More and more every year, the labour market faces the significant challenge of a widespread labour shortage in Canada.
Employers nationwide need help finding the right talent to fill their open positions, threatening productivity and growth. Addressing this issue is crucial for sustaining economic stability and ensuring business continuity.
With the changes in the economy, work environment, and dynamics, along with technological influence, we might need more workers to fill the gaps of those retiring.
What are some of the reasons for the labour shortage in Canada, and how can you, as an employer, avoid (or overcome) it? Read on for some great insights!
Understanding the Labour Shortage
We all saw it coming. Boomers, who make up 24.9% of the workforce, are retiring in the next five years. However, there is an imbalance in the Canadian workplace. The number of younger generations entering the job market doesn’t equal the number of Boomers retiring. In November 2023, more than 4.4 million people aged 55 and older had a job Vs. about 2.7 million Canadians aged 15 to 24 who were employed.
According to a survey by Peninsula Employment Services Ltd., which polled 79,000 SMEs across Australia, Canada, Ireland, New Zealand, and the U.K., more than 40% of SME employers say labour shortages and employee retention are among their top business concerns for 2024.
What Are Some of The Reasons for The Labour Shortage in Canada?
A labour shortage occurs when there are more job openings than qualified candidates to fill them. Industries like technology, healthcare, and trade have been severely affected, experiencing critical shortages that impede their operations.
In Canada, this issue has been exacerbated by an aging population, evolving job market demands, and the aftermath of COVID-19. According to Statistics Canada, the job vacancy rate reached a record high of 5.7% in the first quarter of 2023. The number of vacant jobs decreased to 815,295 in March 2023, the lowest level seen since July 2021.
The overall unemployment rate increased to 6.4% in June 2024, with 1.4 million unemployed people, continuing its upward trend since April 2023.
Okay, so other than the aging population, we seem to have job vacancies and a number of unemployed people available. Where is the problem?
1. Rising Inflation
According to Statistics Canada, 56.0% of businesses in Canada expected rising inflation to be an obstacle over the next months. Businesses with 5 to 19 employees were most likely to expect rising inflation to be an obstacle, while larger businesses with 100+ employees were least likely to expect obstacles related to rising inflation. In addition, factors like geopolitical trends also have a huge impact on the recruitment process.
Potential solution: If your business is struggling due to inflation, be sure to implement a recruitment strategy that will help you overcome this period while retaining your core employees to lower costs.
2. Shifting Expectations
The mismatch of what employers and candidates expect could create a challenge in finding the right talent.
Employers Expect Longer Working Hours: According to Statistics Canada, 83.3% of businesses anticipate that management and/or existing staff will work increased hours to compensate for labour shortages, which affects the retention of skilled labour. SMEs (with 20 to 99 employees) and larger businesses (with 100+ employees) were more likely than smaller businesses with 5 to 19 employees to anticipate increased working hours for their existing staff as a result of labour challenges.
Possible solution: Expecting workers to work for longer hours can hurt your business. It leads to burnout and sickness, and it’s not sustainable. Since the demand for convenient, satisfying work is trending, to retain your current employees, be sure to have reasonable expectations from them. In some cases, hiring a few new people might be the best thing to save your business.
Employers Expect Replacing Employees with AI: A report from beautiful.ai, which interviewed 3,000 managers, found that 66% would gladly replace employees with AI tools if the technology produced comparable work. 69% said replacing employees with AI technology would be financially beneficial, and 68% cited lower payroll costs as a reason.
Potential solution: Embracing technology can be an attractive solution for performing repetitive tasks to cut costs, it also allows human workers to focus on more complex responsibilities. This needs careful consideration regarding its impact on the workforce.
Talent Expect Flexibility: According to Randstad’s 2024 Workmonitor report, candidates now rank work-life balance as more important than salaries when making career decisions. Yet there is a potential mismatch between what they want and employers’ flexible working arrangements.
Potential solution: Offering flexible work arrangements, attractive packages, and benefits can be attractive to high-quality candidates.
3. Outdated Recruitment Practices
As an employer, staying up-to-date with the hiring trends is crucial to attracting top-quality talent, let alone overcoming the challenges of labour shortage with minimal cost. What used to work last year won’t necessarily be effective today.
