One-third of employers reporting labor shortages, up from one-quarter: Survey


Employers’ hiring intentions for 2021 have improved compared with earlier in 2020, according to a survey from the Bank of Canada.

The percentage of firms expecting higher levels of employment minus the percentage expecting lower levels stands at 43 per cent — a major increase from 26 per cent for the third quarter of 2020, 22 per cent in the second quarter and 28 per cent in the first quarter.

“Businesses often link their hiring intentions with their expected recovery in sales over the next 12 months. Among firms with positive hiring plans, about half expect to ramp up the size of their workforce later in 2021, when they believe the pandemic will be largely under control,” according to the Business Outlook Survey.


“Most firms expect their sales to increase, but several are uncertain about their sales outlook because the evolution of the pandemic remains unclear.”

The report came after Canada’s employment numbers dropped by 63,000 (0.3 per cent) in December, the first drop since April, according to Statistics Canada’s (StatCan) Labour Force Survey (LFS).

Labour shortages

What’s behind the improved outlook? One-third (33 per cent) of firms are reporting labour shortages, up from the third (25 per cent), second (13 per cent) and first (28 per cent) quarters of 2020. It’s even higher than the 28 per cent and 31 per cent record in the last two quarters of 2019, respectively.

“Several firms noted that pandemic-related government income‑support programs were contributing to the difficulty in finding workers. Moreover, as demand strengthened, firms’ need for labour also increased, revealing pockets of labour market tightness that existed before the pandemic — namely in the trades, for technology workers and in remote regions,” says the Bank of Canada.

“Citing emerging strength in sales, many firms reported plans to expand operations and boost productivity by investing in automation and digitalization. They also plan to improve the customer-facing component of their online business.”


Advancements in vaccine development also supported firms’ optimism, says the report, “although most businesses anticipate that the positive impacts of a vaccine will not materialize until later in 2021.”

Among firms with positive hiring plans, about half expect to ramp up the size of their workforce later in 2021, when they believe the pandemic will be largely under control.

“Still, results point to the uneven and lengthy recovery of labour markets, as one-quarter of firms expect the size of their workforce to remain below pre-pandemic levels for at least another year,” says the report.

A December survey from Manpower predicted a moderate hiring pace over the next three months.


Wage growth over the next 12 months is expected to be roughly the same as over the past 12 months, Meanwhile the balance of opinion — the percentage of firms expecting higher labour cost increases minus the percentage expecting lower labour cost increases — on wage increases over the next 12 months stood at -21 per cent, an improvement from the -35 per cent recorded in the third quarter of last year.



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