Labour shortages cost Canadian small businesses billions in lost revenue opportunities: CFIB

Small businesses in Canada missed over $38 billion in revenue opportunities last year, according to a recent report by the Canadian Federation of Independent Business (CFIB).

Photo credit: Burst

A recent report by the Canadian Federation of Independent Business (CFIB) has revealed that small businesses in Canada missed over $38 billion in revenue opportunities last year due to having to turn down or postpone contracts or sales as a result of labour shortages.

“We always knew labour shortages came at a high price to small businesses. Staffing challenges cause employers to work more hours, reduce their hours of operation and decline services and contracts, simply because they can’t find enough staff to fully operate their business,” said Laure-Anna Bomal, CFIB’s economist and the report’s author. “In fact, we estimate the business opportunities that small businesses lost in just one year due to labour shortages are worth over $38 billion. While it doesn’t necessarily mean the Canadian economy lost the same amount, it’s still a significant share of revenue that small businesses could have used to invest in automation or growing their business.”

According to the report, small businesses in the construction sector faced the most significant loss of business opportunities last year, accounting for over $9.6 billion.

The report noted that while a single policy change will not address labour shortage pressures, a collection of them may provide some relief.

CFIB has completed a whitepaper on how to address various barriers to work after conducting a detailed review of what other jurisdictions are doing to address their labour shortages.

The policy proposals cover three age groups; youth (15-24), core age (24-64), and older workers (65+) and include solutions on how to better integrate workers of all ages into the labour force.

This includes increasing workforce participation among youth. Governments could do this by increasing the prevalence of work-integrated learning in high schools.

Among the core-age group, the CFIB noted that employment insurance program design should not create disincentives to work, and that governments need to facilitate labour mobility across provinces.

In terms of experienced workers, governments should revisit existing tax policy and/or create a tax credit for career extension.

“As Canada’s population is aging, we need to ensure that those who are willing to work can do so without significant challenges. In the long run, the shortages will get worse, as will their costs, unless we change our labour market approach,” said Christina Santini, director of national affairs at CFIB. “We urge governments to find innovative ways to increase participation in the labour market among all age groups.”

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