Peninsula Group conducted a survey of 79,000 SMBs across 5 countries – Australia, Canada, Ireland, New Zealand, and the UK – to see what the top priorities and concerns were for employers in 2024.

Growth is the main business goal for 44.7% of SMBs; a significant drop from 58.7% this time last year, reflecting the tough economic environment faced by businesses around the world. Australia and New Zealand appear hardest hit, with 22.4% and 26.6% respectively listing survival as their main goal for the year.

It’s more positive news for the UK and Ireland, however, with just 18.8% in both countries listing survival as their top goal, compared to 38.4% and 34.7% respectively a year ago.

Rising costs are the top concern for 84.2% of all businesses, while staffing continues to be a big issue. Labour shortages came in second highest at 45.6% with retention in third place at 41.5%.

The cost-of-living crisis and staffing shortages are having a significant impact, with 56.3% of employers offering financial remuneration to help retention. Canada ranked highest here, at 64.9%.

Those who are unable to give financial incentives are turning to reward and recognition to aid retention; this saw a huge 131% increase year-over-year. While mental health support was highly valued in all countries last year, this year it’s only in the UK where mental health is the second highest retention aid, with 48.7% of employers continuing to offer it – an increase of 8% from last year.

Employers are also getting creative as they look to offset the ongoing skills shortage with 46.5% investing in upskilling and training their existing staff. Apprenticeships are also on the rise, with a 36% increase globally. Canadian employers especially are turning to apprentices with a massive 217% increase year-over-year. 25.7% of employers list recruitment as their biggest challenge staffing wise, with pay increase requests coming in second at 22%.

In terms of working patterns, despite all the headlines surrounding a 4-day work week it’s clear that this is not a reality for many businesses. Only 2.2% of SMBs globally have moved to a 4-day working week, with a further 0.6% having trialled it and found it did not work for them. Instead, 50% of all employers say that their employees are all in the workplace full-time, 14.7% have flexible working hours, and 10.1% have made hybrid working a permanent policy.

Raj Singh, CEO at Peninsula Canada says “Despite the tough economic climate, there is an air of optimism amongst small business owners as we move into 2024. Compared to this time last year there has been a notable surge in employers dedicating greater resources to the development and growth of their staff. Globally, apprenticeships have seen a remarkable 36% increase, while upskilling and training have witnessed a 28% increase. And more than half of employees were given a pay raise or offered flexible working.”

“In 2022, we found that the top two concerns for employers were labour shortages and employee retention. Faced with these obstacles, SMBs acknowledged that fostering employee retention was key. And one of the best ways to overcome these challenges, was to invest in their employees and that is what we saw happen last year.”

“By prioritizing the professional growth of their employees, businesses not only mitigate the effects of labour shortages but also cultivate a skilled and motivated workforce, fill in gaps in the workplace, and set the foundation for continued success in the ever-evolving business landscape.”

“As January starts – traditionally the time of year when most people look for new jobs – it’s no surprise that business owners are looking at ways to upskill and retain their own employees, rather than having to spend time and money recruiting.”

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As governments and industries around the world grapple with inflation, rising costs and a breadth of other economic hurdles, the latest edition of The Real Economy, Canada examines how Canada’s economy is faring at the moment, and what key issues and opportunities businesses need to be aware of in the coming months.

Key findings in this quarter’s report include:

Recession talk is pre-mature, though economic headwinds are having an impact.

• The Canadian economy has bounced back strong from pandemic lockdowns, as pent-up consumer demand and government support have fueled GDP growth in every quarter since the third quarter of 2021.
• However, inflation and a rising unemployment rate, combined with persistent labour and housing shortages present elevated risk that Canada could enter a recession early next year.
• Inflation will take a while to slow despite potential summer peak, as the war in Ukraine grinds on and the labour market remains tight.
• Businesses should expect the Bank of Canada to continue raising rates for the rest of the year rather than easing them prematurely.

Canada will need to accelerate its immigration goals to address long-term labour and productivity problems.

• Declining labour force participation rates, an aging population and declining fertility rates mean that Canada must rely on immigration – rather than natural growth – to replenish the labour pool.
• Canadian policymakers are aiming to bring in more than 400,000 immigrants per year between 2022 and 2024 following the growth immigration has spurred in the millennial and Gen-Z workforce.
• Immigrants are also shown to increase productivity rates, something Canada cannot afford to ignore as labour productivity in Canada might fall to last among countries in the Organisation for Economic Co-operation and Development in just a decade.
• However, Canada must streamline the accreditation process if it wishes for skilled immigrants to fill the labour gaps that are most glaring, such as in the health care industry.

Higher interest rates have cooled Canada’s housing market, but demand remains high.

• The construction industry has been hit hard by rising interest rates and the resulting slowdown now threatens to make Canada’s housing shortage more acute.
• Rising rates, combined with inflation, threaten to put a lid on housing construction for the foreseeable future, potentially further worsening the housing affordability crisis in Canada.
• While most industries gained jobs, the construction industry lost over 23,000 in April and June, despite the red-hot labour market.
• However, the Canada Mortgage and Housing Corporation’s new mortgage loan insurance program is giving developers access to mortgages with more favourable financial terms, which incentivizes them to build more affordable housing and energy efficient housing projects.

Canada will stand to benefit from the United States’ Inflation Reduction Act and green energy transition.

• This legislative and financial commitment by Canada’s closest trading partner provides Canadian companies with some certainty as to where they can hang their hats from an economic development perspective.
• Canada’s mining and manufacturing sectors will be well-positioned to benefit as they provide the products and minerals necessary to facilitate the clean energy transition, particularly when it comes to electric vehicle development.
• Though Canada’s climate change strategy has been fairly robust, the IRA and the resulting opportunities will help provide a clearer picture of how to economically build and scale clean energy industries.

Canada’s industrial sector is reaping the benefits of strong global demand.

• The Prairie provinces have been leading the economy because of growing global demand for energy and rare metals.
• Canadian industrial production grew over five per cent year-over-year in the second quarter, well above the pre-pandemic level, and is expected to end the year on a high note.
• However, industrial production may diminish in subsequent months as global markets anticipate a recession and consumer demand slows.

“Despite a robust recovery from the lockdowns of the COVID-19 pandemic, Canadian economic growth will continue slowing down due to persistent inflation and an historically tight labour market,” says Tu Nguyen, economist and ESG director with RSM Canada. “But the real long-term challenge will be the labour shortage, with declining worker participation hitting the health care, hospitality and food services industries particularly hard.”

Nguyen continues: “There’s also a fundamental shift in the demographic of Canada’s labour force, causing policymakers to explore ambitious immigration goals to address the labour gap. But government, industry associations and organizations will actually need to go further and streamline the accreditation process so that workers educated abroad can fill much-needed roles in Canada. Only then can Canada hope to have more meaningful growth in labour supply and productivity.”

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The Ontario government intends to propose legislation that would, if passed, help address the province-wide labour shortage by making it easier for internationally-trained immigrants to start careers in their profession. The proposal announced today would, if passed, help remove many significant barriers internationally-trained immigrants face, such as the requirement for Canadian work experience, when attempting to get licensed in certain regulated professions and trades such as law, accounting, architecture, engineering, electrical and plumbing.

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