Smallest Businesses Make Biggest Investment in Training

Small firms hire double the percentage of inexperienced workers compared to larger businesses

CALGARY – Canada’s smallest businesses lead the way in employee training, investing nearly $2,000 per employee on average each year according to the Canadian Federation of Independent Business’ (CFIB) latest report.  Entrepreneurs in Alberta invest upwards of $3,000 per employee.  These findings challenge the view that small firms are slower to invest in training than their larger counterparts, who spend $1,713 per worker.

Informal, or “on-the-job,” training, is a key investment for small business, totalling $9 billion annually, making up 64 per cent of the $14 billion small and medium business invests in training.  In total, informal training is offered by ninety per cent of small and medium businesses, and is done without any government credits or grants.

“Formal training is important, but there is no substitute for what you learn on the job,” said CFIB president Dan Kelly.

Inexperienced workers make up 18 per cent of new hires in small firms, versus only 9 per cent in their larger counterparts.  Small businesses invest an average of over $4,200 training each new, inexperienced employee – much higher than the investment of training an employee with experience.

Although 85 per cent of small and medium businesses believe it is their responsibility to train new workers, many small firms will never see a return on that investment.  Sixty per cent fear that employees will receive training, and then leave.  “Too often, small businesses train employees only to see big business and the public sector swoop in and poach them away,” added Kelly.  “Independent businesses take pride in training Canada’s workforce, but ‘we train, they gain’ is not sustainable.”

While there have been small steps that recognize the unique training needs of small businesses, all governments need to do more.  CFIB is calling on the federal parties, as well as provincial and territorial governments to even the playing field by offering a new training tax credit that recognizes informal training.  Sixty per cent of small and medium business owners say such a credit would boost their ability to train tomorrow’s workforce.

“Small business owners are punching above their weight when it comes to developing a skilled workforce.  Instead of hiking minimum wages, Alberta must do more to recognize the time, money and effort already spent by small businesses to make Alberta’s labour force strong and prosperous,” said Amber Ruddy, CFIB’s Alberta Director of Provincial Affairs.

Read the full report, Small Business, Big Investment: Improving Training for Tomorrow’s Workforce

CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region.