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Nov 21, 2023

Hiring challenges limiting SME growth

Canadian small- and medium-sized enterprises (SMEs) are facing hiring challenges that limit their growth prospects and affect their access to capital, says a report by the C.D. Howe Institute.  


Labour shortages occur when there is an insufficient supply of workers to meet the demand for jobs in a particular industry, says the report. Not all shortages are driven by the same factors. For example, wage-level disparities, demographic shifts, skill mismatches, changes in work preferences, and barriers to labour mobility can all contribute to shortages, as well as gaps in education and training, geographic disparities, demanding work conditions, and labour market inefficiencies. 


Even though the majority of small businesses report to have increased wages in response to shortages, some say they still received no qualified or no applicants. The paper finds that the magnitude of wage increases and the wage level make a difference in recruiting workers, and the disparity between the job seekers’ reservation wages and the wages offered can be a reason for lack of applicants. 


Beyond the imperative to address wage mismatches, the paper encourages a multi-faceted approach, which includes workforce development, education and training initiatives, immigrant integration, improved human resources practices, and adapting to new technologies.  

 For more information, visit C.D. Howe Institute.

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