A recent study by the Canadian Federation of Independent Business titled “The labor shortage is back with a vengeance” found that 54% of businesses could not get all the employees they need, with only 42% reporting’s are able to complete their operations.
Some small Organizations have made changes in their programs to increase their competitiveness in the job market, such as raising wages, but only 22% of Organizations who raised wages found it effective. Nearly two-thirds (63%) of occupations reported that the lack of candidates with the required skills/experience was the main obstacle to their labor problems.
Lack of candidates, mismatched qualifications, and labor market disruption drive labor shortages to continue.
Small businesses were already facing a significant labor shortage in early 2020, And the pandemic has only aggravated the situation. Industries that were closed for long periods of time, such as hospitality, have seen a mass exodus as workers have moved to upskills or other jobs or sectors.
Social services and hospitality saw about 37% and 48% of their workforce change sectors. While nearly all sectors are facing major demographic upheaval – about 24% of small businesses reported that employees have closed industries because of the pandemic – the major concern now is that there are no new employees are coming to replace those currently retiring or switching their field.
The COVID-19 lockdown and restrictions hit small businesses hard. Now that most countries are opening back up, governments need to address the labor shortage quickly to ensure a robust recovery.
Wage increases haven’t been the expected silver bullet for retaining or luring new employees
More than four out of five businesses (82%) facing staff shortages have already increased wages in their occupations. While it worked for some, some organizations reported it didn’t help them to attract workers. These occupations said that they did not find any eligible applicants or any applicants for the positions available in their occupations even after increasing their wages.
It becomes complicated for Business owners to meet the innumerable expectations of job seekers and keep up with the competency level at the same time.
The distribution of job seekers in different education is one of the reasons for the lack of applicants.
In 2021 Q1, people who are unemployed have a level of education that is equal to or higher than a bachelor’s degree, but only 15% of the market requires this level of education. Currently, most job vacancies in Canada are concentrated at lower education levels. However, job seekers who wish to immigrate to Canada are at higher education levels—leaving a mismatch in skills and expectations. This overqualification can leave job seekers expecting a different working position—salary or role—then what an employer might be willing to offer.
The changes in the temporary foreign worker program have the Possibility to be one of the best roadmap solutions to the labor shortage.
The most successful solutions in dealing with the reported labor shortage are increasing the level of automation used in businesses (81% success rate) and the Temporary Foreign Worker Program (TFWP) to bring in additional workers (52% success rate).
However, while the success rate of TFWP is higher than that of some other methods, the use of the program is comparatively low. Only 16% of small organizations have reported that they are using TFWP. The low use to high success rate ratio suggests that temporary foreign workers may be a promising solution to Canada’s labor shortage, especially if the program is expanded to other areas. Opening the TFWP to a larger subset of the business community would allow for a general influx of workers – while maintaining the skills needed to be what employers and employees are looking for.
For the TFW program to become a major solution, some improvements to TFWP must be considered. Currently, TFWP is too time-consuming – and expensive for most small organizations to use, it costs up to $1,100 per application and potentially takes months to process. This cost may marginalize some organizations from participating in the program before applying because they are not guaranteed to be matched for TWF even after paying for LMIA. For those Organizations that are in the hardest-hit sectors, any additional constraints or delays mean they can’t easily hire temporary foreign workers, especially when they need solutions to their labor shortage problem.
That is why the Minister of Employment announced the solution roadmap for the TWF program. This initiative is the next step in an ongoing effort to adjust and improve the TFW program to ensure it meets the needs of today’s labor market. The center for this is to address the labor shortage, enhance worker safety and build a strong workforce for today and tomorrow, including those on avenues of permanent residence.
The government should implement the following key policy for the TWF program to help the immediate labor shortage in Canada.
- Process reforms and simplifications for the Temporary Foreign Worker Program and permanent immigration system to rapidly bring foreign workers into Canada, including developing a route to permanent residency for these workers.
- Make sure job seekers match demand in the job market within Canada to create a good fit between immigrants and the positions they are looking to fill.
- Open TFWP to all types of jobs and to all sectors, regardless of the prevailing regional unemployment rate, as a temporary measure to address the immediate labor shortage caused by the pandemic.
- Establish a credible employer system to streamline the application process for Canadian companies hiring temporary foreign workers to meet labor shortages and ensure that even smaller companies with low-paying positions are able to qualify are capable.
- Temporarily waive employer fees for small business owners wishing to use TFWP.
Small businesses have a long and steep climb to recovery, and having the right workers or other tools to address the labor shortage is a big part of this. Small businesses are doing everything they can to attract workers, but they need the government to adopt policies that increase productivity, connect job seekers to employers, and eliminate hiring costs for businesses.
