Hiring Difficulties Are Not Going Away, Says BDC Economist
Fredericton – One of Canada’s foremost economists gave New Brunswick business owners his insight on the province’s labour market Wednesday.
Pierre Cléroux, the chief economist and vice-president of research with the Business Development Bank of Canada (BDC), said Canada’s labour force growth has slowed and that the Covid-19 pandemic has expedited increasingly difficult hiring trends.
Cléroux spoke virtually to chambers of commerce from across the province. Many in the audience represented small- and medium-sized enterprises (SME’s), who in many ways make up the business segment most affected by last year’s economic downturn.
Research published by BDC in September showed 64 percent of Canadian businesses saying labour shortages were limiting their growth. BDC’s analysis of the Labour Participation Rate from Statistics Canada shows an aging population will continue to put downward pressure on labour force participation and growth in the coming years.
What’s caused the shortage is something Cléroux says was already well in motion prior to the pandemic. He said millions of Canadians were set to retire then and in the next few years.
“The labour force used to increase a little bit every year. But now it’s slowing down because so many people are leaving the workforce to retire and not enough young people are entering the workforce,” he said.
Cléroux said Atlantic Canada, and later the country as a whole, began to experience the aging workforce trend over the last decade, the effects of which were only hastened by the pandemic.
BDC’s report points to four factors it believes contributed to the labour shortage. Cléroux pointed to not just to an aging working population – from baby boomers leaving the labour market in such large numbers that entrants are unable to fill all the gaps – but to how retirements are expected to remain high until at least 2026, when many boomers will have left the workforce.
Two other contributors were younger people taking much longer to complete their education before beginning their careers, and immigration. Bringing new residents to the province has in the past helped compensate for the number of people leaving the labour force. But it was nearly cut in half in 2020.
“We believe that the immigration numbers are going to come back to normal, but we’re kind of losing two years in Canada and we figure that we’re missing about 400,000 people in those two years that are not coming to the country because of the pandemic,” stated Cléroux.
A Recovering Job Market Heightening Labour Scarcity
BDC’s projections show labour force growth in Canada will continue to slow for the remainder of the decade. A recent survey from the organization found 55 percent of Canadian entrepreneurs admitting to hiring challenges and 26 percent of business owners saying they have had difficulty retaining their own employees.
Given the downward trend, Cléroux says entrepreneurs must adapt their business practices to sustain their growth over the long run. BDC’s report says rising vaccination rates and last summer’s easing of restrictions allowed Canada’s job market to bounce back with vigour. But it also cautions that the recovery generates both a stronger demand for workers and a tightening of the labour market.
“Many people who lost their job, they have decided to work in another sector. So, it’s more difficult to recruit right now in retail. It’s also the case in accommodation and food services. And also truck drivers. A lot of people decided to do something else,” said Cléroux.
Pressure On Employers To Offer Competitive Pay And Benefits
Cléroux said businesses have been trying to adapt and have had some success addressing those concerns, in part by offering employees more flexible work arrangements.
Other entrepreneurs looked to more internal training and to recruiting younger workers, putting more of an emphasis on mentoring and coaching.
Cléroux said there are four things entrepreneurs did to navigate the labour shortage that were most effective.
“Technology has been proven as the most efficient strategy for people who are facing shortage of labour; use of a formal hiring process and offering a total compensation package that is competitive [are two more], and the fourth is to expand,” he said.
“In our research, we find that companies who are investing in technology and automation, they actually are the ones who performed the most in terms of revenue growth and they are the ones who have the easiest way to face this challenge of a shortage of labour,” Cléroux said.
BDC’s study showed 77 percent of businesses have no formal hiring process. Cléroux noted that, while many entrepreneurs tend to think about how they market their companies, products and services, they spend little time on marketing their business as a good employer, something he says is crucial in today’s war for talent.
Cléroux says offering compensation packages – and not necessarily those tied strictly to salary is helping bring employers and working prospects together in the changing job market.
“While often it is to increase salary, a lot of people are looking beyond the salary, so they are looking for benefits or looking for a more flexible work arrangement. The pandemic has changed that, a lot of people would like to work more from home. So, if it’s possible to offer the ability to work from home few days a week, a lot of that goes a long way for many people.”
Youth And Immigrants Could Be Better Integrated
Cléroux said more companies are hiring younger people with little or no applied experience and taking the time to help new recruits to get experience inside their company.
“Everybody wants to hire somebody with ten years of experience. But in this new context of the labour force, we have to think differently, and hiring younger people and training them, that’s one way to do it,” he said.
Cléroux also said unemployment rates for immigrants remains high and in some provinces much higher than non-immigrant populations. He says those people are a very important part of solving Canada’s critical labour shortage.
“We’re not going to solve this in the next few months because the baby boomers are going to leave the job market for the next five years. So as businesses we have to find long-term solutions. Every business is different, every business model is different,” Cléroux maintained.
“The economic recovery is really coming back pretty quickly. The demand for our products and services is really increasing and we believe that the growth of the economy is going to be quite solid for the end of this year, and also for 2022.”
Tyler Mclean is a Huddle reporter based in Fredericton. Send him your feedback and story ideas: [email protected].