Quebec’s small businesses are losing nearly $11 billion annually to labour shortages

Montreal, August 22, 2022 - Labour shortages are hitting Quebec businesses hard and have cost them close to $10.7 billion, says the Canadian Federation of Independent Business (CFIB) in its new Research Snapshot.

“We knew the labour shortages were having a very negative impact on small business owners, who have to work longer hours, as do their employees, and are forced to turn down contracts and business opportunities. Today, we can put a figure on the losses suffered by small businesses: nearly $11 billion in one year! They could have used that money to recover, grow and boost their regional economies. The worker shortage is very bad news for small business owners,” said François Vincent, CFIB’s vice-president for Quebec.

CFIB’s estimate is based on data from a survey conducted in March. The losses incurred by small businesses were calculated using the average total revenue of a Quebec small business published by Statistics Canada for the year 2020, by sector of activity. It should be noted that the analysis only considers businesses with revenues between $30,000 and $5 million. This makes it a conservative estimate.

“While the loss of sales and contracts is significant for small business owners, it’s important to note that it doesn’t necessarily mean a net loss to the province’s economy. The uninvested amounts may have been injected into different projects or may represent other expenses for small businesses, and the lost customers may have spent their money in other ways in Quebec. Nevertheless, the shortfall comes at a very bad time after two years of a pandemic that has weakened and indebted too many small businesses,” added Laure-Anna Bomal, CFIB research analyst and author of the report.

All sectors are hard hit

The research snapshot released today also breaks down the economic impact by industry. The construction and professional and administrative services sectors have losses in excess of $2 billion. Small businesses in hospitality and retail recorded losses of nearly $1 billion. In the wholesale and transportation sectors, the losses total $1.2 billion. What’s more, micro-businesses in the service and construction industries don’t have access to the small business deduction (SBD), which severely limits their ability to get through this crisis.

Addressing the labour shortages should be a campaign priority in the upcoming election

Lack of personnel is cited by 86% of Quebec SME owners as the most difficult issue to overcome in 2022, just after rising costs (energy, inputs, etc.), which were mentioned by 87%. This is a major problem that generates additional costs for small businesses, as one of the primary effects of labour shortages is to drive up wages.

In December 2021, CFIB developed a series of 12 recommendations for helping small businesses cope with demographic challenges, mitigating the impacts of the pandemic, and correcting mismatches in the labour market. In addition, it has repeatedly called on the Quebec government to address small businesses’ most pressing demands to help counter the labour shortages:

• Reduce income tax and other taxes (57%)
• Enhance business tax credits to enable businesses to offer better working conditions (49%)
• Help SMEs find job applicants in their region (facilitate the matching of job-seekers with employers) (33%)
• Facilitate access to immigrant workers and reduce processing times for the related hiring applications (32%)

“The Quebec government has adopted many measures to support businesses looking for employees and has just made changes so that all small businesses have access to tax credits to attract workers. CFIB will work to raise awareness of the programs that exist for SMEs. That said, more can and must be done to help them, particularly in terms of taxation, since Quebec has the highest tax rate in the country. Entrepreneurs are losing billions of dollars in contracts and can’t run their businesses at full capacity. In the upcoming provincial election, they’ll be listening to the proposals of all the political parties and will expect the labour shortages to be among their priorities. The candidates must make sure small businesses are at the centre of their actions, because they’re the heart of our economy,” Vincent concluded.

For media enquiries or interviews, please contact:
Maud Larivière, attachée de presse, FCEI
Tél. : 514-861-3234 poste 1808 | Cell. : 514-817-0228
affaires.publiques@fcei.ca

About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 95,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.