How much money is being lost due to labour shortage

Image credit: Depositphotos.com

Small businesses in Canada missed over $38 billion in revenue opportunities last year because they had to turn down or postpone contracts or sales due to labour shortages.

This is the finding of a new report by the Canadian Federation of Independent Business (CFIB).

“We always knew labour shortages came at a high price to small businesses. Staffing challenges cause employers to work more hours, reduce their hours of operation and decline services and contracts, simply because they can’t find enough staff to fully operate their business,” said Laure-Anna Bomal, CFIB’s economist and the report’s author.

“In fact, we estimate the business opportunities that small businesses lost in just one year due to labour shortages are worth over $38 billion. While it doesn’t necessarily mean the Canadian economy lost the same amount, it’s still a significant share of revenue that small businesses could have used to invest in automation or growing their business.”

Small businesses in the construction sector faced the most significant loss of business opportunities, over $9.6 billion in the last year.

A single policy change will not address these labour shortage pressures, but a collection of them might provide some relief, CFIB asserted.

After a detailed review of what other jurisdictions are doing to address their labour shortages, CFIB has completed a whitepaper on how to address various barriers to work. The policy proposals cover three age groups – youth (15-24), core age (24-64), and older workers (65+) – and include targeted solutions on how to better integrate workers of all ages into the labour force.

For example, to increase workforce participation among youth, governments could increase the prevalence of work-integrated learning in high schools, the federation suggested.

Among the core-age group, employment insurance program design shouldn’t create disincentives to work, and governments need to facilitate labour mobility across provinces. As for experienced workers, governments should revisit existing tax policy and/or create a tax credit for career extension.

“As Canada’s population is aging, we need to ensure that those who are willing to work can do so without significant challenges. In the long run, the shortages will get worse, as will their costs, unless we change our labour market approach,” said Christina Santini, director of national affairs at CFIB.

“We urge governments to find innovative ways to increase participation in the labour market among all age groups.”