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In looking at obstacles to growth, shortage of skilled workers topped the list in most provinces, with chronic labour shortages especially pronounced in rural Quebec and Nova Scotia. “In exploring further, we found in some cases, they could not find anybody,” Cléroux says. “In others it was working with what they can find. Businesses are spending more money now on hiring people that may not be the right fit, and helping them to gain the right experience and skills. That’s another trend we have not seen in the past.”

In terms of variables that may influence business investment decisions in 2018, Cléroux cites interest rates, NAFTA and labour. “Interest rates are going to increase in Canada and the U.S. The Canadian economy is running at full capacity, and unemployment at 5.7 per cent, which is very low. We expect to see (rate) increases that will have an impact on businesses and consumers.”

NAFTA negotiations continue to create uncertainty for businesses, he adds. “I have not met a single business owner that knows what their tariff would be if NAFTA does not go through. They are not well prepared about an end to NAFTA. Even if there is no free trade agreement, however, I don’t believe it will have a major impact.”

On the labour front, Cléroux believes enterprises have underestimated the drastic changes taking place. “The labour force is not increasing anymore and will not for the next few years. It will get much more difficult to hire people. Baby Boomers will be gone, and millennials are taking over with different expectations.”

With the massive retirement numbers, businesses will need more people from the outside, he adds. “Eighty per cent of growth in the labour force will come from outside of Canada over the next decade. Businesses will have to be more open-minded and think differently about how they manage human resources in the future.”

BDC’s third annual study of SME investment intentions is based on a survey conducted last August and September by the research firm SOM with 4,019 business owners.