Productivity in the deep

Productivity in Canada has too long been the hole that need not be filled. Our geographical and cultural proximity to (and corresponding ability to rely on) the world’s largest economy kept the hole more or less filled for us. Those were the days. Now, amid relentless threats to our economic and political independence, sustaining our newly rekindled ambition to build and grow and reassert not only our sovereignty but also our leadership in the world requires that we find a way to fill the hole ourselves—and keep it filled.

Results from KPMG’s 2025 Canadian CEO Outlook suggest that business leaders in Canada are drilling down on productivity by being holistic, blending human ingenuity with digital innovation in cultures of trust.¹ And although the results also suggest CEOs are looking at the challenge primarily as it pertains to their individual organizations, not as a matter of shared national urgency or priority, progress on one can accrue to the other. The time to dig in is now.

Fortunately, Canadian CEOs aren’t just chipping away at short-term gains. As prerequisites for sustainable growth, they’re investing in AI and digital transformation; in workforce upskilling and productive culture; and in sustainability, innovation and partnerships—the top three opportunities they’re betting will generate the greatest returns.

AI is seen as a key driver of productivity, efficiency and competitive advantage—especially when paired with strong governance and upskilling.

Building a future-ready workforce is both a risk mitigator and a growth enabler.

Embracing innovation and sustainability not only addresses regulatory and societal expectations but also opens new markets and investment opportunities.

AI in particular is dominating the field, with 78 per cent of Canadian CEOs identifying it as a top investment priority, outpacing the global average of 71 per cent. But the real differentiator isn’t technology; it’s how organizations prepare their people to work alongside technology.

Advantage: Canadian firms lead in AI governance and ethics (26 per cent vs. 20 per cent globally) and, as noted, they are prioritizing investment in workforce upskilling.

These investments are positioning Canadian companies to leverage AI for competitive advantage and drive industry growth. And though, at 69 per cent, they’re slightly behind the global average of 74 per cent in feeling confident in their ability to keep pace with AI development, they’re open-eyed about the potential benefits of increased diversity of skills and capabilities, increased efficiency and productivity through automation and enhanced decision-making and data analysis.

78% of Canadian CEOs identified AI as a top investment priority

Bridging the digital skills gap and investing in lifelong learning are top priorities, with 83 per cent of Canadian CEOs agreeing that skills development is essential to future productivity. Nearly a third (29 per cent) cite the skills gap as their biggest challenge, underscoring the importance of building a future-ready workforce.

No surprise, then, that Canadian CEOs are more likely than their global peers to prioritize talent development and responsible technology adoption. This is reflected in their slightly higher investments in workforce upskilling and AI readiness (25 per cent vs. 21 per cent globally) and employee wellbeing and mental health (14 per cent vs. 10)—clear signals of a commitment to building resilient organizations.

Canadian organizations are also leveraging innovation and sustainability not just to meet regulatory demands but to differentiate themselves in the market. CEOs are more likely to engage with regulators and policymakers on innovation (59 per cent vs. 53 per cent globally), and 78 per cent believe AI can help reduce emissions. By integrating continuous improvement into business strategy and forming strategic partnerships, Canadian leaders are positioning their companies as champions of sustainable growth—just what the country needs at this pivotal moment.

What could bury them? They say shortfalls around cybersecurity and digital risk; acquiring and retaining digital talent or failing to reach their upskilling objectives; and complying with complex regulations.

78% of Canadian CEOs believe AI can help reduce emissions

The rapid adoption of AI and digital tools is increasing exposure to cyber threats, making resilience and protection a top priority.

Productivity and innovation depend on having the right talent, and Canadian CEOs are more likely to invest in upskilling and lifelong learning.

Navigating evolving regulations—especially around AI, data and ESG—requires agility and proactive engagement with policymakers.

The stakes on cybersecurity, for starters, have never been higher. Forty per cent of Canadian CEOs cite cybersecurity as a key area for increased investment, slightly above the global average. And with 97 per cent expressing concern about fraud, identity theft and cyber-attacks, it’s clear that productivity gains are counterproductive if they come at the expense of business disruption, reputation damage and loss of trust.

Leaders are particularly focused on AI-related cyber risks, investing to safeguard their organizations and their customers. But only 16 per cent of Canadian CEOs (vs. 20 per cent globally) expressed confidence in their employees’ ability to make the most of AI, including in cybersecurity preparedness and response. Compounding the challenge, only 17 per cent (vs. 20 per cent globally) say their organization is equipped to provide the upskilling necessary for employees to make the most of AI in the first place. This, of course, is why investment in just these issues is high on their list of priorities.

97% of Canadian CEOs expressed concern about fraud, identity theft and cyber-attacks

As for regulatory compliance, it’s another longstanding source of frustration for Canadian CEOs, much like productivity itself. The issues are, to a large extent, intertwined. Recent legislation like Bill C-5 is meant to reduce the regulatory burden, at least for projects deemed to be in the national interest. And it’s expected that here, too, AI will do much of the work.

To gain the most ground most effectively, both for their own immediate ends as well as the shared ones, Canadian CEOs should approach filling the productivity hole as part of a dynamic, multi-dimensional challenge, one that integrates people, technology and trust, while backing strategy with targeted investments.

Those who mix it right will be the ones leading their organizations, and our country, into a future defined by resilience, growth and purpose—and where productivity is no longer a hole at all.