Canadian SMEs Enter Small Business Month with Softer Employment and Rising Wages, New Employment Hero Data Shows

Employment falls 1.7% in August while wages rise 5.5% year-over-year, pointing to increasingly deliberate workforce investment heading into Q4

TORONTO, Sept. 15, 2026 /CNW/ -- As Canadian small and medium-sized businesses (SMEs) head into Small Business Month and the final quarter of 2026, new data from Employment Hero, the all-in-one employment platform for Canadian businesses, points to a growing workforce balancing act: employment is contracting while wages continue to climb.

Employment Hero's latest Jobs Report, a monthly snapshot of Canada's SME labour market, found headcount declined 1.7% year-over-year in August, marking the second consecutive month of negative annual growth. Meanwhile, wages increased 5.5%, the highest annual growth recorded in the 13-month reporting window, up from 4.1% in July.

The divergence suggests SMEs are becoming more deliberate about workforce growth while continuing to invest in talent, putting retention, productivity and smarter workforce planning firmly on the agenda heading into Q4.

"Small businesses are being asked to do more with every dollar right now, and the labour market reflects that," said Chris Pinkerton, Managing Director at Employment Hero Canada. "What's interesting is that softer employment isn't translating into softer wages. SMEs may be more cautious about adding headcount, but they're still willing to pay for the talent they need. Heading into Q4, the challenge is increasingly about making every hire and every workforce investment count."

A different picture across Canada

Across the country, SMEs are navigating different labour market conditions. While headcount declined 2.6% year-over-year in Ontario and 3.1% in British Columbia, other parts of the country continued to see modest growth, including Alberta (+0.5%), Quebec (+1.4%) and Nova Scotia (+2.4%).

"The national picture only tells part of the story," Pinkerton said. "Labour market conditions can look very different depending on where a business operates. For small business leaders, that makes it increasingly important to understand what's happening in their own market and make hiring, retention and workforce decisions accordingly."

Consumer-facing SMEs continue to compete for talent

The pressure is also playing out differently across industries. Despite the broader national contraction, headcount across retail, hospitality and tourism remained 1.7% higher year-over-year, while wages increased 2.3% over the past three months, pointing to continued momentum in pay.

The findings reinforce that softer employment nationally does not necessarily mean easing competition for talent, particularly in sectors where businesses still need people to meet customer demand.

"For SMEs heading into Q4, the question isn't simply whether to hire. It's where adding another person will have the greatest impact," Pinkerton added. "That puts a greater premium on retention, workforce planning and productivity. For small businesses operating with less room for error, making smarter decisions about their people and technology will be critical to sustainable growth."

Employment Hero's Jobs Report provides a monthly snapshot of Canada's SME labour market using aggregated and anonymized payroll data from approximately 2,600 businesses and 97,000 employees on the Employment Hero platform. The report offers a view of headcount, employment and wage activity specifically within Canadian small and medium businesses, adding an important perspective alongside survey-based labour market measures.

Media Contact Primary: Samantha Krupa-Carbone NATIONAL Public Relations [e-mail] / 647-502-4098

Secondary: Megan Felsing Communications Lead, Employment Hero [e-mail] / 587-575-5273 

About Employment Hero 

Employment Hero is the global authority on employment, offering a world-leading Employment Operating System (eOS) that simplifies and optimizes every stage of the employment process. Its award-winning platform combines HR, payroll, recruitment, and employee engagement tools with the groundbreaking employment superapp, EH Work, which integrates career management and financial wellbeing. Serving over 350,000 businesses and managing more than 2.5 million employees worldwide, Employment Hero reduces administrative burdens by up to 80%, enabling organizations to focus on their goals and create more productive, engaged teams. By revolutionising the employment marketplace, Employment Hero is making employment easier, more valuable and rewarding for everyone. 

Methodology 

Employment Hero's Jobs Report provides a monthly snapshot of Canada's SME labour market using aggregated and anonymized payroll data from approximately 2,600 businesses and 97,000 employees on the Employment Hero platform. Unlike survey-based labour market measures, the data provides a real-time view of employment and wage activity within Canadian SMEs.

SOURCE Employment Hero