SMEs brace for more labour shortages, softening consumer demand in 2024
It’s been a rough few years for Canada’s small and medium-sized businesses.
Now entering what they see as a “new normal,” there is more post-pandemic stability and more entrenched and formalized policies, including those around working from home or office. But chronic labour shortages and weaker demand from consumers are key concerns for the year ahead.
Christina Santini, director of national affairs for the Canadian Federation of Independent Business (CFIB), told Means & Ways there’s a pressing need for more lower-skilled workers – and the federal government must consider that in its immigration targeting plans.
“That’s where we have a lot of vacancies, and persisting vacancies,” she said, adding that the government must take into account that the vacancies may not all be in traditional occupations.
Santini said recruitment challenges are most acute in construction, hospitality and tourism, trades, transportation and retail.
A recent CFIB report found the labour shortage has cost small and medium-sized businesses $38.4 billion in the last year, including $9.8 billion in the construction sector alone.
As businesses continue to recover from financial hits caused by the pandemic, they are also struggling to find ways to keep costs low, secure financing and repay debt. Between increased EI premiums, extended CPP payments and higher carbon taxes, Santini said businesses are calling on the government to offer some relief in the way of year-end credits or delayed increases to the carbon tax to counter the increased costs and price pressures.
Another concern is that high inflation and interest rates will cause more consumers to buy less or delay purchases.
“This kind of a change in spending habits is likely because everyone’s feeling the pinch from inflation, and it’s having an impact on small businesses,” Santini said.
On the bright side, after a “very hard year” of adjustments, adaptation and uncertainty, businesses may have reason for more optimism with a “new normal” and more stability and predictability in 2024.
“Businesses now have more information to base future decisions on, so I would say that’s a bit of a silver lining for 2024,” Santini said.
Small Business Minister Rechie Valdez’s office told M&W that the government has been taking steps to help small businesses through a prolonged period of uncertainty and challenges, including cutting the small business tax rate from 11 per cent to nine per cent and raising the ceiling from $15 million to $50 million.
“We know that small businesses are not ‘small,’ they make up over 98 per cent of Canada’s economy. That is why heading into 2024, our government continues to be committed to best supporting our small businesses in any way we can. Inflation, interest rate hikes, and worker shortages are just some of the challenges small business owners are facing. We recognize these challenges and have taken action through measures for small businesses,” reads a statement from Valdez’s office to M&W.
The government has finalized agreements from Visa and Mastercard to reduce credit card fees, and is offering programs with grants, loan assistance and advice to small businesses, including targeted supports for women, 2SLGBTQI+, Black and Indigenous entrepreneurs.
Valdez’s office said in 2024 the government “will continue to seek opportunities to help entrepreneurs in ways that matter most.”
