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Over half of Canadian businesses struggling to find workers: report

The ongoing labour shortage is threatening Canada's economic growth prospects, a new report says, as more than half of small and medium-sized businesses struggle to find workers.

According to a BDC report released Wednesday, 55 per cent of entrepreneurs are having difficulty hiring workers and have been unable to fill jobs for three or four months. Another 26 per cent are having difficulty retaining workers, particularly as economies reopen and business returns to pre-pandemic levels.

"It's slowing down economic growth right now, that's the worst part," Pierre Cléroux, BDC's chief economist said in an interview.

"There are a number of solutions, some related to government, and others related to business. If we don't work to fix this labour shortage problem, it's going to limit our economic growth for the next few years."


Canada's labour shortage has been in the making for the last 20 years, thanks to an ageing population and related declines in the labour force participation. The COVID-19 pandemic exacerbated the situation, as immigration levels stalled and the national unemployment rate surged. Ever since economies began to reopen many who lost jobs through the pandemic – particularly in the service and hospitality sectors – have found other employment, Cléroux says, creating further difficulties for many businesses.

The shortage has affected entrepreneurs in several different ways. The BDC report found that 61 per cent of business owners facing a labour shortage have had to increase their hours or their employee hours. Nearly half (49 per cent) have raised wages and benefits, and 44 per cent have had to delay or been unable to deliver orders to clients.

Some regions are being hit by the labour shortage harder than others. The report found that hiring has been most difficult in Quebec, which Cléroux says is due to the province having a larger number of retirees than other regions.

It's a problem that's not going to go away anytime soon, Cléroux warns.

"I believe this is going to be an issue for the next decade," he said. "For the next five to 10 years, millions of baby boomers are going to retire. They're going to be leaving the labour force by the millions, which is why it's very important for businesses to understand this is a long-term issue and adopt different solutions than those you would use if you thought it was a temporary problem."

Automation a key solution to labour shortages

When it comes to hiring, the report says there are two key solutions that businesses can implement to help adapt to the ongoing labour shortage - adopting new technologies and automation, and undertaking a formal, organized and detailed hiring process.

According to the report, companies that have automated certain areas of their business were twice as likely to find hiring easy and 1.9 times more likely to see sales growth above the industry average. But adopting new technologies and automation is still challenging for many entrepreneurs. Business owners cited high investment cost (43 per cent), security and safety (32 per cent) and selecting the right tools (29 per cent) as the biggest challenges when it comes to adopting new technology.

"Businesses that are investing in technology to reduce some tasks are the ones that are the most successful and have the easiest time getting through this difficult period of time," Cléroux said.

"But only 10 per cent of businesses are using this strategy... Automation has become the No. 1 strategy, because not only is it helping so you don't need as many workers, it's also helping increase productivity."

Hiring strategies will also have to adapt to the changing environment, given the shrinking pool of potential workers. Most employees surveyed by BDC reported wanting higher wages (57 per cent) as the reason why they wanted to leave their job, followed by wanting more benefits (32 per cent). BDC recommends that businesses consider offering a total compensation package that offers additional benefits, such as flexible work arrangements, perks and bonuses, as well as health and wellness support.

The BDC report is based on a survey of 1,251 Canadian entrepreneurs conducted in May, and a second survey of 3,000 Canadians conducted in June focused on employment and related challenges.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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