognized that the education and skills of the labour force are the underpinnings of innovation. Innovation is only possible if there are people who can perform research that generates new ways of thinking and new knowledge, who can apply their knowledge and skills, who can adopt new technologies and processes, and who can adapt to change. Yet there is little hard evidence on the explicit links between specific skills and innovation performance. We looked at the link between advanced skills and innovation.
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On the surface, health outcomes appear to be improving for Canada and its peer countries. Death rates for many chronic diseases have fallen, thanks to improved health technologies and better health care. However, the fact that mortality rates due to cancer and chronic diseases are falling does not mean that the incidence of chronic diseases is on the decline. North Americans and Europeans continue to be plagued by a number of chronic diseases that are often linked to lifestyle choices. Smoking, over-consumption of alcohol, poor diet, and inactivity all greatly increase the risk of developing heart disease, hypertension, diabetes, and cancer.
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Canada and its peer countries continue to spend more on health care, and this spending will rise with the aging of their populations. But, more spending does not necessarily translate into better health outcomes. The U.S. has the highest health spending per capita among its peers, yet it fares poorly on life expectancy, infant mortality, and premature mortality.
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Investment in machinery and equipment (M&E)—particularly information and communications technology—is widely recognized as essential to improving labour productivity. Yet, Canada’s investment in M&E as share of GDP is among the lowest of its peer countries. Historical data for Canada and its peers reveal a strong positive relationship between investment in M&E and labour productivity.
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Canada’s share of global inward foreign direct investment (FDI) has dropped significantly over the past few decades—yet Canada is still attracting slightly more than its “fair” share of FDI. Inward FDI helps expand trade. In this new era of integrative trade, global supply chains are driven by FDI. Inward FDI can also boost productivity by providing access to new technology, business and manufacturing processes, and management know-how, as well as by fostering a competitive and innovative business environment.
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Canada’s report card ranking improved during the recession—from 13th place in 2006 and 2007 to 6th place in both 2008 and 2009. It may seem counterintuitive that Canada’s ranking improved during the recession, because Canada’s actual performance deteriorated—income per capita fell, GDP and employment growth were negative, and the unemployment rate rose. But relative to its peers, Canada’s deterioration during the recession was much milder.
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Post-recession, Canada seems to be falling back into old patterns. While its performance on most of the economic indicators is improving, other countries are improving even more rapidly, and so Canada’s relative ranking is slipping—particularly on labour productivity growth and outward foreign direct investment.
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