Canada’s productivity has been slowing for several years with labour productivity growth averaging under 1% annually since 2000. GDP per hour worked was roughly 20–30% below the U.S., meaning Canadian workers produced about 70–75% of U.S. output per hour.
These statistics are attributed to small firm scale, underinvestment in machinery, automation, digital tools and intellectual property. Additionally, skills shortages and infrastructure bottlenecks have limited efficiency gains and highlight a structural competitiveness gap.
The recently imposed tariffs have put further strain on Canada’s productivity as businesses face rising costs, weak investment and growing trade uncertainty.
However, productivity investments with a focus on automation, artificial intelligence, advanced equipment, digital systems and workforce training may ease the tariff effects.
Government assistance has been keen in alleviating some of the pressure with the release of innovation and infrastructure funding, investment tax credits and skills-training to help reduce costs, improve output and compete in markets beyond the United States.
Rather than asking, “What grant can we get?”, businesses should ask, “What productivity or competitiveness problem do we need to solve?” Funding can then be aligned with measurable outcomes such as lower production costs, higher output per employee, reduced downtime, new market access and stronger domestic supply chains.
The Regional Tariff Response Initiative (RTRI) has recently been significantly enhanced. Eligible SMEs can access up to $3 million in non-repayable support, including up to $2 million for demonstrated liquidity needs and up to $1 million for eligible pivot projects.
Support can help businesses improve productivity, diversify markets, strengthen supply chains and respond to tariff-related pressures.
But beside tariff impacted businesses, labour productivity remains a major concern across industries, and other funding channels may be beneficial.
- Strategic Response Fund: Supports major industrial projects and strategic investments that improve competitiveness, innovation, and economic resilience.
- Regional Artificial Intelligence Initiative: Helps businesses, especially SMEs, adopt AI technologies to improve productivity and commercialization.
- AI for Productivity Challenge: Funds AI-based solutions that raise efficiency, automate tasks, and improve business performance.
- Business Scale-up and Productivity Program: Provides funding to help firms scale operations, adopt new technologies, increase exports, and improve productivity.
These programs can add significant productivity gains to your operations, but requires a comprehensive look at your situation to determine the best alignment of funding support.
Tariffs are creating immediate challenges, but they also reinforce the need for long-term productivity investment. Strategic funding can help Canadian businesses turn that pressure into modernization, diversification and greater efficiency.
Our grant experts at Leyton would be more than happy to discuss your situation and present funding options that can help you meet your business goals.
Sources
- Fraser Institute Labour productivity, a key driver of higher living standards, grew more than three times as fast in the US compared to Canada between 2001 and 2024
- Government of Canada – Labour productivity, hourly compensation and unit labour cost, second quarter 2026
- OECD – Reviving Productivity Growth in Canada