(Cet article a été traduit en français.)

Much ink has been spent attempting to anticipate the effects of automation and digitization on the labour market. The Frey and Osborne analysis that 47 per cent of jobs in the United States were in high risk categories for computerisation produced a flurry of reports on how to respond to the artificial intelligence (AI)-enabled robots coming to take our jobs.

What wasn’t widely predicted was what would happen to the labour market in a global pandemic. The lessons from COVID-19 are that change is rapid and foresight, rather than forecasting, is necessary. For industry, government and policy leaders engaging in scenario planning, coupled with more focus on adaptability, resilience and innovation, is paramount.

And size matters. Small and medium enterprises (SMEs) were hit harder by the pandemic than larger companies. Businesses led by women, Black or Indigenous people were the hardest hit of all.

In Canada, the needs of SMEs are particularly critical as they account for the vast majority of private sector jobs. The structure of the Canadian economy is fundamentally different from that of the United States. In Canada, nearly 90 per cent of private sector jobs are in businesses with fewer than 500 employees. By comparison, in the U.S. over half of private sector employment is found in large corporations.

Series: The future of work and skills training

Quality of work goes beyond income

Indeed, micro-businesses with fewer than five employees make up more than half of Canadian businesses. These micro-businesses dominate most sectors including construction, professional services, personal services, retail, health care, finance and insurance. On top of that, self-employment is growing as people are pushed and pulled into creating new ventures.  Small and medium enterprises are important to Canada.

Recent research from the Diversity Institute, the Ontario Chamber of Commerce and the Future Skills Centre has shown that COVID-19 has dramatically increased the rate of digitization, forcing many more businesses to pivot to online offerings. Yet many lack the skills to exploit digital technologies critical to innovation, growth and survival. Digital skills and the skills associated with defining and adopting innovative technology solutions are critically needed.

While acute labour and skills shortages exist, there remains an untapped labour pool. Many SMEs are aware of the opportunities that diverse talent presents to meet labour market demands, but lack the infrastructure, human resources capacity and skills to execute equity, diversity and inclusion strategies.

The Ontario Chamber of Commerce has had success in addressing this issue and has highlighted the willingness of SMEs to employ diverse talent. This has included giving employers tools to advance inclusive workplaces through various initiatives such as the Discover Ability Network, which provides support to both employers seeking talent and persons with disabilities in navigating the job market. Other research shows that once an SME has experience in hiring diverse staff – for example newcomers to Canada – they typically continue in that tradition. Policy-makers must take note.

1. Economic and innovation policies need to be developed with an eye to help SMEs across sectors grow but also sustain employment. While some start-ups do scale and become unicorns, many SMEs are not high growth but are still critical – they provide stable income for families and people across Canada, in small communities as well as major centres.

2. Targeted support is needed recognizing the realities of SMEs. This requires a sectoral lens as well as those led by women, racialized and Black entrepreneurs, persons with disabilities, newcomers and more. People are both pushed by exclusion and pulled by opportunity to pursue self-employment and start businesses. While many large corporations are replacing people with technology, small businesses remain critical to creating and sustaining jobs.

3. Access to financing is critical, and more needs to be done to modernize programs and processes to remove bias and barriers while building “capital skills.” However, helping to grow markets is even better; ensuring that a good proportion of the government’s $200 billion spend each year makes its way to SMEs is key. Government can exercise significant influence on Tier 1 suppliers to ensure they include Canadian SMEs as a critical part of their supply

4. Capacity is needed to ensure that SMEs and entrepreneurs are front and centre in the skills agenda. Whether it’s support for digitization and digital skills, creating platforms for training and recruitment, designing work integrated learning programs to better meet their needs or advancing best practices in diversity and inclusion to provide pathways for diverse Canadians, there is much to be done.

Small and medium enterprises in Canada are too important to be allowed to fail. They continue to be more preoccupied with day-to-day cost, labour and supply pressures. If we want a successful post-pandemic recovery, we need a renewed focus on SMEs for our economic and social growth.

This article is part of the Future of Work and Skills Training special feature series.

Do you have something to say about the article you just read? Be part of the Policy Options discussion, and send in your own submission, or a letter to the editor. 
Rocco Rossi
Rocco Rossi joined the Ontario Chamber of Commerce in 2018 as president and CEO. He is an entrepreneur, business executive, fundraiser and dedicated public servant.
Nadine Spencer
Nadine Spencer is acting CEO of the Black Business and Professional Association, a Black community champion and founder of BrandEQ, an agency specializing in social change marketing, communications and public relations.

You are welcome to republish this Policy Options article online or in print periodicals, under a Creative Commons/No Derivatives licence.

Creative Commons License

Related IRPP Research

Skills Training That Works: Lessons from Demand-Driven Approaches

By Karen Myers, Simon Harding and Kelly Pasolli May 18, 2021

Adjusting to Job Loss When Times Are Tough

By René Morissette and Theresa Hanqing Qiu February 24, 2021