Labour shortages result in $38 billion lost revenue: CFIB

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CaDCR staff writer

Small businesses in Ontario missed over $16 billion in revenue opportunities last year because they had to turn down contracts or sales due to labour shortages, according to a new report by the Canadian Federation of Independent Business (CFIB). Ontario topped all provinces and territories in this category, with Quebec placing a distant second at over $8 billion.

“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 wrote in a report. “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.”

The construction sector reported the most significant loss at more than $9.6 billion in the last year.

Overall, Ontario small businesses turned down sales or contracts (25%); postponed the timing of existing contracts (18%); and cancelled or deferred business investment/expansion plans (20%). In addition, business owners (51%) and employees (37%) worked more hours to make up for the shortages.

“The significant loss of revenue opportunities across many sectors due to labour shortages is another reason why the federal government needs to extend the CEBA loan’s forgivable deadline beyond January 18,” said Kwiecinski. “Only 34% of Ontario small businesses can pay off their CEBA loan in time to keep the loan’s forgivable portion of up to $20,000.”

A variety of measures are recommended in the report to address labour shortages and provide support to affected small business owners, including:

  • Introducing a payroll tax holiday for all new hires (e.g., EI, CPP/QPP, WCB
  • premiums, etc.).
  • Introducing a training tax credit that recognizes on-the-job training for SMEs.
  • Making permanent the Accelerated Capital Cost Allowance and Immediate
  • Expensing to support investments in automation.

“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.”

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