Small and Medium-sized Employers (SMEs): Skills Gaps and Future Skills

Canada’s small and medium-sized enterprises (SMEs) account for more than 90% of private-sector jobs in Canada. To be competitive in today’s market, they need the right people with the right skills, yet they are disproportionately threatened by labour shortages and skills gaps - a situation made worse by COVID-19. Unlike large corporations, SMEs possess limited resources, making it exponentially more challenging to support these human resources needs. There is a dire need for innovative research & solutions.

Key Takeaways

40% of SMEs studied in 2019 identified skills shortages as a major competitive challenge, up 4% from the year before.
SMEs facing labour shortages are 43% more likely to experience low growth, requiring their employees to work longer hours and incurring delays in services rendered.
The need to further analyze the situation of skills shortages for SMEs in Canada is clear. It is paramount to clarify what skills are needed by organizations to be more agile and competitive. And it’s key to develop proper HR practices that will allow for better recruitment, training (formal and informal) and retention of talent.

Executive Summary

Small and medium-sized enterprises (SMEs), which typically employ fewer than 500 employees, are the backbone of the Canadian economy, accounting for more than 90% of jobs in the private sector. Yet they face critical labour shortages and skill gaps that threaten their competitiveness—both with larger organizations and other businesses globally.

For many years, and across the country, SMEs have identified talent shortages. Surveys by different organizations repeatedly show SMEs reporting access to talent as a critical competitive issue. At the same time, there is limited data on the specific skills needed which vary across sectors and regions of the country.

There is also evidence that SMEs face challenges in the processes that they employ to hire, retain and train talent. Often they lack the HR professionals and resources needed to support recruitment of highly skilled workers or for training, retraining and upskilling existing employees. Some research also suggests they face challenges in retaining talent. In addition, there is evidence that SMEs often present more barriers to women and diverse employees in part because of their heavy dependence on informal processes for recruitment. SMEs are ill equipped to comply with growing regulatory requirement such as Bill C-25, an Act to Amend the Canadian Corporations Act which requires additional reporting regarding diversity on boards and in leadership roles as well as strategies to improve representation.

Finally, SMEs have been hardest hit by COVID 19, especially smaller businesses and those in the services sectors. While some are cautiously optimistic about recovery, the impact it will have on skills and employment in the sector is not at all clear. This report explores the current knowledge concerning approaches to skills among Canadian SMEs as well as the areas for further research.

Small and Medium-sized Employers (SMEs): Skills Gaps and Future Skills

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About the Authors

Ontario Chamber of Commerce, Fédération des chambres de commerce du Québec, Tania Saba, Simon Blanchette

Ontario Chamber of Commerce
A respected voice among government decision makers for more than a century, the Ontario Chamber of Commerce is the indispensable partner of business. The OCC undertakes important research on Ontario’s most pressing policy issues, advocating for solutions that will foster the growth of Ontario businesses and lead to the creation of jobs in the province. Through focused programs and services, OCC supports businesses of all sizes and encourage inclusive economic growth. This work is based on the belief that strong businesses are the foundation of a prosperous Ontario. The OCC’s mission is to convene, align, and advance the interests of our members through principled policy work, value-added business services, and broad engagement to build prosperity for all Ontarians. From innovative SMEs to established multinational corporations and industry associations, the OCC is committed to working with our network’s diverse 60,000 members to improve business competitiveness across all industries. OCC represents local chambers of commerce and boards of trade in over 135 communities across Ontario, steering public policy conversations provincially and within local communities.

Fédération des chambres de commerce du Québec
With its extensive network of more than 130 chambers of commerce and 1,100 corporate members, the Fédération des chambres de commerce du Québec (FCCQ) represents over 50,000 businesses involved in all sectors of the economy throughout Québec. As the province’s premier business network, the FCCQ serves as both a federation and a provincial chamber of commerce. Its members share a common goal: to foster an innovative and competitive business environment.

Tania Saba, PhD
Professor, School of Industrial Relations, University of Montreal

Tania Saba is an expert on issues of diversity management, workforce aging, intergenerational value differences and knowledge transfer. Over the course of her career, she has contributed to more than sixty book chapters and scientific articles. She collaborates on major research projects with public and private organizations on issues of integration and adaptation in employment of disadvantaged groups.

Simon Blanchette, MSc.
Research associate, Diversity Institute, Ryerson University

Simon works on the Diversity Institute’s seminal DiversityLeads project, the Diversity Assessment of the Superclusters for Innovation, Science and Economic Development Canada (ISED), as well as a range of projects for the Women Entrepreneurship Knowledge Hub and the Future Skills Centre.

He has presented is work in prestigious international conferences, such as the Academy of Management Annual Meeting and the European Group on Organization Studies Annual International Colloquium. Simon is a lecturer in management in the Desautels Faculty of Management at McGill University. He is the coauthor of several recent studies on women and work as well as training gaps and skills gaps in SMEs, and also has previous experience as a consultant.

He holds a Bachelor of Commerce from McGill University and Master of Science in Management (specialized in Strategy) from HEC Montreal, where his thesis focused on creative ideation and innovation.