CEO Report on Canada’s Current Talent Trends: What We are Watching
The population of Canada has seen remarkable growth, ballooning from 32 million to 40 million people in the last 17 years – a testament to the appeal of this fantastic country. While this growth presents extraordinary opportunities, it has also ushered in some immediate challenges. One of the most prominent among these is the struggle new Canadians face in securing meaningful work, irrespective of whether they are recent graduates or experienced professionals. The fact of the matter is that Canada’s growth now surpasses what the job market can handle, thereby tipping the balance.
With the changing seasons, we continue to witness the labour market shift back to being employer-centric. Job postings are on the decline as businesses attempt to economize, and with worker productivity at a low, a change in strategy is evident. Companies are moving away from simply increasing manpower to achieve desired results, opting instead to trim down and concentrate on performance management, conversion, and execution. A scarcity of jobs, coupled with a rise in layoffs and redundancies, has led to a surge in job applications, enabling employers to make objective hiring decisions without the pressure of unsustainable compensation expectations. Aware of the changing landscape, employers are taking advantage of the ability to bring in more expertise or experience at a lower cost compared to a year ago.
As options expand, employers are setting more specific criteria for roles. Fully remote positions are dwindling, even in the technology sector, where there is a growing demand for geographically centered roles – a marked change from the mostly remote roles seen less than a year ago. During the peak of the pandemic, employers were hiring candidates who only met 40-60% of the job requirements while paying a premium. Now, they can hire individuals with 70-80% of the key criteria at a fair market price. The need to improve productivity, mainly through increased return-to-office mandates, leaves employers no choice but to cut costs and protect thinning profit margins.
A friend at BDC aptly summarized the current market sentiment we share at Keynote Group: “I’ve never been more popular, but no one seems to have a pen to sign anything!” Business leaders are strategizing, posturing, and attempting to make sense of the market. They acknowledge the need for good people and are aware of the critical skill gaps that need filling. However, uncertainty holds them back from making significant investments until their respective ecosystems stabilize. We anticipate a cascade of decisions, particularly at the Director and VP levels, over the next 3-6 months as executives gear their organizations for the next economic cycle.
As the economy begins to align with the reality many of us have been experiencing, the waiting game will end. Consumer spending is down, the cost of living is eroding household savings, and inflation is yet to be tamed. Concurrently, unemployment is on the rise, especially in mid to senior-level jobs, forcing many to accept lower-income jobs to make ends meet. As daunting as these circumstances may seem, they lead to more predictability in forecasting, aiding business leaders in making informed decisions. As these decisions start flowing, it will stimulate others to act based on customer demand, helping us overcome this period of economic stagnation.
Our landscape is transforming as Canada’s impressive population growth outstrips the job market’s capacity to absorb new entrants. This shift, coupled with a reduction in job postings and increasing layoffs, is resulting in an employer-centric market, a shift underlined by an increasingly selective hiring process.
While the change in the labour market presents some challenges, it also opens up opportunities for efficiency and cost-effectiveness. Amid these changes, companies are focusing more on performance management and prudent spending rather than expanding their workforce.
The business environment is rife with uncertainty, holding business leaders back from making substantial investments. However, as the economy begins to align more predictably with reality, we anticipate a wave of strategic decisions and business activities.
In the coming months, we foresee a more predictable business environment, increased unemployment, and a decline in wage inflation. Employees’ performance will come under close scrutiny, and remote workers may face increased job security risks.
As we navigate these changes, our focus remains on observing these evolving dynamics, adapting our strategies accordingly, and providing the best value for our stakeholders. Our eyes are on the horizon, looking forward to the insights the Bank of Canada’s business outlook survey may offer in early July.
Author: James Baker, CEO, Keynote Group