Canada has been on a trajectory of slower economic growth for the past half century. If this trend continues, inflation-adjusted GDP per person will stop rising by 2020 and total GDP some time after that. Whether this is a blessing or a curse for Canadians will depend on how we manage the transition to an economy that is no longer dependent on economic growth.

On the positive side, slower growth in economic output will make it easier to reduce the burden of our economy on the biosphere. The faster an economy grows, the faster it must reduce the environmental impact of each unit of economic output simply to stand still. But standing still will not be enough to reduce climate change, ocean acidification and biodiversity losses, among other urgent challenges. To play our part in a global environmental effort, we require absolute reductions in the use of materials and energy in the Canadian economy and in the generation and disposal of wastes. These reductions will be more easily realized in an era of slower economic growth, provided that public- and private-sector investment is redirected toward this objective.

A major concern when economic growth slows is that unemployment rises. If labour productivity increases but overall output does not, then unemployment seems to be the inevitable result. But if gains in labour productivity are used to reduce the time spent at work, then employment can be maintained and even increased in a slower non-growing economy.

Tolerance for inequality will be short-lived.

Throughout much of the 20th century Canadians benefited from increases in labour productivity through a combination of higher earnings and reduced work time. The balance between them shifted over the years, and the last three decades saw a marked slowdown in work-time reductions. Such reductions have ceased completely in recent years. Now many Canadians report an unsatisfactory work-life balance, suggesting that some would choose to work shorter hours for less pay but are prevented from doing so because of the conditions of employment.

Some of the obstacles preventing a decline in time at work for those who want it can be overcome through changes to the tax and benefits system. Overcoming other obstacles may require changes to labour laws that give employees the right to work shorter and more flexible hours. Such labour laws exist in Belgium, France, Germany and the Netherlands, where there are also more comprehensive social programs. The point is that slower or no economic growth need not necessarily increase unemployment, but it will take a variety of changes by employers, employees, unions and government to see that it does not.

One advantage of a lower rate of unemployment arising from more flexible working conditions and better systems of support is that it could help reverse the rising levels of income and wealth inequality in Canada. Greater inequality is weakening the social fabric, all the more so because many of those who have gained the most are seen as privileged and fortunate rather than unusually productive. It may be easier to tolerate such inequity in a faster-growing economy if the gains from growth are widely shared. But in a slower non-growing economy such toleration will be short-lived as it becomes obvious that the disproportionate gains of the few come at the expense of the many. Without growth as a justification for rising inequality, we can expect to hear more calls for social justice in all its forms, such as those that have inspired the Occupy Wall Street and Idle No More movements.

A future of slow or no economic growth can be bleak, but it can also be a blessing. The outcome will be up to us.

Peter Victor
Peter Victor is an economist who has worked on environmental issues for 40 years as an academic, a public servant and a consultant. He is a professor in the Faculty of Environmental Studies at York University.

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