The backbone of the Canadian economy is entering a ‘promising’ phase in its recovery
When COVID-19 struck the Canadian economy, small businesses – which employ the vast majority of the country’s private labour force – were hit hard.
Three in five small-business employers (60%) were forced to cut costs through pay or staff reductions, one study has found.
But Stage 3 of Canada’s reopening plans signals new hope for the sector.
The backbone of the economy is entering a “promising” phase in its recovery: 58% of small businesses are planning to rehire employees who were laid off at the height of the pandemic.
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“Small businesses are built on entrepreneurial optimism,” said Shrad Rao, CEO of payroll software specialist Wagepoint, which led the study on how the sector is responding to the crisis.
“They’ve always fought against the odds, and now we’re seeing them do it again,” Rao said.
Canadian small businesses support nearly 70% of private-sector employees – or about 8.3 million people, Wagepoint said. But retrenchment in the sector peaked in March, with 60% of job cuts happening around this period, just as COVID-19 restrictions were first rolled out.
By the close of June, however, more than half of retrenched employees (55%) had already returned to work, and the trend of rehiring extended all throughout July, the study found.
But market volatility, as a result of the crisis, provides valuable lessons to small-scale entrepreneurs: 70% of employers with 10 or more workers, for example, were forced to reduce headcount, hours or compensation. This suggests a need for small businesses to remain flexible in the months ahead.
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As the world continues to wrestle with the pandemic, the “unpredictable nature of economic fluctuation and recovery” could result in the same patterns of furlough and rehiring happening all over again for months – even years.
Employers are thus revaluating traditional HR practices such as payroll, the analysts learned.
Among small businesses that were forced to cut staff, for example, 40% echoed the need for a payroll system that responds to abrupt workforce changes, such as layoffs and rehiring, while 26% recognized how paying employees quickly and accurately has taken on a “whole new meaning” amid the health and financial crises.
