Business leaders say improving temporary foreign worker program is one way to curb labour shortages

The pandemic has exacerbated long-standing labour shortages in Canada, and there is no simple solution.

The Canadian Federation of Independent Business (CFIB) reports more than half of small Canadian businesses are affected by labour shortages. These businesses may have been short staffed due to difficulties hiring, retaining or getting staff to work the hours needed.

On top of that, 16% of businesses say they have enough staff, but at a significant additional cost due to wage increases, flexible hours, or hiring bonuses, among others.

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As a result of these labour shortages, about a third of small businesses in June reported abandoning or delayed projects, and turning down contracts and sales.

CFIB says the solution is not as simple as raising wages as higher wages imply higher labour costs, which force up prices and generates inflationary pressure. However, business owners report that investment in automation and the use of the Temporary Foreign Worker Program (TFWP) appear to be the most promising.

When disaggregated by sector, temporary foreign workers most often saw high success rates in agriculture, and professional services. They were also often successful in addressing labour shortages in manufacturing, retail, and financial institutions and administration.

Despite their high success rate, only 16% of surveyed businesses reported using temporary foreign workers to fill empty positions. The restrictions in the TFWP make it time-consuming and expensive for most small businesses. For some it was "unworkable" as certain occupations do not qualify.

The CFIB says the solution to labour shortages requires many actions over a long period of time. However, investing in automation and improving the TFWP can be done in the short term.

The working-age population in Canada has been declining since the 1990s, and future projections expect the trend to continue. By 2050, Canada will have lost a significant portion of its working-age population if no changes are made.

To help businesses cope with Canada's demographic challenges, the CFIB recommends improving the TFWP to bring more workers in to Canada faster, and ensure a good fit between immigrants and the positions they fill. An improved TFWP would be more accessible to a broader level of skills and sectors, and allow for more pathways to permanent residency.

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