2023 Headwinds: Technology, capital constraints and labour shortages limiting business growth
Calgary remains a competitive place to do business in 2023. The Q4 Canadian Survey on Business Conditions, released December 2022, indicates businesses are firmly rooted in Calgary, with zero per cent of businesses surveyed planning to move their operations or business elsewhere. However, very few businesses are in a position to grow, with only 5.9 per cent indicating they will expand their operations over the next 12 months. Despite this, with rising costs and an increasingly acute labour shortage, 57.5 per cent of businesses are optimistic about their economic future, a decrease from 65.1 per cent in Q3 2022.
With a looming recession and an upcoming provincial election, now is the time for governments to implement policies to advance the future of Alberta.
Businesses’ adoption of technology remains low. In fact, only 22.8 per cent of businesses are planning to incorporate new technologies like cloud computing over the next year. Similarly, 21.1 per cent of businesses plan to incorporate security software tools over the next year, investing in business security. Critically, it is not too late for businesses to make transformational investments that will serve them now and into the future. Investing in technology and automation can also help to mitigate the persistent and lasting labour shortage.
Technology adoption for small and medium sized businesses over the pandemic was likely low because many businesses were strapped for cashand faced immediate uncertainty. Now is the time for businesses to invest in technology. Governments at all levels must work to reduce the costs to do business if we hope for organizations to adopt new technologies.
Access to capital
Businesses continue to face inflationary pressures heading into 2023 with few businesses looking to expand within and beyond Calgary. Capital constraints and rising inflation remain top of mind for businesses, 58.8 per cent of Calgary businesses see rising inflation as an obstacle in the next three months while 44.1 percent are concerned with rising interest rates and debt costs. These numbers are concerning for businesses. When inflation is high, businesses experience higher supply chain costs and may find it difficult to remain viable. At the same time, during periods of high inflation, consumers may reduce their spending, resulting in lower sales for businesses.
Many businesses are struggling with cash flow – 33.2 per cent of businesses cannot take on more debt, while 27.2 per cent are still struggling with debt incurred during the pandemic. Rising debt reduces business’ ability to make new investments, slowing growth of both their business and the economy.
Governments can support businesses by implementing affordability measures including the fuel tax relief, electricity and natural gas rebates, and low-income transit passes. The Calgary Chamber asks governments to identify opportunities to reduce administrative burdens to businesses, alleviating the cost to do business and facilitate direct communication between businesses and all levels of government.
Labour and talent shortage
The labour shortage continues to be a major concern for the business community. Over half of businesses are concerned about the labour shortage, and an alarming 70 per cent of businesses find it more challenging to recruit and retain staff compared to one year ago, suggesting the challenges ahead are unlikely to resolve themselves. To help retain talent, 45.4 per cent of businesses plan on increasing wages to existing employees over the next 12 months, while others plan on offering flexible scheduling to retain employees to avoid facing cost increases.
In the fall, the Calgary Chamber convened businesses, thought leaders and young Calgarians to develop policy recommendations and tangible solutions to the province’s talent crisis, which asks governments to support, invest and adopt the following recommendations:
Refine our immigration policies to attract global talent and eliminate barriers
Build an inclusive and values-driven workforce
Invest in Calgary’s people, culture and infrastructure
Strengthen Calgary’s brand and reputation
Government has a role to play to make it easier to do business, we encourage collaboration between governments and the business community to address the labour shortage.
ABOUT THE CALGARY CHAMBER OF COMMERCE
The Calgary Chamber exists to help businesses thrive. As the convenor and catalyst for a vibrant, inclusive, and prosperous business community, the Chamber works to build strength and resilience among its members and position Calgary as a magnet for talent, diversification, and opportunity. As an independent, non-profit, non-partisan organization, we build on our 131-year history to serve and advocate for businesses of all sizes, in all sectors, and across the city.