Too many small businesses are currently hanging from a fiscal precipice of which they face difficulty surviving, according to the Canadian Federation of Independent Business (CFIB).
Seth Scott, a senior policy analyst for CFIB, says the COVID-19 pandemic has exacerbated a labour shortage issue that may send many small businesses struggling to hang on past a line of no return.
“The unfortunate thing is one-third of businesses today are losing money every day they stay open, so the question becomes how much longer can they hang on,” said Scott.
A CFIB labour market study revealed on average 63 per cent of respondents experiencing labour shortages expect to increase wages by 3.7 per cent, above the national average of 3.1 per cent, while 52 per cent reported a lack of any candidates at all.
“Businesses in B.C. have been finding it very challenging to get the help and staff they need,” said Scott.
“Over half (59 per cent) of B.C. small businesses report experiencing labour shortages, the fourth highest in Canada.”
There is also a qualification mismatch in the labour market, as 22 per cent of the unemployed had a level of education equal to or higher than a bachelor’s degree, while only 15 per cent of the market requires this level of education.
Scott said the labour shortage problem is complex, fueled by people retiring from the labour force without a younger demographic of workers with the same job skills able to replace them.
Job sectors such as construction, hospitality industry, enterprise management and transportation are the most acute focal points for feeling the negative impact of a changing workforce.
“Those issues existed pre-pandemic but what the pandemic has done in exacerbate that problem even more,” Scott said.
“It is vital we get past (the pandemic) and find a way for business to operate under these conditions. I can tell you the numbers: the vast majority of businesses are making less than what they expected to make coming into Christmas.
“I am not sure how much longer many businesses can survive who are constantly peppered with pandemic issues or can’t find staff to help sell their goods and services.”
Scott said the CFIB has offered several short-term solutions to help ease the financial predicament many small businesses face including:
• Improve and streamline the temporary foreign worker and immigration processes to bring more workers to Canada faster.
• Stimulate automation through programs or tax credits.
• Provide tax relief for workers over 65 who wish to remain employed by making their hours worked tax-free.
• Ensure Employment Insurance programs don’t discourage individuals from returning to work.
• Reduce EI premiums for small businesses to offset the costs of hiring and training staff.
• Add tax credits for worker training, particularly for informal, on-the-job training and tax credits for hiring young graduates and students.
Of those suggestions, Scott said EI premium and tax relief are what government can do now to free up more capital for businesses to offer incentives to attract staff.
While the positive outlook for 2022, seems to have been sidelined by the Omicron wave outbreak now taking hold globally before 2021 has even ended, Scott says trying to remain positive will be challenging.
“I guess what I can say is we are now in the Christmas season and going forward we are not seeing the restrictions yet we have seen before. Businesses are still open, people can still patronize restaurants with their friends, you can still go to the local stores and buy Christmas gifts, we can still continue to reconnect to local small business owners,” he said.