High labour costs have businesses scrambling

Alberta’s tight labour market is putting a financial squeeze on employers who can’t compete for high-priced workers.

Alberta’s tight labour market is putting a financial squeeze on employers who can’t compete for high-priced workers.

A recent survey by ATB Financial found that 67 per cent of small and medium-sized businesses are finding it hard to attract and keep experienced or skilled labour. While many of these cited a shortage of workers as the problem, 37 per cent complained that the salary expectations of prospective and current employees are the problem.

“Certainly, the number was higher than what we anticipated,” said Wellington Holbrook, ATB Financial’s executive vice-president of business and agriculture.

Jonathan Seib, policy co-ordinator with the Red Deer Chamber of Commerce, said many small businesses in Red Deer are among those struggling with high labour costs. And while the energy sector is a big contributor to the problem, businesses in other industries are suffering.

“They’re not able to pass on those rising costs downstream,” said Seib.

Richard Truscott, Alberta director with the Canadian Federation of Independent Business, agreed that the issue is widespread.

“It’s a similar kind of story right across the economy in virtually every sector, where small businesses are having a really difficult time keeping up with the salary demands of qualified people,” he said.

“The pockets of a big oil and gas companies are certainly a lot deeper than a small business’s.”

Seib noted that many small businesses are finding other ways to compete for workers. These include offering greater flexibility with respect to working hours, granting more time off, giving generous employee discounts on their products or services, and even providing non-vocational training — such as language courses for recent immigrants.

ATB Financial has observed the same response, said Holbrook, with employers trying to make their workplaces more fun for staff and even offering them an equity interest.

“What we’re seeing is more and more creativity around creating stakes of ownership for their employees in their businesses.”

Truscott is also seeing creative measures to attract and retain workers. But some CFIB members are also being forced to take matters into their own hands — literally.

“Our research shows that business owners themselves end up working longer hours because they either can’t find qualified people or they can’t afford them.”

He added that CFIB research indicates that half of its members have forgone business opportunities as a result of not being able to find or afford the people they need.

“This issue is having a major impact on the ability for small businesses to compete and to thrive and prosper,” he said, adding that the consequences could be even more dire.

“Some small businesses, they’ve tried to tread water and ultimately they’re going to drown because they just can’t keep up with the flood of labour costs, as a result of bigger companies, especially.”

It is possible to put a positive spin on the situation, said Holbrook. For one thing, it means Alberta’s economy is prospering.

“Most parts of North America, and in fact the free world, are wishing they had this kind of environment.”

Plus, he added, the high labour costs are helping to moderate the pace of growth — which left unchecked could accelerate to an unsustainable level.

“It might just restrain growth from getting out of hand.”

Still, the Red Deer Chamber has made labour its top priority when it comes to lobbying government for solutions, said Seib. At the recent Alberta Chambers of Commerce conference and policy session, it won support for a resolution that the federal government be asked to remove recent new restrictions to its temporary foreign workers program and implement other changes to enhance the program’s effectiveness.

“We have a permanent labour committee that’s looking at everything from education to immigration and how to solve these problems,” added Seib.

Truscott said the CFIB is also concerned about government policy in areas like employment insurance.

“There are some disincentives built into some of our public polices that prevent people from moving to a place like Alberta, where salaries are higher and growing because there’s a shortage of qualified people.”

The ATB Financial survey attracted 300 responses from small and medium-sized businesses across the province — excluding farms, government organizations and financial institutions

hrichards@bprda.wpengine.com