Jasmin Guenette
Vice-President of National Affairs at the Canadian Federation of Independent Business (CFIB)
Mediaplanet interviewed Jasmin Guenette, Vice-President of National Affairs at the Canadian Federation of Independent Business (CFIB), on labour shortages and hiring challenges.
How are labour shortages currently impacting businesses?
Small businesses were already affected by labour shortages long before the pandemic. However, the COVID-19 crisis has certainly made it harder for businesses to hire workers.
CFIB’s recent report shows more than half of small businesses (55%) are experiencing labour shortages. That means they have difficulty finding and retaining staff or having enough employees to expand or meet new demand. Another 16% of entrepreneurs said they have all the staff they need, but at a significant additional cost to their business.
For small businesses, the situation causes a much greater impact due to a high vacancy rate and a lack of qualified applicants.,
If businesses don’t have enough staff, they can’t grow and expand. The situation may result in stalled sales and production, impede innovation, disrupt services or cause shortages of goods.
What drives labour shortages?
Among many factors like labour market disruptions and qualification mismatches, demographics is a big problem. Canada’s population is ageing, and a significant portion of its working-age population will decrease in the next three decades.
The pandemic has also pushed some workers to seek jobs outside of industries that were impacted by the lockdowns. Almost a quarter of businesses reported that employees switched jobs due to the pandemic. The rate was even higher among businesses in social services (37%) and hospitality (48%).
What can small businesses and governments do to address the situation?
Business owners have been exploring diverse options to cope with labour shortages but not all of them have turned out to be effective.
There is a widely held belief that increasing wages will solve labour shortages. In fact, more than four-fifths (82%) of businesses experiencing staffing shortages have raised wages. However, 47% of small businesses that have tried this approach have not found it useful due to the lack of applicants on the market.
The top two solutions that proved to be most effective include investing in automation and hiring temporary foreign workers (TFWs). Their levels of success were 81% and 52%, respectively.
Automation can help tackle the country’s demographics issue in the long term, while the TFW program helps address immediate labour shortages.
As small businesses are embarking on a long road to recovery, the federal government needs to step in and help them stay afloat.
Some short-term solutions include making temporary changes to the TFW program. The program’s cost and criteria make it time-consuming and difficult for small businesses to use.
By expanding the program to all types of jobs and sectors, improving and simplifying the processes, and temporarily waiving employer fees, the government will help ensure small business owners meet their staffing needs as they recover from the pandemic.
