Labour shortages forcing Quebec SMEs to shift operations

by Krystyna Shchedrina

Fifteen percent of Quebec-based small and medium companies (SMEs) say they have had to relocate operations outside the province because they cannot find workers.

According to the Quebec manufacturers association’s (STIQ) most recent Quebec Industrial Barometer, labour shortages are the worst the association has seen since starting the barometer 13 years ago.

Over the past year, the job vacancy rate has increased by 36 percent, with an average of 12 unoccupied jobs per company. The barometer also found that international recruitment has not been sufficient to keep up with demand for skilled workers.

In a press release, Richard Blanchet, president and CEO of STIQ, said these trends have significant consequences for the manufacturing sector, which accounts for 86 percent of Quebec exports.

Ninety-one percent of manufacturing SMEs identify hiring specialized employees as a critical issue, while 73 percent are challenged with retaining these workers.

“Sixty-two percent of SMEs have lost or turned down contracts, limiting their growth. Thirty percent have cut back on their investments in innovation, which can jeopardize the company’s future,” said Blanchet.

“Previous editions of the barometer have shown that innovation and investment are interconnected and improve business performance.”

The labour shortage has wide-ranging effects. While 60 percent of companies see their profits declining, 95 percent of businesses have increased their prices, and 80 percent of the SMEs are late on delivering orders and contracts. Another 20 percent say these factors have caused a decrease in the quality of products and services.

Technology integration

The lack of skilled workers has also slowed the digitization of Quebec companies. Blanchet said companies that sell their goods outside of Quebec and those that have already integrated technology, or only plan on doing it, have identified the slow pace of digitization as a substantial issue for businesses.

Almost half of companies say the size of the technology gap itself is a barrier to new technology integration. Because catching up can be a multi-year project, companies put it off.

“A technology divide is materializing,” Blanchet said. The 28 percent of businesses that have made little progress on digitization  do not see the issue as very important. However, for the 80 percent of companies that sell outside Quebec, and 91 percent of companies that have already introduced digital technologies or plan to do so, digital technologies are a priority, he noted.

Covid-19

SMEs have used the pandemic to re-evaluate operations, increase efficiency and promote retention, the study found. Fourty-two percent of companies deployed new technology, and 70 percent adopted new human resources practices to improve employees’ autonomy and well-being, enhance their living and working environment, and added flexible hours, versatility and accountability measures. SMEs with 100 to 500 employees or which are well ahead on integrating digital technologies are significantly more likely to have implemented these changes.

The Barometer is an annual portrait of the manufacturing sector compiled by STIQ since 2009. This year it surveyed 500 SMEs by telephone in January and February 2022.