A new CFIB report exposes a hiring divide that's keeping youth unemployed and small firms short-staffed
Canada's small business community and its young workforce have a problem that goes deeper than a sluggish economy; they're not even searching for each other in the same places.
That's the central finding of a new report from the Canadian Federation of Independent Business, which surveyed small business owners and polled Canadian youth to map out where the hiring process is breaking down. What it found is a chain of disconnects: in recruitment channels, job expectations, role preferences, and the skills employers actually need from entry-level workers.
Nearly two thirds of small business owners said they fill positions primarily through personal referrals and trusted networks.
Young job seekers, meanwhile, are overwhelmingly gravitating toward online job boards with three in four rely on digital postings as their main search method, and only roughly half of them are tapping into their own professional and personal connections at all.
The result is that available positions are circulating through channels that many young Canadians simply aren't monitoring.
Co-op and internship arrangements represent another missed connection. These programs convert to permanent employment at a 73% clip, yet only about one in five small businesses uses them, even as a quarter of young workers actively pursue them.
"We have two groups – employers and young job seekers – who are increasingly out of sync right now," said Molly MacCormack, CFIB policy analyst. "Small businesses hire through trusted networks and look for soft skills, while many youth focus on online postings potentially overlooking the available roles that businesses need. As a result, they're missing each other and fueling high youth unemployment numbers."
Skills gap
The skills gap reinforces the divide. When small business owners were asked what matters most when bringing on young workers, attitude topped the list at 91%, followed by motivation at 84% and professionalism at 76%.
Formal credentials and prior experience ranked well below those qualities. The roles where those soft skills are most readily demonstrated (trades, service work, physically demanding positions) are precisely the ones younger Canadians are most inclined to pass over.
Nearly half said they would not consider jobs involving significant physical labour or overnight shifts, and close to two in five ruled out outdoor work entirely.
"The reality is there are jobs out there that young Canadians just don't want, can't do, or won't do," said Bérengère Fouqueray, CFIB research analyst. "Whether it's a resort in northern B.C. or a restaurant in rural New Brunswick, businesses need workers to keep operating and support their local economies. Many young people aren't able or willing to relocate, or take on the shifts required, especially if they are in school. Leaving these roles unfilled could be the difference between staying open or closing the doors for good."
Salary expectations
Salary expectations are also a sticking point. Although most small businesses pay above provincial minimum wage floors (which currently range from $15 to $18 an hour) more than a third of youth respondents said they would not accept a minimum wage position.
That's a meaningful constraint for smaller operators already navigating thin margins and economic uncertainty, for whom the upfront cost of training inexperienced staff adds another layer of financial pressure.
"Today's hiring environment is far more constrained for small businesses," said Fouqueray. "Given the current economic pressures, small businesses are hesitant to grow their teams and are being much more cautious about bringing on new staff."
Government support programs have done little to bridge the gap. More than two-thirds of small business owners said they were unaware that hiring incentives even existed. Among those who had looked into them, the feedback was consistent: application processes are burdensome, poorly timed relative to actual hiring cycles, and designed with little apparent understanding of how a small operation functions day to day.
"Young workers need more training and hands-on management, which takes time away from running the business," added MacCormack. "That time has a real cost, and any policy that seeks to address youth unemployment needs to acknowledge it."
CFIB is urging governments to lower payroll taxes, establish permanent refundable tax credits for businesses that take on co-op and internship placements, and streamline programs like Canada Summer Jobs to reduce administrative friction.
"Small businesses owners are proud to often be the ones to give young people their first jobs, and we don't want to lose that," said Fouqueray. "Bridging the expectation gap means young people can continue to get valuable workplace experience, and businesses get the workers they need."
