The Sky Didn’t Fall After all!
by Darnell Dobson, Contributing Writer
Where we’re at and what else is on the horizon for Canadian businesses. So, at the end of 2017, we told you that changes were on the horizon for Canadian businesses. With uncertain- ties around international trading partnerships, government legalisations coming into effect, and the continuous growth of technology’s influence, 2018 was shaping up to be a chal- lenging year for businesses. Now that we’re almost halfway through, we thought it would be a good time to see how our predictions have panned out and what else we can expect to see into 2019.
No surprise here, online shopping and express delivery services continue to growOver the past decade the Canadian e-commerce market has experienced consistent growth and, according to a 2018 Statista report, this year will see a massive increase in sales figures. The statistics and market research portal predicts that e-commerce sales in Canada will reach as much as 44 billion by the end of the year; this represents a $14 billion dollar increase over 2015’s figure. Market share is also expected to rise by the end of the year with e-commerce “accounting for eight percent of total retail sales in Canada in 2018,” the report stated.
Canada’s largest grocer, Loblaws, is expanding its online shopping options to compete with the likes of Amazon. They are not alone. The push to compete with the e-commerce giant is one of the main reasons for the rise in e-commerce across the country. More than 700 Loblaws stores will have online store options by the end of the year compared to the 200 stores that had the option last year. Online shopping is also getting positive reviews from Canadian retailers. The same Statista report indicates that retailers have a positive perception of online shopping as they reap the benefits of increased sales and revenues for their businesses. Indeed, online shopping is already big business in Canada, and it’s only getting bigger: are you onboard?
Politics and your business, it’s complicatedWith Canada currently at the bargaining table with its neighbours to the south and a number of provinces raising or proposing to raise minimum wages, many Canadian businesses have been hoping for the best but preparing for the worst. Still, in some cases, political decisions are not having the exact effect on businesses that experts predicted. First up, the NAFTA renegotiations; it’s hard to tell if they’re going well or not. This uncertainty was expected to have a negative impact on trade and exports in 2018. However, not only has trade not suffered as a result of the renegotiations but according to Export Development Canada’s bi-annual forecast, the value of Canadian exports is expected to grow by 6 per cent by year’s end which indicates a strong start to the year despite the uncertainties..
Even though exports continue to flourish, many businesses are still not convinced. The Conference Board of Canada’s Index of Business Confidence revealed that business leaders are not confident about the state of Canada’s economy and cite the problems agreeing to a new NAFTA deal with the United States and Mexico as a major factor.The NAFTA renegotiations have also taken a predicted toll on the Canadian dollar according to Shaun Osborne, chief currency strategist with Scotiabank, in an interview with Reuters. Osborne believes that the renegotiation of the trade pact along with other political noise is causing the dollar to weaken. However, he expects a stronger Canadian dollar in 2019. “Once we get some clarity on that [NAFTA] … I expect the Canadian dollar to strengthen,” Osborne stated.
Minimum wage increase = less jobs?
The Ontario government’s announcement last year that minimum wage would increase to $14 per hour in January 2018 as part of Bill 148, the Fair Workplaces, Better Jobs Act, led to mixed reviews and predictions, with a prevailing sentiment among experts that there would definitely be an increase in job loss. They were right. Ontario’s job market has felt some blowback as a result of the minimum wage increase. According to the 2018 Ontario Labour Market Report, January job losses were the highest on provincial record since 2009 in reaction to the wage increase, but recovered steadily in February and March as businesses slowly adapted to the sudden change.
But, the increases aren’t over yet; Ontario will have another increase in January 2019 to get to the $15 per hour minimum wage mark. Alberta and Quebec have also raised or intend to raise their mini- mum wages this year. These moves by three of the country’s largest provincial economies have struck fear into the hearts of many business leaders who are anticipating negative impacts on the economy. However, while speaking with the Toronto Star earlier this year, David MacDonald, a senior economist at the Canadian Centre for Policy Alternatives, urged business owners not to panic: “Every time the minimum wage increases, see reports that the sky is falling, but it’s unlikely that’s going to happen,” MacDonald said. Let’s hope he’s right.
To be fair, many business owners are not against the wage increases, but are concerned about how quickly it is being implement- ed, particularly with this year’s massive increase from $11.40 to $14.00 in accompaniment with new obligations for employee benefit contributions and entitlements which further increased costs to businesses. Sadly, for many companies, especially SMBs, the road to survival has been paved with benefit reductions and layoffs. We’ll see what 2019 brings.
Looking ahead: Resistance is futile!
Technology is moving fast. New technologies are being introduced at a pace that businesses can hardly keep up. Technology promises greater efficiency and more success, two things business leaders find hard to resist. Canada, particularly Ontario, has established itself as a hub for artificial intelligence and the influence on businesses is only expected to grow. What does this mean for human labourers? According to Brookfield Institute’s report, The Talented Mr. Robot: The impact of automation on Canada’s work- force, 42 per cent of Canada’s labour force is at ‘high risk’ of job automation within the next decade and that same percentage of Canadians are being paid to do jobs that could be automated by existing technology.
Hold it, though! Don’t hit the panic button quite yet; it’s unlikely that we’ll all wake up one day to find 80 per cent of the workforce replaced by robots. While automation will most certainly replace some forms of human labour in the near future, it definitely won’t affect every job and, in most cases, technology will be used to complement human labour rather than replace it altogether. There is still plenty to look forward to for the rest of 2018 and into 2019. It will be interesting to see how NAFTA negotiations finally pan out, as well as the continuous impact of politics on business, especially with the new wage increases on the horizon. Also, Ontario recently elected a new leader with differing policies and economic plans which will most definitely affect business in some way, shape or form.
That said, Canadian businesses are nothing if not resilient; our savvy business leaders have shown that they are willing to make the tough decisions needed to survive.