The Next Shortage and Price Hike for Canadian Business
A new shortage is coming, and it’s not housing or lumber. It’s human capital, which will be felt by every business sector across Canada.
The old ways of attracting, retaining, and inspiring employees will no longer work. Employers will have to find new ways to attract and retain employees and increase their team’s capacity.
Continue reading for insights from Eddie LeMoine—a top business speaker in Canada—as he shares invaluable insights into the evolving employment landscape.
Remember the Great Resignation?
The Baby Boomer generation was born between 1946 and 1964, just after the Second World War. This has been the largest spike in population that we have seen in recent history, at least in developed countries where these statistics are easily tracked.
As Eddie LeMoine describes in his webinar, Navigating The Talent Gap, since the 1970s there has been a population decline. This is because Baby Boomers didn’t have as many children as their parents, and now Generation X and Millennials are having even fewer children than their Baby Boomer parents.
Now that the majority of Baby Boomers are retiring, there are fewer people to take their place, this phenomenon is known as The Great Resignation. To further exacerbate the problem, Canada has one of the largest Baby Boomer populations in the world, which has been a driving factor for our growth throughout the past few decades.
While some claim that this started with the pandemic and is caused by how employees are at odds with their organizations, truthfully, we have seen an increasing number of voluntary resignations since 2009, and this number is only continuing to accelerate.
The COVID-19 pandemic did intensify the occurrence of resignations. As stimulus cheques provided enough for basic living needs, people saw less of a need to work. Simultaneously, the remote and hybrid work model gave employees more options for employment, so they shopped around as they were not tied to working locally. This lowered the employee retention rate because of a lack of engagement and better wage incentives to switch companies.
Canada’s Population Trap
Canada’s solution to its diminishing population has been immigration. Thankfully, Canada is still a desirable place to live with a relatively free market, minimal corruption, and a good standard of living. However, this strategy that has been supporting us since at least the early 2000s is beginning to fall apart too.
In the past two years, Canada has almost doubled the number of immigrants compared to previous years, from an approximate average of 250,000 annually to nearly 500,000 people in 2022 and 2023. The reason for this spike is to hopefully offset the damages of The Great Resignation that was heightened drastically by COVID-19.
Ideally, increasing the number of people in an economy increases the output of that economy. However, if there isn’t enough capital investment to keep up with a large spike in population, things like machinery, workspace, technology, raw materials, and employment in general, then the output per capita starts to stagnate or even decrease. Consequently, if there are more people and fewer goods being produced to go around, demand rises while supply stays the same, and the result is inflation.
With the increased cost of living due to homegrown inflation, and the lack of housing to meet the demand, migrants are starting to turn away from Canada.
The Brain Drain Dilemma and Student Visas
Also known as human capital flight, one of the deciding factors for people to relocate to Canada is because of the brain drain that occurs in their home country. This phenomenon happens because employees can typically find better wages and living conditions in Canada than they can in their home country.
Unfortunately, brain drain is a double-edged sword. As inflation and taxes begin to strain the workforce in Canada, our higher-skilled workers are relocating south to the USA, where they can find better wages and more affordable living. This is further decreasing our productivity and economic output and increasing our need for skilled immigrants.
Immigration protocols usually focus on importing skilled workers who were trained in their home country and bring their expertise to Canada. They also usually bring an adequate amount of money to spend in our country since they are typically educated professionals. Until recently, this has held up, but as we have sought to fill more roles in the past two years, Canada has loosened its immigration requirements and people are finding ways around our student visa program to allow them to work full-time and even buy property while being a student. This is aided by legitimate schools informally known as diploma mills, which help people meet the minimum requirements for a student visa while providing little to no schooling.
Solutions for Canadian SMEs
While the human capital challenges facing Canadian business leaders of small and medium-sized enterprises (SMEs) may seem daunting, there are effective solutions at hand.
Leveraging AI in the Workplace
AI has enabled businesses to automate jobs that are often unappealing to humans, such as roles that are repetitive, disengaging, dangerous, or dirty. Robots can now perform simple repetitive tasks commonly found in sectors like agriculture or warehousing, such as apple picking or moving heavy boxes. This automation frees up human workers to focus on more creative and engaging tasks, which can enhance job satisfaction and lead to better employee retention.
Embracing Remote Work and the Gig Economy
Another strategy for businesses to address the talent gap is by embracing the remote work model where it’s feasible. The rise of the gig economy has empowered freelance workers to operate from anywhere globally, facilitated by platforms like Fiverr and Upwork. The competitive nature of these platforms has also helped reduce costs for employers who opt to hire freelancers for specific tasks. SMEs can capitalize on this trend for project-based work that doesn’t necessitate a full-time, in-person employee.
Innovative Approaches to Employee Retention
Eddie LeMoine also recommends thinking outside the box regarding employee retention strategies. Creating a supportive work environment and culture where individuals feel valued and have the freedom to operate autonomously is crucial for fostering personal fulfillment and loyalty.
For instance, one innovative company introduced a new work shift from 10 am to 2 pm, allowing parents to drop off and pick up their children from school without the need for daycare. Such benefits not only keep employees engaged and productive but also help retain talent by offering flexibility that challenges traditional workplace norms.
We Want to Hear from You!
Are you also finding that the old ways of attracting, retaining, and inspiring employees are no longer working? What new ways is your business attracting and retaining employees?
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