Being nimble in a changing labour environment

Future-proofing your business for whatever comes your way

The labour market is changing. Some blame demographics, the economy, or the pandemic, but the changes were in evidence well in advance of March 2020. Whatever the reason for the changes, many Canadians are less willing to accept work that leaves them stressed or burnt-out. Many are demanding more from employers – more flexibility, more supports, and/or more money.

The May 2022 Canadian Labour Force Survey indicates that wages are still on the rise and that many employees are offering greater flexibility in the workplace:

  • The average hourly wage rose 3.9% (+$1.18) on a year-over-year basis, up from 3.3% in April. Wages increased among both permanent (+4.5%) and full-time (+4.3%) employees.
  • More than one-quarter of employees have the flexibility to choose their work location.
  • 2% of employed Canadians reported that they usually work exclusively from home. The proportion of workers with a hybrid work arrangement increased slightly to 6.3%, an upward trend.

And it looks like wages will continue to rise to help keep up with the rising cost of living. The Canadian Survey on Business Conditions (May 2022) reported that 55.2% of businesses expect inflation to be an issue when discussing wage increases with employees over the next 12 months. Additionally, 44.9% of businesses planned to increase wages offered to existing employees over the next year.

Yes, changes are afoot in the Canadian workforce, but there is much debate over what is permanent and what will be just a temporary blip.

A “Great Resignation” in Canada?

As pandemic restrictions lifted across the country, most businesses had been anticipating getting back to “normal”. But headlines describing the “Great Resignation” – the large number of workers leaving their jobs during the pandemic – indicate that there may not be a normal to which we can return. In the U.S., the numbers have been notable. In 2021 alone, over 47 million Americans voluntarily left their jobs (more than twice the size of Canada’s entire labour market). And though there were over 75 million Americans hired during the same period, worker shortages have been widespread, touching many industries.

Are we seeing the same thing here in Canada? Fortunately, the numbers indicate otherwise. According to Statistics Canada, the rate at which Canadians are changing jobs is under 1%, comparable to the past five years before the pandemic. So, while Canadian businesses are definitely not grappling with a Great Resignation, they are dealing with a tight labour market, which means that employees tend to have the edge. The May 2022 Labour Force Survey reported that Canada’s unemployment rate declined to 5.1%, its lowest since before the pandemic.

Labour shortages and the pandemic

Labour shortages are nothing new to Canadian businesses, but pandemic lockdowns and health restrictions complicated the problem, further disrupting the job market. The last two years saw a record number of workers out sick or in quarantine. Some in the retail and hospitality industries lost jobs and retrained for careers with more job security and/or benefits. Employment was interrupted as working parents dealt with school closures and a dearth of childcare resources. More than the average number of older workers left the workforce to retire early. Some front-line and health care workers burnt out under the strain to the system.

The Canadian Federation of Independent business (CFIB) says that demographics are to blame for the labour shortage, but that the pandemic led to 55% of Canadian small businesses experiencing labour shortages. It is a similar story for many larger businesses. Take the oil and gas industry. In March 2022, as economic sanctions on Russia limited its oil exports, Canada’s production should be ramping up to fill the gap, but it did not have the adequate labour to do so quickly.

The ramifications of a tighter labour market

Even without a Great Resignation in Canada, there is little question that workers’ expectations are changing. Part of this is demographic, of course. Millennial workers (usually defined as those born between 1980 and 1996) naturally have different priorities and expectations from employers than do their older demographic counterparts, Generation X or Baby Boomers.

However, the last couple of years were also a catalyst for an acceleration of changes in workers’ expectations – and not just regarding salary expectations.

Even as the pandemic appeared to be losing strength, Canadian workers’ mental health did not seem to reflect the same recovery. The February 2022 Life Works’ Mental Health Index reported that the mental health of Canadians remains below pre-pandemic levels, and that nearly half of Canadians are planning, or thinking about, changing career goals because of the pandemic.   

A recent Deloitte survey of employees and executives in the U.S., U.K., Canada and Australia revealed similar results on employees’ well-being. According to survey results, even a majority of those at the C-suite level (almost 70%) are considering quitting for a job that supports their well-being. It also found that at least one in three employees and executives are struggling with exhaustion, stress and poor mental health.

After two years of remote working and juggling jobs and health with homeschooling children or elder care, many workers are looking for more flexibility about when, where and how they work.

Hybrid work, job-sharing arrangements, reduced hours and generally greater wellness support benefits appear to be motivating some workers to jump ship.

A tighter labour market tends to tip things in favour workers. Companies in many industries are being forced to compete for labour, to try new approaches for everything from hiring processes and compensation to wellness benefits and signing bonuses. But with rapidly rising inflation – hitting another high in May 2022 – and talk of a possible recession in the near future, some may think that the balance could tip in favour of employers. Only time will tell.

How can your business prepare, adapt and thrive?

  1. Leverage processes and technology to find efficiencies. Companies have learned how to do more with less staff. This may have been due to streamlined processes or new technology, which is a good longer-term solution. 

  2. Do not lose sight of your existing workforce. As important as your recruitment strategy may be to your business, remember that it is more expensive to recruit, hire and train a new employee than it is to adapt to keep an existing one. Employers focused on getting new talent in the door rather than retention of existing employees may face increased attrition, which can disrupt your business. Do you have a retention strategy or mentorship program? Providing growth and development opportunities and doing more to recognize the contribution of employees could go a long way to keeping talented staff. Keep listening to your workforce.

  3. Create an employee-centric work culture to attract and retain talent. Employers need to ensure their compensation is competitive and that benefits are focused on supporting employees. Is your company flexible enough to allow alternative work location and/or shift arrangements? With the rise in mental health concerns, wellness initiatives or additions to the benefits package could help support your employees. Even small employee perks can go a long way to help recognize employees’ contribution to your organization and make them feel valued.

  4. Refresh your business plan. You may need a longer-term human resource strategy that is focused on staff retention but also anticipates growth needs. One that allows you to begin recruitment before you have a vacancy to fill. It takes time to win potential staff to your organization. It takes even longer to win the right staff to your organization. 

Every business is different, so what works for one likely will not work for another. Listen to your employees to better understand what they need to stay and to thrive. Try new approaches. Adapt policies to meet the needs of your workforce. And stay flexible.

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| |   Mehendi Kamani | Shawn Jakupi | Ben Legge | David Szalkai

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