Survey shows impact of inflation on Manitoba businesses

Hey there, time traveller!
This article was published 11/01/2024 (646 days ago), so information in it may no longer be current.

Nearly half of Manitoba businesses have raised prices over the past year in response to inflation, survey results from the Manitoba Chambers of Commerce found.

It comes as the gap between small and large businesses — in their ability to hire, to grow and to be competitive — continues to widen, survey data suggest.

The Manitoba Chambers of Commerce released its sixth annual business outlook survey results Thursday. Leger conducted the survey in November and December.

Almost all of the 288 respondents said they’ve been impacted by inflation. Ballooning costs replaced labour shortages as respondents’ biggest challenge.

“The price of everything has been going up,” noted Chuck Davidson, president of the Manitoba Chambers of Commerce. “Businesses… (are) having to make some difficult decisions as a result.”

Forty-eight per cent of respondents said they’d reduced profit margins in the past year; 47 per cent cut back on internal costs.

Davidson highlighted the number of businesses lowering their profit margins.

“What that also means is that business isn’t making key investments, and it doesn’t have the dollar set aside for future thinking,” he explained.

Businesses don’t take raising prices lightly, he added.

While there was an overall increase in business optimism — a six per cent rise, to 80 per cent, from the year prior — businesses were split on opinions about provincial competitiveness and government’s progress in driving economic growth.

Companies with fewer than 50 employees were more likely than large firms to think no level of government was doing well in promoting economic recovery.

Thirty-one per cent of large businesses (those with at least 100 employees) thought the federal government was doing the best job, compared to just nine per cent of small businesses.

The impending Canada Emergency Business Account loan contributes to the differing views, Davidson noted.

The loan, which many small businesses took during the COVID-19 pandemic, must be repaid by Jan. 18 to receive a forgivable portion. Businesses can still get the forgivable portion in March if they’ve refinanced through a bank.

Many small companies aren’t close to repaying the loan. More than half of the 23,424 Manitoba recipients haven’t repaid any of the money, according to the Canadian Federation of Independent Business.

“Larger businesses have had a greater ability to really respond from the pandemic,” Davidson said. “Small businesses, it’s a lot more challenging.

“Those are the business owners that we need to make sure we’re continuing to support.”

Such entrepreneurs don’t need additional cost pressures, like the CEBA loan, in the midst of recovering lost revenue from the pandemic and dealing with inflation, he added.

One-third of small businesses haven’t hired anyone in the past two years, the Leger survey found.

“The small businesses, they’re tough to be competitive for salaries in an employee market with inflation,” noted Ron Gauthier, CEO of the Chartered Professionals in Human Resources of Manitoba.

Collectively, 58 per cent of businesses reported raising wages to retain staff over the past year. Forty-seven per cent said they’d offered flexible hours.

Medium- and large-size businesses offered training and upskilling to staff, provided pay subsidies for transportation and increased benefits at a greater rate than small businesses did, the survey found.

Larger businesses were also more likely to recruit workers from outside Manitoba. Forty-one per cent of large companies reported hiring someone, in the past two years, who immigrated to Manitoba from outside of Canada because of their employment.

Smaller businesses may not have the resources to hire immigrants, Gauthier commented.

“There’s more work to be done,” he said of increasing the working population through immigration.

Roughly half of surveyed businesses — 47 per cent — thought access to skilled labour in Manitoba had worsened compared to two years ago.

As a result, more than one-third believe their staff need training and upskilling.

It’s something larger companies are generally more capable of tackling, stated Margot Cathcart, chief executive of the Rural Manitoba Economic Development Corporation.

“It’s a double-edged sword, right? You want to be more competitive, (and) being more digitally savvy gets you there, but you can’t invest in the technologies,” she said.

“The companies that can continue to invest in their digital posture are the ones that continue to grow.”

A digital divide between rural and urban players needs to be addressed, she continued.

Businesses with less than 50 employees more often saw a drop in revenue last year than companies with more than 50 staff — 24 and 13 per cent reported declines, respectively.

Small and small-medium businesses were more likely to consider Manitoba’s business climate uncompetitive than larger organizations.

Overall, 58 per cent of respondents called for business tax reduction, and 51 per cent sought training incentives.

A majority of businesses — 91 per cent — indicated it was important for Manitoba to have a strategy for building international trade opportunities.

The Manitoba Chambers of Commerce and Leger survey doesn’t have a margin of error because it didn’t use a random sample.

gabrielle.piche@winnipegfreepress.com