New report shows overcoming continued labour and skills challenges could support recovery and growth of Canada's SMEs

TORONTO, Oct. 15, 2020 /CNW/ - 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, if addressed, could support pandemic recovery and growth of Canada's SMEs. While the extent of the effects of the COVID-19 crisis will emerge over time, the demand for highly skilled workers as well as for some lower-skilled workers is expected to continue.

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 per cent 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 percent of SMEs tried to recruit employees in the last six months and among those, 82 percent mentioned having experienced at least one challenge. The top one, cited by 60 percent of respondents, was finding someone who possesses the adequate qualifications.

"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. "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 at all 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 percent and 16.6% (172,663 jobs) coming from medium-sized and just 26.6% (276,677 jobs) from large businesses.

Due to demographic shifts, most of the growth in the workforce will be driven by immigration—a trend that is forecasted to continue—and the ability to attract and retain skilled immigrants is critical. Additionally, women-led businesses are disproportionately impacted by the crisis and operate in many of the sectors most affected, such as lodging, catering and retail. Youth-led businesses report a high risk of foreclosure.

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. Importantly, it includes the need to strengthen the resilience of SMEs so that they can withstand future shocks; the need to step up efforts to help SMEs go digital; the need for open and integrated supply chains; and the opportunity to use the crisis to ensure that businesses around the world become more sustainable and climate-friendly.

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."

SMEs are also experiencing a lower level of digitization and difficulties in accessing and adopting technologies. However, for those that have been able to quickly adapt have seen growth. The Canadian Federation of Independent Business6 (CFIB) reveals that a quarter (26%) of SMEs owners have been able to go digital. Of those who have done business online, 30 percent have seen an increase in sales and 25 percent say that sales have remained the same compared to pre COVID-19. The survey also found that the number of online transactions has increased by more than 30 percent.

However, the pandemic has made some businesses more agile and flexible: a third of SMEs believe that digitization has become more important and was accelerated as a result of the pandemic.

The report is part of the Skills Next Project, a collaboration of the Public Policy Forum and the Diversity Institute at Ryerson's Ted Rogers School of Management —supported by the Future Skills Centre, which explores a number of the most important issues currently impacting the skills and employment ecosystem in Canada.

SOURCE Diversity Institute at Ryerson University

Kathleen Powderley, 416-803-5597, [email protected]