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Brendon Bernard, economist at Indeed Canada, discussing the tighter labour market at The Globe and Mail's 4th annual Small Business Summit, May 14, 2019.

Glenn Lowson

Canada’s labour market has been picking up steam in the last few years, but that’s only part of the story.

As the labour market has tightened, a key question is how employers, particularly small and medium sized enterprises (SMEs) can adjust to tougher hiring conditions.

The growth in Canada’s labour market is significant, but still uneven. Unemployment is low in many regions and job growth has been solid for more than two years, but the jobless rate is still relatively high in oil-producing provinces.

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In addition, the tight labour market is not translating into more hiring among “micro”-sized small businesses; while small- and medium-sized enterprises (SMEs) find they have to be skillful in navigating these tighter conditions.

While payrolls at small businesses with between 20 and 99 employees have either roughly matched or bested the rates of job growth for Canada’s economy as a whole, micro-enterprises with 20 or fewer employees have lagged behind. Micros have a tepid job growth rate of just 0.9 per cent a year since 2011, well behind the economy-wide rate of 1.5 per cent. Job growth at Canada’s smallest businesses in 2018 matched its slowest pace since the recession, even as payrolls at larger enterprises did well.

This is partly because micro businesses tend to be less responsive to economic cycles — a start-up with two or three employees might be less likely to ramp up hiring just because the general economy is going strong. The smallest businesses also come and go more quickly than larger ones, so any growth in hiring gets offset by businesses that close up and, obviously, hire no one.

Micro companies also operate in different categories than larger ones. Many of them are local and aren’t on a trajectory to expand their workforces, because they simply don’t need more staff. They can be distinguished from young businesses, which may start out small but are often on a path toward growth and expansion.

As Canada’s job numbers pick up, employers need to be creative in their hiring, expert says

Understanding the challenges in today’s Canadian labour market is particularly important for all smaller businesses and startups. Smaller firms often need help to grow.

The whole economy benefits when small business does well because SMEs, particularly fast-growing ones, are a key engine of the economy. Fortunately, Canada actually ranks well in terms of the ease of starting a business; data compiled by the World Bank puts Canada second (behind New Zealand) in terms of which countries make it easiest to start one.

Being nimble in a tight labour market can be achieved in a number of ways, says Brendon Bernard, economist at Indeed Canada.

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“Broadening the candidate search is one good place to start. Businesses can look more carefully at candidates who might not have been their first choice or who have less experience, but who have transferable skills that can be applied, especially after training,” he says.

“One area where we see this particularly is for truck drivers, where there has been a big increase in job openings in recent years. More and more job vacancies for the role are considering candidates with less than one year’s experience. Back in 2016 it was about one in five, but as of the end of last year it was more than one third.”

Another way to broaden the candidate search is to look farther afield geographically, Mr. Bernard adds.

“Searching for workers within Canada but outside your immediate vicinity is an option. Companies can also look abroad — one area where looking abroad stands out is the tech sector.”

Participants hear how small businesses can adjust to a tightening labour market, at The Globe and Mail's 4th annual Small Business Summit, May 14, 2019.

Glenn Lowson

Looking abroad can be promising because job seekers outside of Canada are looking closely at the tech sector here too. Research by Mr. Bernard finds an increasing share of clicks on Canadian tech jobs on Indeed come from outside of Canada — rising from 9 per cent of clicks in early 2015 to 15 per cent this February.

A third way for employers to fill job vacancies is simply to make the job opportunity more attractive, Mr. Bernard says.

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“Paying more is a reliable way to do this, but there are other aspects you can also change that can make a job opportunity more attractive for workers and fill more hours that you need in the process,” he says.

“For example, conditions have tightened for companies looking for construction and manufacturing labourers, and now we see an increase in openings for full-time, and permanent positions. Offering full-time, permanent status can make the job more attractive for job seekers, and it makes it so the employer doesn’t have to keep looking for other people to fill hours.”

Employers also can consider constant recruiting — keeping the lines open for hiring new workers all the time in a tight labour market. This tactic is increasingly being employed in the restaurant industry, Mr. Bernard says.

He warns that these adjustments to the labour market are “context specific” — they vary according to the type of company, its location, size and type of work. “Those employers who are finding a tight labour market challenging will discover that it really helps to be creative in the way you go about hiring.”

Advertising feature produced by Globe Content Studio. The Globe’s editorial department was not involved.

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