Thank you very much, Mr. Chair.
Thank you for the opportunity to be here.
The BDC doesn't need a lengthy introduction, with its 75 years of experience and the heightened visibility it has enjoyed since the start of the pandemic. However, I would like to note that the BDC is the only bank dedicated exclusively to entrepreneurs.
We are a Crown corporation that reports to Parliament, through the Minister of International Trade, Export Promotion, Small Business and Economic Development.
We carry on business as a lender and investor at arm's length from the government. We therefore complement, rather than compete with, private sector lenders.
That means that we take more risks than other financial institutions and that when the economic slows, we step in.
During the pandemic, we provided $2.8 billion in direct financial support and over $4.5 billion indirectly, in collaboration with financial institutions across Canada.
We also offer venture capital and advisory services.
I'm here in that latter context. My economic research team supports not only internal planning within BDC but also our clients, through regular publication of free reports and analysis to help them understand the economic context in which SMEs operate.
Here are some key recent observations of relevance to this committee's study, including those based on a recent trip I made to meet entrepreneurs from coast to coast in order to discuss these current realities.
Demand for products and services will remain strong for most businesses in Canada, which is excellent news. In relation to the committee's interest in supply chains and inflation, supply chain disruptions continue to be a major challenge for Canadian businesses. In our latest BDC survey, 63% of SMEs reported experiencing longer delivery times, and 61% said they are facing price or cost difficulties. Supply chains will continue to be disrupted for at least another 12 months.
The situation is more difficult for businesses that cannot pass on cost increases to consumers. This is the situation, for example, for a client I recently met in the meat packaging industry. His input costs for meat and plastic are increasing, but his clients—in this case, big-box retailers—are refusing price increases. As a result, this mid-sized company's profits are down despite higher sales volumes.
Labour shortages also continue to be a key issue for many businesses. We recently released a labour shortage study that builds on similar work we did in 2018. The proportion of people in Canada aged 65 or more has increased from 13% in 2000 to 19% in 2021. Baby boomers are leaving the workplace, while the working-age population is growing at a slower pace.
From 2000 to 2012, the labour force increased by 12%, but it's only expected to grow by 3.8 % or even less in the current decade. Today, 21% of Canadian workers are over 55, which means that about four million Canadians are going to retire in the next decade. In other words, labour shortages are here to stay, especially in light of expected demand for workers.
The pandemic amplified or added a layer to these long-term trends. Without COVID, there would be 440,000 more people in Canada. Immigration declined by half because of COVID restrictions. Immigration levels should return to normal in 2022. Furthermore, 20% of workers who lost their jobs at the beginning of the pandemic changed fields of employment. As a result, the number of job vacancies more than doubled since 2015, with the gap particularly felt in accommodation, food services and manufacturing.
There are actions entrepreneurs can and do take: 37% have adopted flexible work arrangements, 35% are providing more internal training and 26% are recruiting younger workers. Our advice to entrepreneurs is that they should also consider formal hiring processes, having a more competitive total compensation package, expanding their hiring pool and, more importantly perhaps, given the long-term nature of these shortages, investing in technology and automation. Canadian businesses using automation are performing better and growing faster. Technology is now available in all sectors, including services and retail.
In that context I want to highlight that BDC is pleased to contribute our efforts to the Canada digital adoption program that was launched last month. As part of stream 2 of CDAP, budget 2021 announced $2.6 billion for the Business Development Bank of Canada to help SMEs finance the implementation of their technology adoption plans. BDC will offer zero-interest loans to improve productivity, better serve consumers and become more competitive.
Thank you for your attention, and I hope this lays a framework for a great discussion.