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COVID-19 causes industry-wide labour disruption

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These are challenging times and to a large extent, previous models and economic expectations will have to be revised as our society muscles through this public health crisis. COVID-19 created a shock wave through our economy and is effects on the labour marketing are still being felt and understood.

Currently, Canada has furloughed close to 2.5 million workers with Toronto alone seeing more than a quarter-million people sent home from jobs to stay safe. Will the economy quickly reabsorb these workers once the all-clear has sounded? Indications are that over the short term there will be pent up demand in the market and this could be good news for retail and service sectors. Government economic initiatives will also help spur the economy. However, COVID-19 has created lasting damage to the trade environment and this will be felt over the long term following back to work.

Here are some figures we have been able to source about the impact of COVID-19 on employment in Canada. Restaurants Canada tells OCTANE that there are now more than 800,000 foodservice workers on lay off with 10% of Canada’s restaurants closing permanently. The ING group has reported the economy shrunk by 20% in March with some three million laid off across the country. The Edmonton Chamber of Commerce states that 3% of businesses in the city have closed permanently and 47% see this a strong likelihood in the coming period. There, 86.3% of companies have seen drops in revenue and 60% have had to lay off staff. About 40% of Edmonton businesses have shut down their offices.

Even though gas station and car wash facilities were deemed essential services (most provinces), there is still considerable pain with-in this sector across the country. Customer volumes are down dramatically with people isolating and operators are working hard to keep staff safe. For example, at Valet Car Wash, an eight location full-service chain in Ontario, they had to stopped interior detailing, a key point of revenue, and focus on automated exterior service. The company typically employs just under 200 workers, but the vast majority of Valet’s crews were laid off waiting to see what the future will bring. According to Karen Smith, Valet’s compliance and training manager, “We choose to close interiors for the safety of our employees. We are keeping exteriors open due to the fact it is a zero contact service.”

Valet’s experience is similar to what other operators across the country are finding. As we move forward the labour challenge will be competition from a wide range of businesses for the laid-off employees as the country gets back to work in the months ahead. Already businesses such as c-store, car wash and gas bar were being hit by high rates of turnover and difficulty in recruitment.

Before March, operators across the country had been finding it harder and harder to recruit the staff they needed and to keep the ones they already had in place. Indeed, the number of jobs unfilled in Canada’s private sector had grown. At the end of 2019, the Canadian Federation of Business (CFIB) found almost 435,000 unfilled positions in Canada, a value that is up by nearly 10,000 over last year.

Behind this was a declining labour force where gains in new workers have almost flatlined with an expansion of just 0.2% (BDC). Low wages and limited benefits packages also impacted businesses such as c-store, gas bar and car wash where their capacity to bring in new staff has been negatively impacted by competitive pressures from large operators such as Amazon and Walmart (Walmart is currently advertising job openings for 10,000 workers).

Among the most difficult spots to fill were in the services sector where businesses such as car wash found a 5.1% vacancy rate, a number well above the national average of 3.2%. The retail sector is also where 54% of respondents to a BDC study reported hiring was very difficult. Regionally, the Atlantic (50%) was tops in reporting trouble sourcing new hires. BC was next up at 45% with 40% of Ontario respondents telling BDC they had Human Resource (HR) challenges. Hardest hit were small businesses with between 5 and 49 employees. The study found 49% of businesses in the 5-9 worker set had real difficulty finding new staff with 55% of 10-19 worker enterprises reporting major challenges and 58% in the 20-49 worker group finding HR grief.

The Convenience Industry Council of Canada (CCIC) is a national body dedicated to convenience sector advocacy, research and education. Recently they took an in-depth look at British Columbia’s labour market. Findings mirrored other studies and showed specifically that the c-gas channel was being hammered by hiring and retention challenges. Industry participants to a round table discussion told moderators that:

  • Employees of any kind were difficult to find but especially difficult to find suitable ones.
  • They found very low response rates from ads.
  • They were interested in the Temporary Foreign Worker Program and found they could rely on that program to help fill positions but with recent program changes such as application fee increases and more paperwork, the process became more onerous and stressful.
  • Present staff is mostly students and mostly part-time. These workers tend to be very hard to retain and they quit easily often without notice.
  • Retention cost for employers is about $4,000 (e.g., it costs about $4,000 to recruit and provide each new employee with approximately 50 hours of initial training). After all that training, however, employers can’t pay wages high enough to recruit and retain high-quality people.

Help at hand

At Valet Car Wash, Smith reports they recruit using organizations such as Second Chance in Guelph, the YMCA and use federal government programs to assist with training. They also turn to Indeed, Facebook and through word of mouth. “Friends tell friends if the employment environment is good,” she says adding that they seek employees who are a good fit with Valet’s core values. “When the fit is there, retention is high. During our interview, I tell applicants about our values and ask them to give two examples of core values they possess,” she says mentioning that road signs can also be effective.

“We also use the local universities and colleges online career pages to post job openings and have had some success with the local high-schools co-op program, resulting in hiring after the co-op term finished, this includes students with disabilities, who have developed into valuable employees.

“Give some thought to the questions you want to ask in the interview, you want to make sure the applicant is qualified and understands the adverse conditions they will be working in; weather, noise, physical, fast-paced.  Not only do you want to hire qualified staff that can do the job, but employers also have to consider if they have the right personality to fit into the culture of your business.”

Smith tells OCTANE that at Valet they don’t do exit interviews with general labour, but do so for managers and supervisors who leave. She comments that this final talk with an exiting staffer can offer tremendous insight into working challenges every business faces. “The goal is continuous improvement in everything we do.”

Are temporary foreign workers still a viable option given the current state of affairs? The short answer is yes, especially once the dust settles from COVID-19 labour challenges and the economy corrects. Foreign temporary worker numbers have been climbing as Canada faces labour market shortages. By 2017 Canada had over 214,000 foreign temporary workers. This is a number that is up by 50% from 2015 and reveals a strong trend across the country.

“Restaurants, c-stores and gas stations can be challenging environments for hiring,” suggests Parvinder Burn, director with Canadian Immigration Centre, a consultancy specializing in student visa, business immigration and skilled foreign workers. He has seen Tim Horton’s locations with 110% turnover, gas and c-stores that are finding it tough to compete with wage and benefits from other businesses, and sites where temporary workers fill entire staffing cohorts. “Having skilled workers come in from other countries can be a good solution to these challenges. However, we see that businesses are both confused and intimidated by the government paperwork and regulations.”

Originally published in the May/June issue of OCTANE.