The Office of the Superintendent of Bankruptcy has reported that insolvencies in 2022 rose by 37.2% compared to the previous year. The number of business bankruptcies and debt settlement proposals also rose over the same period.
The Canadian Federation of Independent Business (CFIB) has confirmed that only half of its 97,000 members made up of small and medium-sized businesses have reported that their sales have returned to pre-pandemic levels. Even for those whose sales have bounced back, there are still economic pressures arising from heightened inflation and interest rates, supply chain challenges, and labour shortages. Two-thirds of CFIB members are also said to still have Covid-19 debt that averages $114,000.
Some small businesses in towns and cities around Calgary are also opting to shut down due to the higher costs and drops in sales. Some businesses have reported a decline in the value of sales despite the same number of customers, indicating that consumers are spending less. The Airdrie Chamber of Commerce has confirmed that the cost of doing business has risen substantially for many, especially with the end of subsidies and loans that were granted during the pandemic.
Senior policy analyst at CFIB, Andrew Sennyah, said that the biggest cost challenges for businesses in Alberta were energy, fuel, insurance, and wages. He also noted the weakening domestic demand as consumers appeared to be spending less. He is urging the government to consider temporarily suspending the small business tax rate as Saskatchewan did.
The CFIB has said that about 46% of small businesses were struggling with labour shortages, with rising wage costs being a cost constraint for 60% of firms. With these economic pressures, 94% of small businesses are requesting the federal government to act on rising prices. They also want the government to address the issue of the overall tax burden, labour policy impact on employers, and labour shortages.
The CFIB recently released a report aimed at urging municipal governments in Western Canada to do more in addressing small business concerns. In the report, many business owners indicated that they felt the municipal government did not understand the cost pressures they faced as compared to other municipal government representatives in other provinces. The report also indicated that businesses felt that city governments were spending too much, instituting tax hikes and cost increases that were hurting their businesses.
The business community also indicated a need to address the bureaucracy that was creating unnecessary red tape. More communication and consultation is also being urged when it comes to drafting budgets and public projects.
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