How to tackle the labour shortage?

According to Statistics Canada, the labour shortage is a barrier for nearly half of Canadian businesses, across all sectors. Fifty-five percent of Canadian employers are struggling to recruit the employees they need, forcing them to increase work hours or deliberately delay or refuse orders. These measures affect service quality and customer satisfaction, but more importantly, employee retention.

How can businesses adapt to the labour shortage?

Emna Braham, Executive Director of the Institut du Québec (IDQ), states that “it’s a widespread problem, but more acute in Quebec.” Indeed, the labour shortage is persisting in Quebec and shows no signs of easing. The government predicts that by 2030, there will be 1.4 million job vacancies in the province—a phenomenon affecting all regions and sectors.

Canada is struggling to find workers to fill positions in its businesses. Canadian employers are concerned about the decline in the country’s commercial economy. Additionally, the remnants of the “Great Resignation,” a trend characterized by a continuous economic reshuffling where employees have been resigning in large numbers since late 2020 and early 2021 in the United States, seem to be crossing the border. More than a quarter of Canadian businesses are now having difficulty retaining their staff.

Why is Canada facing a labour shortage?

Opinions are divided on the exact origin of this phenomenon in the country. According to Karl Blackburn, President and CEO of the Quebec Employers' Council, the labour shortage is primarily a demographic issue. He states, “More workers are leaving the labour market than are entering it.”

However, other experts argue that this perspective is flawed. Economist Pierre Fortin asserts, “Only in Quebec do we think that, but it’s not true.” He clarifies, “The labour force continues to grow in Quebec. There is no shortage. The demand from businesses is stronger than the increase in labour availability because the economy is solid, plain and simple.”

Where the economist and the president of the Conseil du patronat align is that there is no universal remedy for the labour shortage. As Karl Blackburn explains, “There are several solutions, such as keeping experienced workers in the labour market, transitioning to digital, or improving workplace training, but there isn’t a one-size-fits-all solution.”

What solutions exist for dealing with this ongoing labour shortage?

Recruiting employees has become increasingly difficult over the past year, and this challenge is likely to persist. Pierre Cléroux, Chief Economist at BDC, predicts that recruitment difficulties could continue over the next five years. In the meantime, he suggests that businesses need to find ways to cope with labour shortages and be creative in their recruitment efforts.

Let’s look at some of the solutions recommended for businesses by experts:

Investing in new technologies

Pierre Cléroux believes that the best way to address the labour shortage is to invest in new technologies, particularly in automation. According to the Bank of Canada’s Business Outlook Survey for the first quarter of 2022, 42% of businesses indicated that they planned to invest more in machinery and equipment to alleviate labour constraints through productivity improvements.

Digitalisation, automation, and robotic process automation

Automation and robotics are more commonly seen as solutions for manufacturers. These technologies involve transferring certain time-consuming, labour-intensive, and repetitive tasks from humans to machines, but they also help assist workers to become more productive. For example, exoskeletons can multiply workers’ strength while reducing the risk of injury—a solution that requires significant investment.

A more affordable yet effective solution is process digitalisation. This approach focuses more on streamlining activities, such as an audit management module that simplifies inspections by providing inspectors with a clear, step-by-step process to follow. It guarantees increased efficiency through simplified operations (internal audits, work order checklists, non-compliance reports, etc.), reduced writing time, and the integration of the application into your ERP allows more checks to be performed more quickly. This tool focuses on boosting worker productivity through faster troubleshooting, ensuring longer production times.

Adapting the business model

Process automation is an approach used by businesses to stand out from the competition or explore new markets. But it’s also an important lever for addressing labour shortages. Emna Braham emphasizes, “It’s necessary to invest in new automation tools or information technologies. It’s a matter of survival for most businesses.”

Indeed, integrating an Integrated Management System (IMS) provides a methodology for automating your operations and centralising information to reduce silos. This integration is based on four efficiency indicators: time savings, cost reduction, elimination/significant reduction of paperwork, and increased proactivity/responsiveness. 

HR strategy reform

Compensation

The HR process is at the heart of the solution. Étienne Lalé, a member of the Chair and professor in the Department of Economics at UQAM, reveals in his research that the major issue for many businesses is compensation. He notes, “The industries experiencing the most severe shortages are those where wages have remained very low for a long time and have been slow to increase.” The most obvious example of this phenomenon is the hospitality and restaurant sector, which has seen an exodus of staff to sectors with better conditions.

Work reorganisation

Emna Braham advocates for better work organisation to avoid extended work hours. The Executive Director of the Institut du Québec (IDQ) states, “We need to do things differently to improve efficiency by adjusting schedules, defining tasks, and encouraging teamwork.”

Integrating tools tailored to industries exposed to higher professional risks and uncertainties, such as construction, allows for better human resource management and ensures safety. From an HR perspective, a digital tool like OHS Management in such a company allows the employer to identify risks and inform workers about applicable prevention measures.

Training employees

Pierre Cléroux (Chief Economist at BDC) advises employers to invest in training less experienced workers. He adds, “This (labour shortage) isn’t going to disappear in a few months, so you need a long-term strategy to cope with this labour shortage.”

It’s important for the employee training management system to be relevant. Depending on the industry, training and certifications can vary, such as professional cards (driver’s licence, etc.), workplace first aid certificates, specific training on production machines, training in partner or client companies, etc. Thanks to digitisation, it’s now possible to manage training pathways more efficiently. A dedicated tool can track training history, validate skills, ensure renewals, and follow up on certifications specific to each employee.

Recruiting and retaining workers

Businesses need to invest in HR to ensure they have the right recruitment policies and retention strategies. Recruiting people aged 60-69 is one of the main levers promoted by the Quebec Employers' Council (CPQ) to address the labour shortage issue. Attracting or retaining these experienced workers is one of the quickest solutions to implement in the short, medium, and long term. In fact, Karl Blackburn emphasizes, “It’s easier to retain a worker who’s already in the labour market than to bring them back into it.”

For younger generations, specific measures are needed to attract and retain them in the labour market. Stéphane Renaud, Full Professor at the School of Industrial Relations at the University of Montreal, conducted an experimental study on the subject with two colleagues from HEC Montreal and UQAM. He notes that young people’s expectations of their employers differ from those of previous generations. Intangible rewards (which strengthen their relationship with the company) do more to retain them than tangible rewards (financial transactions), provided that “the reserve salary necessary to meet their needs is met.”

In the end, there is no universal solution to the labour shortage. Otherwise, experts of all kinds wouldn’t spend their time studying this phenomenon. Each organization must find the best solution according to its context and reality. It will likely be a combination of some of the elements mentioned above, and it will take time to find the right formula, even if it means changing your business model.