Business Investment Decline is Bad for Workers
March 4, 2024
Business investment helps maintain good jobs, writes Peter Watson.
Canadian companies are investing less per worker and that could have negative consequences.
Recent information from StatsCan showed Canadian businesses investment per worker fell by 20 per cent over the 15-year period ending in 2021.
Business has a delicate balancing act between the output of work by employees and machines. If workers’ productivity declines because of the lack of investments in machinery, those companies could become less profitable and eventually go out of business.
Employees will lose their job and some, or many, depending on the industry, might not be able to find suitable employment. Others might find work but at a reduced income.
Sometimes there can be pushed back against companies that are automating and therefore require less workers. Being efficient in an ever increasingly competitive world is a key ingredient to keeping that business operating.
The wonderful web of commerce in our country relies on all working parts operating efficiently.
Companies provide goods and services and that has the potential to provide the owners of those companies with a profit. Profits result in the business continuing to operate and potentially growing.
Employees earning an income can support themselves and their families by spending their income. This allows other businesses to prosper and to hire workers who also earn an income and spend accordingly.
Finance Minister Chrystia Freedland encouraged companies to expand their business investment at a news conference held in February.
“We believe in you. We want strong Canadian headquartered companies in this country,” Freeland said. “We need you to be investing in the productive capacity of this country, whatever sector you’re in.”
Encouraging companies to continue spending is particularly important. The data from StatsCan indicated larger companies and foreign control businesses were among those firms spending less.
Those companies tend to have more employees and therefore more jobs that must be maintained.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com