Survey finds majority of independent enterprises that were forced to do layoffs are planning to reverse course
In the early days of the COVID-19 crisis, small-business owners were forced to make tough choices in order to preserve the viability of their enterprises. But as the third stage of reopening commences across different Canadian provinces, those businesses may be taking their first steps toward a recovery.
Drawing from its database of more than 12,000 small businesses, online payroll software provider Wagepoint found that 58% of small businesses that laid off staff due to COVID-19 now have plans to rehire in the next three months.
During the onset of the COVID-19 crisis, 60% of Canadian small businesses implemented drastic changes to their workforce. Temporary or permanent layoffs accounted for 40% of the small firms that had to make rapid changes; that included layoffs in March, which represented 60% of all layoffs in 2020. Another 44% of the reacting firms said they had to reduce people’s working hours or compensation.
Separating the sample by employee headcount, Wagepoint found that firms with at least 10 employees were hardest hit as 70% reduced headcount, employee hours, or compensation. That’s in comparison to 57% of those with fewer than 10 employees who were forced into one or some combination of those actions.
But now there are hints of light at the end of the tunnel. By the end of June, 55% of those employees had been put back on the payroll, and even more were rehired in July.
“Small businesses employ more Canadians than any other part of our economy. So, when they got hit hard by COVID-19, we all got hit hard,” said Wagepoint CEO Shrad Rao. “But small businesses are built on entrepreneurial optimism. They've always fought against the odds, and now we're seeing them do it again.”
Small-business owners may also be coming away from this crisis with a greater appreciation for the need to be quick and flexible when it comes to payroll. In its small-business survey, Wagepoint found seven in 10 (72%) of small-business owners considered payroll an important going concern on par with sales, invoicing, and general accounting.
Among those who reduced headcount, two in five (40%) agreed that payroll must be flexible enough to adapt to sudden workforce changes. And around one quarter (26%) of small-business owners said COVID-19 has highlighted the significance of paying workers quickly and accurately.
