Canada’s Small and Medium Enterprises Struggling on Every Level

While seventy percent of small business owners have seen declined revenue and taken on debt a skills shortage has stunted hiring efforts.
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TORONTO, June 17, 2021 – According to a study by Ryerson University small and medium sized enterprises are not only struggling with debt due to the pandemic, they also can’t hire new staff because of a serious skills shortage. Small and Medium business (SMEs) are drivers of the Canadian economy, accounting for nearly 70 percent of private sector jobs. They have also been hit hardest by the pandemic.

Seventy percent of SME owners have taken on debt; many have experienced a 20 percent or greater decline in their revenue stream with 70 percent experiencing declines in revenue of 30 percent or more and many have closed entirely. But, in spite of massive layoffs, new research shows talent and skills shortages continue and training and upskilling is more important than ever. The report, Supporting Entrepreneurship and SMEs: A Post Pandemic Skills and Training Agenda, provides results of a national survey on the talent and skills challenges SMEs face as part of the recovery. 

Key findings show:

  • Even pre-COVID-19, 40% of SMEs identified skills shortages as a major competitive challenge.
  • Thirty-seven percent of respondents indicated that a shortage of skilled workers has affected their business.
  • Thirty-seven percent indicated the increased labour costs have affected their business.
  • More than one quarter (27%) indicated the introduction of new organizational practices due to the pandemic affected their business.
  • In spite of the devastating economic impact of COVID-19, nearly 50 percent of survey respondents agreed or strongly agreed that opportunities have been created by the pandemic (e-commerce, and expanded talent pool made available by the shift to remote work).  
  • While many firms indicate an interest in seeking out diverse individuals (e.g., Indigenous or racialized people) as a way to find previously untapped sources of skilled talent, very few indicated having concrete plans or the capacity to do so.

“Small businesses are the backbone of our economy and have been hardest hit by the COVID-19 crisis. Access to skills, talent, and labour are long-standing priorities for businesses and employers, and have been exacerbated by the crisis. Supporting entrepreneurs and small businesses through training, upskilling, and diversifying access to talent will be critical to our long-term recovery.

Rocco Rossi, President and CEO, Ontario Chamber of Commerce

The report found that most small and medium business can’t afford dedicated human resources staff, or those they have, often lack the capacity and expertise needed to balance competing demands of supporting recruitment, advancing upskilling and improving diversity and inclusion. There is an opportunity to leverage shared resources to curate training opportunities, build capacity for advanced human resources and share best practices through networks, which could be supported and co-ordinated by business organizations and industry associations.

The research report builds on a longstanding research project conducted by Public Policy Forum (PPF) and the Diversity Institute and supported by the Future Skills Centre about the future of work, and is part of the research series, Skills for the Post Pandemic World which tackles key questions facing policymakers, employers, training providers and workers as they collectively turn to face the post-pandemic future of skills, training and retraining. 

“Supporting SMEs is critical if Canada is to compete globally and recover in a post-pandemic economy.  Entrepreneurs and SMEs need programs and support tailored to their specific needs. Given that these needs vary widely across sectors and firm size, multiple forms of support are needed.”

Wendy Cukier, director of Ryerson University’s Diversity Institute and academic research lead of the Future Skills Centre

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