BDC's Economic Crystal Ball for Canada
by Lauren Thibodeau
Today, I attended BDC's Economic Outlook Session where Pierre Cléroux, BDC's VP Research and Chief Economist, shared his perspective on the economic recovery in Canada, and the top trends and challenges facing Canadian entrepreneurs. In this article, I share highlights that provide a big-picture context for the challenges and opportunities SaaS startups and scaleups will face over the next few years.
ECONOMIC RECOVERY IN CANADA
Pierre shared some coast to coast specifics on recovery by province.
BC - Performing the best. Back to pre crisis job level - 102% pre crisis employment level. Lumber is big part of this, very strong demand for renos during Covid. Manufacturing sector performing well. Vancouver has strong tech sector performing well. Compensating for fact tourism is down. Level of sales from restaurants back to pre pandemic level - only province in Canada where this is true.
AB and SK - Had a more difficult time because oil prices went down, now price is back, highest level in last 10 years. Next few yrs AB economy will grow over 5% - one of highest in the country.
SK - Lot of agriculture here. Demand for Canadian food will continue to be strong. Will be good for economy here.
MB - Has the most diversified economy in the country. Recovery has been strong.
ON - Average. Back to pre-crisis level. Manufacturing performing well except for automotive. Demand is high but can’t be filled due to supply chain issues (ie chip shortage). As this is solved automotive will recover.
QC - Economy back to pre-crisis level. Diversified manufacturing sector. Housing market strong. Construction strong.
Eastern Canada - Economy almost back but tourism but has gone down significantly. Good re manufacturing and tech. But rely on tourism a lot.
FOUR TOP TRENDS FACING CAN ENTREPRENEURS
1. Labour Shortage – Decade long challenge driven by aging population not COVID government support programs. Even when those end, will still be a significant shortage.
2. eCommerce – Retail eCommerce doubled in Canada compared to pre-pandemic levels. This is driving everything from eCommerce technology to the need for warehouse space in large urban centres.
3. Remote Work – 74% of Canadian SMBs surveyed say they’ll rely on some form of remote work post-pandemic. Employees seem to prefer a hybrid model if it makes sense for their job.
4. Climate Emergency – Not going away, many entrepreneurs taking action to limit corporate environmental footprint: 20% say they’re leaders, 54% say in transition, 26% beginners.
CANADIAN LABOUR SHORTAGE
This is a top challenge facing entrepreneurs from coast to coast - I've noticed it anecdotally in the SaaS founders and leaders I speak with. And the macro level data shows it well. Pierre explains that the labour shortage is a decade-long challenge mainly driven by an aging population.
Median age of Canadian population in 1971 was 26 yrs old.
By 2031 median age of population estimated to be 44 yrs old.
Millions of Canadians will retire in next 5 yrs.
Impacts all sectors, all types of jobs (entry level, management etc).
Recos to address this based on what BDC is seeing working for Small and Medium businesses are:
One concrete suggestion for #4 was recruit abroad as part of city delegations to hire immigrants with specific skills.
The bottom line here is don't expect the labour shortage to resolve itself when government pandemic supports end. Instead, think of what longer term strategies you can put in place to address this talent gap.
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