Health-related barriers to workforce participation cost Canada more than $100 billion in economic output in 2025, according to a new Deloitte Canada analysis that says reducing those barriers could generate more than $25 billion in annual economic gains.
The report, titled The health-productivity gap: Canada's untapped lever, released Tuesday, examines the economic effects of illness, mental health challenges and unpaid caregiving through what Deloitte describes as its Health Productivity Gap framework. It identifies lost economic activity tied to both preventable illness and constraints on people's ability to participate in the workforce.
Health and productivity
Deloitte says Canada's productivity performance has lagged other advanced economies for more than a decade, while health outcomes have deteriorated and pressures associated with chronic disease, mental health and caregiving have increased. The report argues that health-related barriers to workforce participation are contributing to those economic pressures.
"Productivity is one of Canada's most pressing challenges, yet health is rarely considered part of the productivity agenda," says Michelle Theroux, National Health Leader at Deloitte Canada. "We cannot expect technology, AI, or workforce upskilling to solve Canada's productivity challenge if people are increasingly sidelined by illness, poor mental health, or caregiving responsibilities. Better health is not just an outcome of a strong economy. It is a prerequisite for one."
The analysis divides the health-productivity gap into two areas: a prevention gap, which reflects capacity lost to preventable illness, and a participation gap, which reflects capacity constrained by chronic disease, mental health challenges and caregiving responsibilities.
Deloitte estimates that $55.1 billion in lost economic value in 2025 was associated with morbidity, including time away from work because of illness. Another $48.5 billion in lost labour income was associated with unpaid caregiving responsibilities, while $1.1 billion in lost economic output was attributed to premature mortality during the period required to replace and train workers.
Potential economic gains
The report says reducing health-related barriers by 25 per cent could recover more than $25 billion in annual economic output. Within that total, a 25 per cent reduction in caregiving burdens could generate more than $12 billion in economic gains, while reducing morbidity-related impacts by the same proportion could generate more than $13 billion in GDP gains.
Deloitte says governments, health-care organizations, employers and other stakeholders could pursue seven integrated actions to address the gaps. They include enrolling every Canadian in a Health Home that integrates primary care and prevention, making prevention more proactive and personalized, removing barriers to receiving health care and giving individuals financial tools for prevention.
The other proposed measures are creating capacity from existing resources, meaningfully digitizing health infrastructure and redesigning financing and incentives.
"There is no single solution to Canada's health-productivity gap, but there are practical steps we can take now that will pay dividends in both the near and long term, " says Matthew Stewart, Partner, Economic Advisory, Deloitte Canada. "Better prevention, improving workforce participation and smarter use of existing capacity and technology could unlock billions in economic value and strengthen Canada's long-term growth."