Small businesses face a shortage of applicants, skills mismatches and difficulty attracting candidates when hiring skilled workers, and these challenges are only worsened by labour mobility barriers, finds recent analysis by the Canadian Federation of Independent Business (CFIB).
The CFIB is Canada’s largest association of small and medium-sized businesses with 100,000 members across every industry and region.
“Over four in 10 small firms say a shortage of skilled labour is limiting their ability to increase sales or production. Many are struggling not just to find workers, but to find candidates with the right skills, expectations, and qualifications,” said Marvin Cruz, CFIB’s director of research.
“Since 2021, wage costs have gone up, but productivity has stagnated. By improving our workforce quality and removing labour mobility barriers, we could boost our productivity and strengthen Canada’s economic competitiveness.”
Over two-thirds (69%) of SMEs said the primary obstacle to recruiting skilled employees is a shortage of qualified candidates within their sectors. More than half (54%) of small businesses had issues attracting qualified candidates at all, while 47% said they struggled with a mismatch between the skills applicants bring and the actual requirements of the role, said the CFIB in releasing its data on Tuesday.
Even when qualified workers are available elsewhere in Canada, provincial licensing and certification barriers often prevent employers from filling essential roles quickly and efficiently—especially in rural areas or sectors where candidates are scarce. Additionally, 57% of small businesses reported a disconnect between what candidates expect in terms of pay or benefits and what the business is offering, and half of small businesses said they simply cannot provide compensation packages that match those of large companies, said the organizartion.
“There’s a growing disconnect in Canada’s labour market between small business needs and the available workforce. Even when roles are filled, businesses often deal with employees’ poor productivity, lack of motivation, and weak problem-solving skills. Business operations and output are then lacking, while owners are often forced to spend more time training or rehiring workers instead of focusing on running the business,” said Alchad Alegbeh, CFIB’s research analyst.
To enhance labour quality, the CFIB said governments should:
- Introduce tax credits and grants for SMEs that invest in employee training and upskilling.
- Provide wage subsidies or EI premium holidays for SMEs hiring and training new or inexperienced workers.
- Encourage partnerships between small businesses and educational institutions to create apprenticeship and internship programs that can help bridge the skills gap.
As for labour mobility, CFIB recommends governments:
- Mutually recognize one another’s regulatory requirements.
- Allow licensed professionals to work within the scope of their existing training and experience while undergoing registration processes in a new province or territory.
- Work with professional colleges and associations to lower or waive interprovincial registration fees.
- Streamline the registration process by legislating a clear timeline for professional certification approvals. Should approval timelines not be respected, implement compensation for businesses such as waiving registration fees.
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As someone with many years of expertise in retail fashion, I have been looking for a long time and would welcome employment opportunities.
Instead of complaining, businesses should review every application instead of relying on third party gatekeepers and AI to read resumes.
Perhaps, that’s why skills are mismatched.