Toronto, June 10, 2025 – Small businesses face a shortage of applicants, skills mismatches and difficulty attracting candidates when hiring skilled workers, and these challenges are only worsened by labour mobility barriers, finds recent analysis by the Canadian Federation of Independent Business.
“Over four in ten small firms say a shortage of skilled labour is limiting their ability to increase sales or production. Many are struggling not just to find workers, but to find candidates with the right skills, expectations, and qualifications,” said Marvin Cruz, CFIB’s director of research.
Over two-thirds (69%) of SMEs said the primary obstacle to recruiting skilled employees is a shortage of qualified candidates within their sectors. More than half (54%) of small businesses had issues attracting qualified candidates at all, while 47% said they struggled with a mismatch between the skills applicants bring and the actual requirements of the role.
Even when qualified workers are available elsewhere in Canada, provincial licensing and certification barriers often prevent employers from filling essential roles quickly and efficiently—especially in rural areas or sectors where candidates are scarce. Additionally, 57% of small businesses reported a disconnect between what candidates expect in terms of pay or benefits and what the business is offering, and half of small businesses said they simply cannot provide compensation packages that match those of large companies.
“There’s a growing disconnect in Canada’s labour market between small business needs and the available workforce. Even when roles are filled, businesses often deal with employees’ poor productivity, lack of motivation, and weak problem-solving skills. Business operations and output are then lacking, while owners are often forced to spend more time training or rehiring workers instead of focusing on running the business,” said Alchad Alegbeh, CFIB’s research analyst.
To enhance labour quality, governments should:
• Introduce tax credits and grants for SMEs that invest in employee training and upskilling.
• Provide wage subsidies or EI premium holidays for SMEs hiring and training new or inexperienced workers.
• Encourage partnerships between small businesses and educational institutions to create apprenticeship and internship programs that can help bridge the skills gap.
As for labour mobility, CFIB recommends governments:
• Mutually recognize one another’s regulatory requirements.
• Allow licensed professionals to work within the scope of their existing training and experience while undergoing registration processes in a new province or territory.
• Work with professional colleges and associations to lower or waive interprovincial registration fees.
• Streamline the registration process by legislating a clear timeline for professional certification approvals. Should approval timelines not be respected, implement compensation for businesses such as waiving registration fees.
“Since 2021, wage costs have gone up, but productivity has stagnated. By improving our workforce quality and removing labour mobility barriers, we could boost our productivity and strengthen Canada’s economic competitiveness,” Cruz concluded.
For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
647-464-2814
public.affairs@cfib.ca
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 100,000 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.
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