9 September 2021

Canada’s Worker Shortage: Everything You Need to Know

5 min read

This issue has broadened over the past year and is now simply nothing more than a shortage in workers, not just skilled workers. This issue is set to become even worse as we move out of the restrictions set by the pandemic. 

In fact, according to a McKinsey Global Survey, 87 percent of executives said they were experiencing skills gaps in the workforce or expected them within a few years. Yet less than half of respondents had a clear sense of how to address the problem – a question that the pandemic has only made more urgent. 

The talent shortage is a global crisis, but how exactly is it impacting Canada? Unfortunately, businesses across the country are faring no better than the rest of the world, with the labour shortage having a huge impact on the ability organizations have to fill new roles. 

In the manufacturing industry alone, it’s estimated that eight in 10 Canadian manufacturers are facing a talent shortage. 

It’s expected that the labour shortage is only set to get worse, as companies and consumers come out of the COVID-19 pandemic with renewed confidence and spending power. In this blog, we take a look at the driving force behind Canada’s worsening labour shortage, what could offset this gap and how your business can move ahead of its competitors in the race for talent. 

What is driving the impending talent shortage in Canada?

So, what’s driving the talent shortage in 2021 and why is it worse now than in previous years? 

A shortage in workers has been a concern for businesses for a number of years now. Companies across Canada have been left with the challenge of filling open positions, but demand for these workers is only growing year-on-year. 

Yet as we move into the post-pandemic world, the shortage in workers is only becoming a bigger concern. Here are a few of the main reasons why Canada’s labour shortage is set to worsen in 2021.

A significant decline in immigration 

Immigration is an important part of Canada’s economic growth, and a fantastic resource the country uses to help sustain the labour market. Yet with international travel limited due to COVID-19, there has been a significant decline in immigration to Canada over the past two years. 

In fact, according to Statistics Canada, Canada welcomed 184,624 immigrants in 2020, down by almost half from 2019 and the lowest in any year since 1998. This was significantly lower than the 341,000 pre-pandemic target for immigration set by Immigration, Refugees, and Citizenship Canada.

Pent up consumer demand

Consumer spending collapsed during the first wave of the COVID-19 pandemic, and the economic impacts since have been devastating for both consumers and businesses alike. As we move out of the pandemic, however, it’s expected that consumers will spend significantly more – meaning companies are going to dip into the labour market to meet growing customer demand.

According to a study from McKinsey, “an effective vaccine rollout to bring the pandemic to an end could restore consumer demand to pre-pandemic levels, fueled by rising consumer confidence, pent-up demand, and accumulated savings.”

Employee retention issues

Employee loyalty has been higher than normal during the pandemic, with employees holding on to their jobs to see how the situation plays out. However, as we move towards the post-pandemic world, it’s expected that there will be a large number of employees who will either retire or move on to new opportunities. 

A poll by the Canadian Centre for the Purpose of the Corporation (as reported by CityNews) found that 42 per cent of Canadian employees say they’re considering changing their job or entire career in the next year. This post covid situation appears be a global issue that some have dubbed “The Great Resignation”.

On-hold projects to resume

With COVID-19 leading to uncertainty across the vast majority of industries, and stay-at-home restrictions meaning employees couldn’t come into the office in some cases, a huge amount of projects have been put on hold. This decrease in projects led to workers being laid off by their organizations.

As we move into the post-pandemic world and businesses start spending more money, those projects are going to resume. That means organizations will be hiring workers to complete those projects, making the talent shortage even more difficult for many companies.

Market sectors feeling the squeeze

For the IT market, there will be a push on improving infrastructure to reflect a desire for remote working. This will be particularly prevalent for large enterprises and governments, who, at times, have resisted this push. These projects tend to suck large volumes of talent from other areas, making the hunt for workers highly competitive. 

The hospitality, travel, tourism and entertainment sectors have suffered dramatically. The loss of talent has been dramatic, with vast amounts never returning to the industry – and never planning on returning in the future. This has left Canada “desperate” for service workers, according to the Financial Post, and competition for workers within the industry at an all-time high.

Meanwhile, companies in the retail, warehousing and consumer products sectors have experienced an eCommerce boom. It remains to be seen what short, medium and long-term consumer behaviours will remain from the pandemic, but resourcing should remain a challenge as other industries compete for talent – particularly at the entry level or at high volume, lower salary levels. Either way we expect a war for talent as competition and market movement creates talent gaps. 

Is there anything that could offset the hiring challenges in Canada? 

While it seems inevitable that the labour shortage may only worsen over the next year as we come out of the pandemic, there are a couple of factors that may offset the talent shortage slightly. 

Elimination of CERB: The Canada Emergency Response Benefit (CERB) provided temporary income support to anyone who had stopped working for reasons related to COVID-19. However, the benefit ended on December 2, 2020. With CERB now over, workers may be pushed back into the labour pool in search of work.

Push on automation: While this is a long-term solution to the labour shortage, the drive to automate some roles within the workplace is likely to offset some of the pressure on the worker shortage over the next five or 10 years. This does not solve the problem in the short term, however.

How can your organization offset the labour shortage and acquire talented workers?

The talent shortage is having an impact on a wide range of businesses across Canada, but none more so than those in the light industrial and corporate sectors. If you manage a company in one of these industries, here are a few things you can offer to improve your access to workers and stand out over your competitors:

Light industrial

  • Offer a competitive salary.
  • Offer a signing bonus to new employees/workers.
  • Add a retention bonus to your workers’ contracts.
  • Offer incentives, such as a good benefits scheme, company discounts and much more.
  • Offer flex days, for a better work/life balance.
  • Focus on candidate experience.
  • Streamline interview processes – organizations need to move quickly with candidates who will have multiple options

Corporate businesses

  • Offer long-term remote and flexible work schedules. This is a trend that is set to continue long after the pandemic and is something that workers are sure to look out for when searching for a job.
  • Make sure you focus on the work/life balance.
  • Offer flex days.
  • Ensure a best in class candidate experience when hiring and competing for talent. This includes a focus on your employment brand, feedback through the interview process and responsive communication with potential candidates. DO NOT GHOST candidates even if they are not a fit. You may have to sell your organization more than ever.
  • Build a company culture that workers want to be a part of.

In addition, for both of these industries, make sure you are using the contingent workforce and staffing agencies to enhance your team of full-time employees. 

Don’t ignore the incentives and experience of contingent workers. Independent contractors and temporary workers (temps) give you access to labour in short notice, and allow your organization to be more agile and flexible depending on your current projects. 

Want to learn more about the Canada talent shortage and how your organization can address it? Get in touch with Contrax today. Our team of workforce specialists would love to answer any questions that you may have.

Subscribe to the Contrax Blog