Big labour shortages to continue in food, hotel industries

Despite record-low unemployment across Canada, many industries are suffering from labor shortages in the second quarter of 2022, with restaurants and hotels remaining the hardest hit.

According to a new Statistics Canada survey, nearly two-thirds (64 percent) of businesses in the hospitality industry said they would face labor shortages in the next three months — the largest proportion in any other sector.

In this sector, too, there was a high probability of an increase in the number of vacancies over the next three months. In March 2022, job vacancies in the sector rose to 12.8 percent – the highest rate of any sector for the 11th straight month.

Statistics Canada conducted the survey from early April to early May 2022. During this period, companies with more employers were also at greater risk of losing their employees over the next three months.

Based on these results, employees may need to work more hours to clear the work barriers.

The report comes as current inflation in Canada has reached 7.7 percent – the highest in nearly four decades. In a recent report, the Organization for Economic Co-operation and Development (OECD) highlighted labor shortages and wage pressures in Canada and said higher immigration could help address these issues.

The companies that expected a labor shortage were predominantly among the companies with a large number of employees. Larger companies with more than 19 employees see labor shortages as a bigger obstacle in the next three months than smaller companies with fewer than 19 employees.

Larger companies with more than 20 employees were also more likely to expect job openings to increase in the next quarter than smaller companies with fewer than 19 employees.

Recruitment, retention of talent and more working hours

Of those companies anticipating labor shortages, nearly three-fifths (58.7%) said recruiting and retaining employees is more of a challenge today than it was 12 months ago, the report found.

Almost two-fifths (36.9 percent) of companies expect talent recruitment to be a challenge, and more than a quarter (27.6 percent) of companies expect talent retention to be a barrier.

According to the report, construction (49.5 percent) and manufacturing (47.4 percent) companies are most likely to face skills recruitment challenges over the next three months. The retention of specialists in accommodation and catering is highest (42.4 percent), followed by health care and social welfare.

In the face of growing labor law challenges, professional, scientific and technical services were the most likely to expect management (68.2%) and existing staff (63.5%) to work more hours to meet work-related challenges.

The survey also found differing expectations around hiring, retention, and hours of work related to the number of employees at each company.

Retaining skilled workers was an obstacle for almost three fifths (56.5 percent) or almost half (48.4 percent) with 100 or more employees or 20 to 99 employees. This was slightly lower (36.6 percent) for companies with five to 19 employees and less than a fifth (17.2 percent) for very small companies with fewer than four employees.

Statistics Canada’s analysis showed that recruiting qualified employees was a barrier for almost two-thirds of companies with 20 to 99 employees (65 percent), followed by companies with more than 100 employees (62.8 percent).

Even smaller companies expected recruiting qualified staff would be a challenge over the next three months – with more than half (52 percent) of companies with 5 to 19 employees expressing concerns about hiring.

In terms of company size, larger companies – 100 or more employees (61.4%) and 20 to 99 employees (59.3%) – see the need to add more working hours compared to smaller companies – 5 to 19 employees (47.1 %) and 1 to 4 employees (40.5%).

inflation and wage negotiations

In order to attract qualified staff and retain old employees during inflation, companies are struggling to adjust their current wage plans.

The problem is greater for companies employing more than five people, with seven in ten companies expecting inflation to be an issue during pay negotiations.

This means an increase in the average hourly wage. In the first quarter of 2022, 45 percent of companies said they wanted to increase wages in the coming year.

However, with inflation rising, more than half (55.2 percent) of companies expect the high cost of living to be a bigger issue when discussing pay rises with their employees.

This applies in particular to the hospitality industry (76.1 percent), closely followed by manufacturing (70.9 percent).