MONTREAL -- The labour shortage is causing problems for many entrepreneurs, but they also may not be using the best tools to recruit and attract workers, according to a Business Development Bank of Canada (BDC) study released Wednesday.

"The solutions used by small businesses are often not the best solutions," explained Pierre Cléroux, chief economist with the BDC. "For example, one of the first things people do is increase salaries while investing very little in technology."

The economist believes the findings of the report, "How to adapt to the labour shortage" could help entrepreneurs deal with difficulties, which he predicts could last at least a decade.

Not only do technological investments and automation make it possible to be more productive, but they also attract workers, Cléroux says. Entrepreneurs who embrace this solution are twice as likely to find it "easier to hire workers."

"Many workers want to be in a 'dynamic' work environment," Cléroux said. "For workers, it's more attractive to work in a company that uses technology because the most routine tasks are done by technology or by a robot. That makes the job more interesting."

Yet, only one in four companies has fully automated any of their business functions.

The main reason given by entrepreneurs (43 per cent) is the high initial cost of investment.

The economist insists that technological investments are more within the reach of small businesses than they may think.

He gives the example of neighbourhood restaurants that have automated online appointment scheduling and ordering.

A WIDESPREAD PROBLEM

The survey also shows that the labour shortage is a widespread problem.

Fifty-five percent of businesses say they are unable to hire enough workers -- and 26 per cent are struggling to keep employees.

Of the employers who are having recruitment problems, 64 per cent say it has hurt their growth.

Forty-four percent say they have had to delay delivery to their customers or have been unable to fill some orders.

"That doesn't surprise me," said Cléroux. "We see a lot of businesses having to turn away customers because they don't have the manpower to be able to deliver."

Also among these companies, 49 per cent have decided to increase wages and benefits.

This is the measure that has the greatest impact on employee retention rates, according to the study.

Cléroux, however, urges employers to consider total compensation packages, which include benefits and working conditions, such as flexible work hours and telecommuting possibilities.

"It's not just about salary," he insisted.

Businesses shouldn't wait for the so-called post-pandemic return to normalcy, the economist argues.

The labour shortage is driven by demographics and could last for a long time to come.

"The worst of the situation is for a decade. After that, it should get better," he said.

BILLIONS LOST

The BDC study was released just after a survey by Manufacturiers et exportateurs du Québec (MEQ) that shows members estimate $18 billion in losses in the manufacturing sector due to the labour shortage, over a two-year period.

The study also shows that half of the positions available are paying $20 to $29 an hour.

"Everywhere across Quebec, the pressure on wages is going up," said Véronique Proulx, president and CEO of MEQ. "We have several companies that have raised wages, but basically, the problem is that the pool of workers is not large enough."

-- This report by The Canadian Press was first published in French on Sept. 29, 2021.