June 21, 2024
It’s been a rough patch for Canada’s staffing market as of late. Even now, it’s projected to contract further. However, optimism remains looking ahead, and some projects presently on hold could result in pent-up demand going forward.
“The term ‘neutral gear’ is probably the best way to describe it,” said Craig Brown, CEO at Agilus Workforce Solutions, which operates across Canada and provides engineering, IT and other lines of staffing. “When there’s uncertainty, there’s hesitation in hiring and/or pausing in hiring. And we’ve certainly seen that in Canada.”
There are also pockets of strength, such as the energy sector, Brown said. And Agilus has seen an uptick in nuclear and renewables.
“I think it will get better,” Brown said. “There’s definitely pent-up hiring demand. There are things that need to get done that employers aren’t doing right now.”
Currently, the staffing industries in both Canada and the US are in cyclical downturns, according to SIA’s Americas Staffing Market Estimates and Forecast: May 2024 report. Canadian staffing revenue is forecast to contract 7% this year as measured in US dollars. On the other hand, the forecast calls for growth of 6% in 2025.
“I would say the labor market in Canada has been contracting for probably seven to eight quarters,” said Jeff Aplin, CEO at Calgary, Alberta-based staffing firm Aplin. “I think we’re starting to kind of bottom out.”
The federal government has been extensively hiring, but the private sector has had a tough time creating higher productivity jobs for the past couple of years, Aplin said. Still, some areas of strength include the construction and defense industries. Tourism is also doing well because of the relatively weak Canadian dollar.
“My view is that the labor market will firm up in terms of demand starting in Q3 of 2024,” he said.
One positive: The Bank of Canada recently reduced interest rates by a quarter point.
“I think what that does is they’ll see some credit markets start to come back a little bit better, and that should boost business confidence to move forward with certain projects or expansions,” Aplin said.
IT Staffing
Micah Williams, president of IT and engineering staffing provider Tundra Technical Solutions, said his firm is seeing growth, though that seems specific to his firm. He’s not seeing the overall market grow, and he’s seeing a slowdown in IT.
The Toronto, Vancouver and Montreal areas are predominantly reliant on finance and banking, and there’s a conservative approach and slowdown in job hiring in those spaces, Williams said. There’s been a slowdown in startups as well, and that will likely remain until Canada’s election in 2025.
Industrial and Office/Clerical
The market is definitely contracting, said Souren Sarkissov, CEO at Team Global/MSM Group in Toronto. Sarkissov has been in the employment business since 2004, and his firm handles everything from general labor middle management.
“We had the completely 180-degree turn from the employees’ market, which we had during the pandemic,” he said.
Currently, there’s a large number of people per day registering to get jobs through his Toronto area offices, Sarkissov said. All three have about 50 people coming in each day.
He also noted some industries such as the food industry are still doing well, but uncertainty is still impacting the overall market. Many staffing clients work with the US, and the upcoming US election is providing that uncertainty along with the upcoming Canadian election in 2025.
Anne Ristic, CEO of Agency Employment in Toronto, also said things immediately post Covid-19 were stronger. Right now, some areas such as construction are busy and some others not so much. Ristic’s firm supplies industrial and office/clerical workers as well as employer-of-record services and remains active with work. She too said she feels expansion plans at some companies have been put on hold given the uncertain economy. Much work typically comes from clients expanding and building new facilities.
Still, “it’s very industry specific and client specific,” Ristic said.
She also pointed to the recent lowering of interest rates in Canada as a positive that will impact firms’ views on whether they spend money building new plants are starting other projects.
Ontario’s Licensing Requirement
Ontario is also putting in place a licensing requirement for staffing firms beginning July 1. All temporary staffing firms will need a license, according to the Association of Canadian Search, Employment and Staffing Services. Staffing buyers will also be required to use only licensed staffing firms or face fines.
However, staffing executives are seeing this requirement as a positive.
“Ultimately it’s a good thing because quality staffing firms will already exceed the requirements by quite a bit, and so it’s not really a significant change for firms that run a quality staffing service,” Aplin said.
Sarkissov said he hopes the licensing requirement will weed out bad actors in the industry.
“They pay cash under the table, and that completely kills the market,” he said. The don’t pay government remittances, which allows them to charge lower rates and undercut legit firms.
However, Tundra’s Williams said enforcement will be key.
“You can put these policies in place, but if no one’s enforcing them, then at the end of the day, it’s just a cash grab for the government,” he said. “And you know we don’t get the intended outcome, which is to protect the employee.”
Looking Ahead
Williams said he sees a lot of opportunity for the Canadian staffing market moving forward. Though there may be red tape and a higher level of unionization than in the US, there’s room to grow to the same size as the US in proportion to population.
“One of the issues we face is a lot of bureaucracy, a lot of red tape and sometimes higher taxes,” he said. “But I think the opportunity is certainly there for the Canadian market to reach the same size as the US in respect to, obviously, the size of the population.”