Labour shortages cost small businesses $38 billion in revenue opportunities

Dec. 4, 2023 – Small businesses in Canada missed over $38 billion in revenue opportunities last year because they had to turn down or postpone contracts or sales due to labour shortages, finds a new report by the Canadian Federation of Independent Business (CFIB).

“We always knew labour shortages came at a high price to small businesses. Staffing challenges cause employers to work more hours, reduce their hours of operation and decline services and contracts, simply because they can’t find enough staff to fully operate their business,” said Laure-Anna Bomal, CFIB’s economist and the report’s author. “In fact, we estimate the business opportunities that small businesses lost in just one year due to labour shortages are worth over $38 billion. While it doesn’t necessarily mean the Canadian economy lost the same amount, it’s still a significant share of revenue that small businesses could have used to invest in automation or growing their business.”

Small businesses in the construction sector faced the most significant loss of business opportunities, over $9.6 billion in the last year.

After a detailed review of what other jurisdictions are doing to address their labour shortages, CFIB has completed a whitepaper on how to address various barriers to work. The policy proposals cover three age groups—youth (15-24), core age (24-64), and older workers (65+)—and include targeted solutions on how to better integrate workers of all ages into the labour force.

Reccomendations from the report include to increasing workforce participation among youth by increading the prevalence of work-integrated learning in high schools. Among the core-age group, employment insurance program design shouldn’t create disincentives to work, and governments need to facilitate labour mobility across provinces. As for experienced workers, governments should revisit existing tax policy and/or create a tax credit for career extension.