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Labour shortages and supply chain issues hinder Ontario’s rebound

Ontario Chamber of Commerce releases annual economic report
Anna Shvets-Pexels photo
(Anna Shvets-Pexels photo)

The pandemic and public health restrictions continue to stagger Ontario businesses and frustrate consumers.

The Ontario Chamber of Commerce released its annual Ontario Economic Report this week on the consequences of labour shortages, global supply chain disruptions, and inflation are beginning to hit home with many Ontarians.

The report said the impacts of the pandemic continue to disproportionately impact small businesses, organizations led by women and people with disabilities. The hardest-hit sectors are in the arts, entertainment, and agricultural sectors.

“We are seeing a domino effect of structural issues. Jobs are going unfilled, demand is outpacing capacity, and these issues are driving up prices for consumers and uncertainty for businesses,” said the report’s co-author, Claudia Dessanti, the chamber's senior manager of policy. 

“Two years into the pandemic, there is light at the end of the tunnel, but we need a long-term plan that will provide stability and lay the groundwork for economic growth.”

Among the report's key highlights was that 29 percent of Ontario businesses are confident in Ontario’s economic outlook, compared to 21 percent the year prior. Fifty-seven percent are confident in the outlook of their own organizations, up from 48 percent in 2021.

“Ontario began to see some positive momentum in 2021 thanks to progress on vaccines and reopening,” said Rocco Rossi, the chamber's president-CEO. "Business confidence, GDP, and employment growth are trending upwards after record lows in 2020. However, the road ahead remains uncertain for businesses and households as labour shortages, supply chain disruptions, and inflation are hitting home.

“A staggering 62 percent of sectors are facing labour shortages in Ontario and expect to continue facing them over the next year. This is having real-life consequences on the cost of living, service delivery, and product availability,” said Rossi.

Related to Northern Ontario, the report said this region continued to see declines in population last year and is projected to see a meagre 0.1 percent increase in 2022. The report suggests this may be the result of inadequate broadband,considered an important driver of intra-provincial migration with the pandemic’s push towards digital adoption and remote working.

While every part of Ontario felt the brunt of the high increases in unemployment, all regions saw positive job growth last year with the exception of northeastern Ontario.

Moderate-to-strong rebounds were observed in Windsor-Sarnia (8.7 percent) and Kingston-Pembroke (5.8 percent), with northwestern Ontario seeing a milder rebound (3.6 percent).

All three of these regions are forecasted to continue experiencing employment growth this year. But the report lumped in northwestern Ontario in its 2022 forecast as an area that will not recover to pre-pandemic levels along with Toronto, Hamilton-Niagara Peninsula, London and Windsor-Sarnia.

Windsor-Sarnia has been greatly impacted by restrictions on travel and cross-border trade, as well as impacts to transportation, distribution, warehousing, and wholesale trade industries.

The report contains regional and sector-specific data on business confidence and economic indicators and puts a spotlight on what public policymakers need to focus on for 2022.