Alchad Alegbeh
Research Analyst, Canadian Federation of Independent Business (CFIB)
Marvin Cruz
Director of Research, Canadian Federation of Independent Business (CFIB)
Canada’s skilled trades are a vital pillar of our economy, but small-and medium sized businesses (SMEs) across the country are struggling to find the talent they need to thrive.
Despite signs of easing labour market pressure, structural challenges persist. Over half (52%) of small and medium-sized enterprises (SMEs) still cite labour shortages as a major barrier to growth, and 46% say a lack of skilled labour is directly limiting their ability to increase sales or production.
At the heart of this issue is a persistent mismatch between business needs and the available workforce. Nearly 70% of SMEs report that the biggest obstacle to hiring skilled workers is a shortage of qualified candidates. But the challenge runs deeper: over half of small businesses say they can’t offer compensation packages that match those of larger firms, and 57% report a disconnect between candidate expectations and what they can realistically provide.
This dual constraint—expectation versus capacity—leaves many businesses stuck in a hiring impasse. Even when candidates are available, many lack the practical skills needed to meet job demands. In sectors like construction, personal services, and social services, where specialized expertise is essential, over 60% of SMEs report serious recruitment challenges. Rural businesses face even steeper hurdles, with limited access to skilled labour and fewer opportunities to attract talent.
One of the most overlooked barriers is labour mobility. Skilled workers often face province-specific licensing and certification requirements that prevent them from moving freely across Canada. For example, a Red Seal-certified tradesperson may still need to navigate costly and time-consuming applications to work in another province. These regulatory hurdles not only discourage mobility but also prevent businesses from accessing talent that already exists within the country.
Improving labour mobility is a critical step toward unlocking Canada’s full workforce potential. CFIB research shows that nine in 10 small businesses support automatic recognition of professional licenses across provinces. Streamlining certification processes and reducing interprovincial barriers would allow businesses to recruit from a truly national talent pool—especially vital in sectors and regions facing acute shortages.
But mobility alone isn’t enough. Workforce quality remains a pressing concern. Only 17% of SMEs rate their workforce as “excellent,” while 40% rate it “fair” or “poor.” Employers frequently cite issues with productivity, motivation, and problem-solving skills. These soft-skill deficits undermine operational efficiency and point to broader gaps in training and education.
To address these challenges, CFIB recommends a two-pronged approach:
1. Enhance Labour Mobility:
- Pursue mutual recognition agreements across provinces.
- Waive or reduce interprovincial registration fees.
- Legislate clear timelines for certification approvals.
- Allow professionals to work within their scope while awaiting registration.
2. Elevate Workforce Quality:
- Introduce tax credits and grants for SMEs investing in employee training.
- Provide wage subsidies or EI premium holidays for hiring and training new workers.
- Foster partnerships between small businesses and educational institutions to expand apprenticeships and internships.
Canada’s skilled trades are essential to our economic resilience and growth. By removing barriers and investing in workforce development, we can ensure that small businesses—often the first to innovate and the last to recover—have the talent they need to build, grow, and thrive.
Learn more at cfib-fcei.com.