Potential solution: Here are some of the outdated hiring practices to avoid.
- Relying only on referrals and not looking for candidates outside your comfort zone.
- Looking for the perfect candidate based on their resume
- Attracting Candidates with Salary Alone
- Not offering benefits, flexibility or remote work
- Posting Vague or Ambiguous Job Descriptions
- Wasting time in Lengthy and Time-Consuming Application Processes
- Using outdated technology and services
- The hiring process is too long. Learn how to speed up your hiring process.
4. Difficulty in Finding Qualified Candidates
Many employers are struggling to get applicants with the necessary skills and experience in the scientific, technological, managerial and economic fields. According to ManpowerGroup, 75% of employers struggle to fill job vacancies. Additionally, 23% said the available talent pool doesn’t match their needs.
At the same time, a significant 34% of job seekers identified companies that falsely claim to be hiring but are solely collecting applications and resumes as a major barrier in their job search, which is alarming, especially with the increasing number of job scams.
Potential solution: Some successful employers would develop talents to be the future workers you need. Investing in employee training can help bridge skill gaps and prepare the workforce for evolving job roles, especially when it comes to newer technology. Upskilling your staff has a high ROI and can benefit your company in the short and long run. By prioritizing their employees’ professional growth, businesses mitigate the effects of labour shortages, cultivate a skilled and motivated workforce, and fill gaps in the workplace.
Some specialists also suggest easing up the interview process and not to – too many unrequired qualifications. Some things can be learned on the job. According to the survey, 18% of employers mentioned that reducing qualification requirements helped them overcome the labour shortage.
5. Competitive Employer Market
Many companies compete fiercely for the limited pool of available talent, often driving up wages and benefits. According to the Peninsula survey, 25% of employers found increased job market competition, and 21% said uncompetitive benefits were a challenge.
Potential solution: Employ talents from commonly underemployed groups such as new Canadians, Indigenous people, retired workers or veterans, and people with different abilities.
Labour Shortage Can Hurt Your Business Beyond Repair
A skilled labour shortage is a significant challenge that can negatively impact industries on a global scale. The consequences can be far-reaching and detrimental to businesses of all sizes, and understanding these repercussions is essential for organizations and industry leaders. With a greater appreciation for the negative impacts, companies can proactively address a skills shortage before it becomes a more significant issue.
Unfilled positions can decrease productivity, increase operational costs, and cause revenue loss.
Addressing the labour shortage in Canada is essential to maintaining economic stability and business growth. Employers can overcome this challenge by adopting a multifaceted approach that includes upskilling, offering flexible work arrangements, attracting diverse talent, and partnering with organizations like Career Edge.
How Can Career Edge Help You Overcome Labour Shortage?
Partnering with Career Edge Organization can be a lifeline for many businesses struggling with labour shortages. We are dedicated to bridging the gap between employers and a diverse talent pool. We connect employers with a diverse talent pool, including recent graduates, internationally qualified professionals, and people with disabilities.
We have a track record of partnering with top Canadian employers, such as RBC, Bell, and Loblaw, who have successfully utilized Career Edge’s services to meet their hiring needs.
Benefits of Working with Career Edge
Employers benefit from having access to a diverse and motivated talent pool, low-risk hiring options, and support throughout the hiring process.
Our paid internship program matches employers with diverse, highly educated, and skilled professionals and provides businesses with internship programs tailored to employer needs. It provides a low-risk solution to the labour shortage and gives employers the chance to evaluate potential long-term hires.
How Does it Work?
- We set up some calls to understand your labour needs. Then, we will work together to develop solutions and ways to overcome any challenges.
- You provide us with the vacancies and/or skills you want to fill.
- We conduct a phone screening to ensure the candidates fit and then provide you with a shortlist of highly skilled, job-ready candidates who are willing to have a regular interview process with you so you can assess their technical skills.
- We do all the admin work for you, and the candidates will be on payroll for the duration of the internship.
- Once the internship ends, you can convert the interns you like to full-time without any finder’s fees!
How to Get Started?
We at Career Edge offer innovative solutions and access to a diverse talent pool, providing a new perspective and a reliable way to bridge the labour gap. If you want to partner up with Career Edge to address your labour challenges, here is how to get in touch with us. Reach out via email or phone to start your collaboration with Career Edge.