Canadian Manufacturing

Overcoming labour and skills challenges could support recovery and growth of Canada’s SMEs

by CM Staff   

Research & Development Small Business Public Sector

40% of SMEs identified skills shortages as a major competitive challenge

Photo: Getty Images

TORONTO — A new report, Small and Medium Size Employers (SMEs): Skills Gaps and Future Skills shows labour shortages and skills gaps continue to challenge small and medium size employers (SMEs) but could support pandemic recovery and growth of Canada’s SMEs.

The report by Ryerson’s Diversity Institute and the Ontario Chamber of Commerce in partnership with the Public Policy Forum and supported by the Future Skills Centre explores the current knowledge concerning approaches to skills (pre-COVID and during the pandemic) among Canadian SMEs which is important because it also finds that SMEs view the ability to attract and retain talent as a critical competitive issue. For example, 40% of SMEs identified skills shortages as a major competitive challenge. These skills shortages vary across regions and sectors, with Atlantic Canada, British Columbia and Ontario being more severely affected, and manufacturing, retail trade and construction representing the hardest hit industries. Further data from a 2020 OCC report found that 62% of SMEs tried to recruit employees in the last six months and among those, 82% mentioned having experienced at least one challenge.

“Further research and supports for SMEs is vital and can’t be ignored in our discussions of economic recovery and growth,” said Wendy Cukier, founder of the Diversity Institute, in a prepared statement. “SMEs have been the hardest hit by the economic impact of COVID 19, especially smaller businesses and those in the services sectors. Most of the discussion regarding skills development is focused on large businesses despite SMEs being Canada’s biggest driver of job growth.”

“Small and medium-size employers are an integral part of Canada’s economy, and their health is vital to the resilience of our job market. One of the big challenges they face is finding employees with the right skills and qualifications, as recent research has shown,” added Pedro Barata, Executive Director of the Future Skills Centre. “That means that we need to align our skills training with what the labour market is demanding—and, above all, to ensure that training can respond quickly to sudden economic shocks.”


While some SMEs are cautiously optimistic about recovery, the impact of COVID-19 on skills and employment is not clear and concerning given that SMEs account for the majority of job growth in Canada with small firms leading in job growth from 2013 to 2018 with 56.8% and 16.6% (172,663 jobs) coming from medium-sized and just 26.6% (276,677 jobs) from large businesses.

Small and Medium Size Employers (SMEs): Skills Gaps and Future Skills
identifies four priority themes to enable SMEs to move towards recovery. They relate to the acquisition of new skills to develop the ability to go digital, adapt products and services, and strengthen and develop new business expertise.

Provincial chambers of commerce and other SME support organizations will be integral in identifying and addressing challenges that SMEs are facing and to share innovative approaches, some of which are outlined in the report, including accessing overlooked talent pools, new tools for upskilling and reskilling and new platforms and processes to help SMEs source talent and support.

“We understand the hardships small businesses are enduring while COVID-19 abatement measures are in place. Many have pivoted, and will be integral to recovery and growth post-pandemic,” said Ashley Challinor, Vice President, Policy, Ontario Chamber of Commerce and a co-author of the report. “Small firms will need to leverage new talent and technologies to adapt to the virtual economy. As consumer behavior changes, the ability of small businesses to ‘go digital’ will be a major determinant of Ontario’s long-term economic recovery.”


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