Small businesses are struggling to find workers

posted on October 18, 2018

By Financial Post |

For the first three-and-a-half years of business at Avenue, staffing wasn’t much of an issue. The Vancouver-based company, which provides online marketing support to realtors, had 12 employees. Then the business took off — growing to a team of 85 employees in just 18 months.

With size came the need for senior management, says Rebecca Troelstra, COO and founder. And there was the crunch: “It isn’t easy as a tech startup in a smaller community like Vancouver to find people with the experience we need, especially when we want to add senior level management and have to compete against larger companies like Amazon, Shopify and larger startups in town. It actually took us a year to find a chief technology officer.”

But tech startups aren’t the only small- and medium-sized businesses struggling with hires. According to a recent report by the Business Development Bank of Canada (BDC), 39 per cent of these companies say finding the right staff — at all levels — is a challenge. Forty-three per cent say it’s limiting their growth, while 56 per cent say their employees are working more hours to compensate for staff shortages. Almost half (47 per cent) say they have raised salaries or improved benefits to combat the issue.

Pierre Cléroux, vice-president, research and chief economist at BDC, says the problem is particularly acute for companies with fewer than 100 employees. “Smaller companies tend to have to hire less qualified people and train them because they can’t find the right person.”

Andrew Injodey is president and CEO of Peto MacCallum Ltd., a Toronto engineering consulting firm. The need for employees fluctuates depending on the time of the year but head count can go as high as 200, including a large number of high-demand, highly skilled employees.

But even hiring less experienced workers and training them is problematic, he says, because they’re hard to hang onto. “(It’s) really gotten quite intense. By the time we line up and train a person, it’s easier for head hunters to poach them.”

According to Cléroux, some of the clients he’s spoken with believe all of this is temporary.

“Unfortunately, it’s not, mainly because the population is aging and fewer young people are entering the labour force,” he says. “That will keep happening over the next 10 years.”

By way of comparison, in 2000 there were 263,000 new people entering the workforce. “This year the number is 107,346 — which is less than half. Business will have to think differently about this, because the next few years are going to continue to be difficult.”

Dan Kelly, the president and CEO of the Canadian Federation of Independent Business, says the labour crunch may be an enduring problem. “It’s a very big worry on the minds of a huge number of small businesses, particularly in low-unemployment regions like Quebec,” he says.

That’s a shift from 2007, for example, when it was mainly small businesses in resource-rich provinces like Saskatchewan, Alberta and Manitoba that were short on workers because of competition from oil and gas companies — particularly restaurants and retailers looking to fill minimum-wage jobs. In response, many turned to the temporary foreign workers program to fill the gaps. But since the government’s crackdown on TFWs, Kelly says, it’s even harder for most small firms to compete.

And while shrinking numbers of prospective hires is certainly one critical issue, Kelly says employers also have to address what he describes as employees’ changing goals.

“We have by most measures the highest percentage of population with a post-secondary education in the world. That means new entrants are not particularly interested in certain work. As a result, there is a lot of demand for candidates in semi- and low-skilled categories.”

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