When Equal Parts Hospitality posts a job at one of its eateries, only half of the applicants scheduled for an interview actually show up. In most cases, the no-shows have already found work, says company co-founder and chief executive Jason Cassis.
The shrinking talent pool is enough to make Mr. Cassis – and other business owners facing similar hiring challenges – long for a period of slower economic growth, just to help fill their vacancies.
"I’m not hoping for a recession, but I think a pause in the economic cycle would make for a more balanced employment market,” says Mr. Cassis, whose company has about 250 employees across a handful of venues in Hamilton including the Aberdeen Tavern, the French, the Diplomat and Knollwood Golf Club. "At some point soon, it feels like this economic expansion will run out of the very fuel that has driven it, [which is] people” and their spending.
While increased consumer spending benefits businesses such as his, the flip side of a strong economy is a labour shortage that can hamper expansion plans. Mr. Cassis says his company can’t build as many properties as it would like, given the uncertainty around finding experienced cooks and servers.
"You have to curb your enthusiasm," he says. "The biggest challenge that we've had has been the tight labour market.”
Job growth is outpacing economic growth in Canada, which has made it a job seeker’s market and ramped up competition for talent, says Beata Caranci, chief economist at Toronto-Dominion Bank.
Employment has increased by 2.4 per cent over the past 12 months, the latest Statistics Canada data show, while the most recent gross domestic product figures show Canada’s economy has grown by just 1.3 per cent year-over-year as of August.
"It's not sustainable to have job growth move this far ahead of economic growth," she says.
Ms. Caranci says recessions tend to address imbalances in the market. “However, a job market shouldn’t be considered as an imbalance. It’s responding to demand. … A recession will cause labour demand to fall, but I guess I take issue with why we are criticizing a strong job market."
She says the dynamics shifted in favour of a worker's market about a year ago in Canada, and this will force business owners to compete harder for talent.
“You need the job pressures to motivate the businesses to start to look for efficiencies and to put [them] in place … which will, in the long term, make them more competitive. This way, when that recession comes, they have efficiencies built-in.”
Steven Uster, CEO of FundThrough Inc., is having trouble finding skilled workers to expand his Toronto-based company, which bridges cash flow gaps for businesses that invoice their customers and have to wait for payment.
"The biggest risk to our growth is finding and onboarding talent fast enough," says Mr. Uster, who co-founded the company in 2014 with three employees and now has about 55. FundThrough has been hiring people abroad to help fill vacancies for engineers, developers, marketers and salespeople.
“The revenue opportunities are there. In order for us to capture those opportunities, we have to bring in the right staff … and it’s getting harder and harder.”
Salary expectations are also increasing, driven by market demand, which is forcing companies like FundThrough to revisit their compensation every six months, instead of annually. "It never used to be that you'd have to keep doing it that quickly," Mr. Uster says.
Employees across the industry are also jumping ship sooner, confident that if the new gig doesn’t work out they can quickly find another one. “Because talent is so tight, and because there is so much confidence in the labour market, they are more easily open to jumping for small, short-term reasons without taking a long-term perspective,” Mr. Uster says.
An economic slowdown could realign the labour market, Mr. Uster says. It would also be a first for many startups, such as FundThrough, that weren’t around for the recession in 2008-09.
“It’s not that I’m hoping there is going to be a recession to normalize the market, but there is a [salary-inflation] bubble that’s forming and it’s a much bigger bubble than I think people understand,” he says, adding that workers are earning higher salaries, spending more and that’s putting them at risk if the economy tanks. “It’s just not sustainable where it is right now.”
Mr. Uster acknowledges his business could benefit, to a point, from an economic slowdown, particularly if banks tighten lending to small businesses who then seek alternative financing options such as FundThrough. What’s more, small businesses might need funding to cover the gap created by companies taking longer to pay their invoices.
FundThrough’s invoice factoring business model provides some insight into economic conditions, based on when invoices are being paid. If payments are taking longer, and are consistently overdue, it’s likely a sign the economy is weakening, Mr. Uster says.
“We’re not seeing that yet, although we are monitoring it very closely,” Mr. Uster says.