Inflation and its direct side effects continue to drive concern among Greater Vancouver businesses about the coming year, a new survey reveals.
According to the Greater Vancouver Board of Trade and the Canadian Chamber of Commerce Business Data Lab’s latest business conditions survey, the top three obstacles cited by business owners for Q1 2023 all directly correlated with inflation.
The report, which is released every three months and gathers the opinions of 756 employers across all sectors, found business owners saying their top obstacles for the beginning of the new year to be rising inflation (55%), rising costs of inputs (44%) and rising interest rates (43%).
Even the fourth and fifth areas of concerns named – rising real estate/leasing costs (36%) and recruiting skilled employees (also 36%) can be partially or indirectly linked to the current inflationary crunch and regulators’ attempts to fight it.
Given the inflation and interest rate being largely out of the control of political leaders, GVBOT officials are calling instead for these leaders to focus on making the situation more manageable for businesses by targetting labour and trade barriers to lower costs.
“The labour challenges and borrowing costs of the past year are beginning to manifest in a liquidity crunch that will put many of the businesses still carrying significant debt from the pandemic at risk,” said Bridgitte Anderson, president/CEO at the GVBOT in a statement.
“We need governments laser focused on reducing barriers associated with doing business in our region and creating efficient permitting processes, not increasing costs and fees.”
The top issue that is within reach to be addressed directly by policymakers, Anderson said, is the skilled labour shortage.
“Persistent labour shortages and difficulty finding skilled workers will be compounded by a looming wave of retirements to create a truly challenging business environment. It will take a coordinated effort from the business community, education sector and governments to ensure that we have the skilled workforce our region needs to thrive,” she said.
There are some small signs of optimism. In the last report in September, the percentage of business owners concerned about inflation was much higher, at 64.5%. The concern level for the labour crunch, meanwhile, stayed relatively flat (the figure in September was 35.3%).
However, the numbers were relatively unchanged when compared to the survey done six months ago during Q2 2022, where fears about the inflation was at 52% and concerns about labour was at 37%.
To deal with these persistent challenges, business owners in the Lower Mainland said they are either very likely (37%) or somewhat likely (28%) to pass additional costs onto customers. However, using technology does not appear to be part of the plan for most to adapt, as more than 70% said no such plans are in place – mostly due to the lack of staff who are trained to deal with said technology.
In addition, 62% of those in accommodations and food services said paying back the government support funding made available during the pandemic will be “a major challenge,” adding to the bleak outlook.
The full report can be read at www.boardoftrade.com.