By Mary McIninch, Executive Director and Director, Government Relations, ACSESS
As the national voice for employment, recruiting, and staffing services in Canada, the Association of Canadian Search, Employment & Staffing Services (ACSESS) represents 85 per cent of this industry’s operating revenues. We advance best practices, including ethical standards, promote the interests and support growth of the $15 billion staffing industry.
A key focus is to represent our members by providing input on federal and provincial employment legislation, as well as regulations, and to work collaboratively with government on initiatives impacting our industry. ACSESS also takes a leadership role in keeping industry members informed of legislative, regulatory, economic and other changes that may affect their businesses and responsibilities as employers.
While Canada began 2025 with solid job gains and is currently basking in a surge of buy Canadian consumption, disruptive tariffs are in the forecast for what’s shaping up to be a stormy year. But it’s not all gloomy news. Some trends play directly to the staffing industry’s strengths.
Here’s a glimpse of what’s anticipated, as well as evolving strategies to help your business get ahead of change and embrace trending opportunities.
First, with Canada’s pervasive skills gap, job requirements and hiring decisions will increasingly focus on a candidate’s skills versus their education and prior roles.
Results bolster this trend and suggest it may be here for the long-term. Specifically, a McKinsey report found hiring for skills is five times more predictive of job performance than hiring for education. Skills-based hiring can also uncover untapped talent without degrees, who, according to the same report, have a 34 per cent higher retention rate.
With many businesses not sure how to shift to skills-based hiring, staffing experts can step in to help clients navigate this transition. Specifically, they can help identify which roles will provide the most business transformation value and evaluate requisite skills to fill them.
Furthermore, clients may want to take advantage of the programs many staffing firms offer to upskill workers for new and increasing opportunities, which in turn, help reduce skill gaps. For instance, as businesses are now aiming to source more materials within Canada, we’ll need more skilled manufacturing workers. So, this sector will be looking to “upskill” or train employees in automation and new production techniques.
Employees will continue to seek flexibility in how, where and when they work, particularly younger workers, like those in Gen Z. To attract top talent, employers need to offer hybrid roles, remote options and compressed work weeks.
There’s also an increasing number of people who prefer project or contract work, which is good news for recruiters and staffing firms. This trend is complemented by the gig economy, which remains strong. It's also evolving beyond manual and service sector roles, to include highly skilled positions, and the knowledge worker sector, which is represented through many of our corporate members.
From optimizing job postings to volume screening, artificial intelligence (AI) is becoming invaluable to recruiters. Experts believe this year will bring a rise in predictive analytics to cautiously assess options and increasingly sophisticated algorithms.
The challenge for staffing experts is to judiciously use AI to improve efficiencies but know when human judgement, intuition and a personal touch is required. In fact, Korn Ferry found that 40 per cent of talent specialists worry that too much AI can make the recruiting process impersonal, causing them to miss out on top talent.
In 2025, the most successful staffing firms will find the ideal balance between AI and human collaboration. In this ideal, AI can be used to automate admin tasks and deliver data to recruiters who validate the output, make key decisions and avoid automating correspondence that can alienate talent.
Like most Canadian businesses, ACSESS and the staffing industry are bracing for the 25 per cent tariffs American President Donald Trump plans to implement on U.S. imports from Canada.
Updated models, cited by the Canadian Chamber of Commerce in a November 2024 news release predict these tariffs will hit industries like energy, auto, mining and pharmaceuticals the hardest. According to Stephen Tapp, Chief Economist for the Chamber of Commerce, they could push our economy into recession by mid 2025.
However, Tapp also points out that this impact underscores Canada’s economic importance to the U.S. If Trump imposes these tariffs, he says “it would represent a significant negative shock to the U.S. economy,” raising costs for businesses, making American production less competitive internationally and increasing prices for its consumers.
At ACSESS, we have no doubt these tariffs will adversely affect our economy but the impact on the staffing industry is difficult to assess and quantify at this point, due to so much uncertainty.
According to Howard Levitt and Gregory Sills, from Levitt LLP, if implemented, these tariffs will have a ripple effect “across multiple sectors, from energy to retail, as consumer demand plummets.” They warn that the impact will be amplified with secondary job losses and middle managers will likely be among the first to go as part of early cost-cutting measures. Furthermore, they suggest Canada’s federal and provincial counter-tariffs may exacerbate issues by driving up prices for the end-user and reducing Canadian product purchases.
Levitt and Sills also flag a new hardship for Canadians: In the fight to survive, companies may be unable or unwilling to provide proper severance packages and those that do, will likely offer them at a reduced value.
Federal and provincial governments may be forced to provide support for affected workers and industries, but they can’t stand alone as the “silver bullet” solution.
On the flip side, history has shown that while reduced tariffs, such as those implemented with the introduction of the Canada-U.S. Free Trade Agreement (CUSFTA) in 1989, offer more benefits, they don’t come without challenges.
CUSFTA’s interquartile increase in Canadian tariff cuts increased layoffs among our low-attachment workers at large firms (in affected industries) by three per cent, according to a study from the University of Toronto and Carnegie Mellon University. However, the same study suggests “Canadian workers quickly moved from industries facing large increases in import competition to industries facing smaller shocks,” and over time, there was minimal impact on total employment.
Similarly, a recent study from the Chief Executive Group found that 87 per cent of Canadian employers say they’re prepared to deal with today’s impending U.S. tariffs and that “even if they may impact the course of business initially, they will be able to pivot and adjust accordingly.”
The threat of these tariffs has already driven a nation-wide “Buy Canadian” movement, which speaks to our agility and has created optimal conditions for our industry sectors to pivot, as required. Canadian employers are also focused and united in building more independence and exploring options to expand interprovincial trade, as well as other domestic-focused strategies.
In fact, a recent article from Aplin outlines how several key sectors are pivoting to optimize domestic market opportunities, their workforce strategies and where staffing firms can help.
It suggests each highlighted sector will need staffing industry expertise to achieve these pivots. For example:
ACSESS is continuing to monitor the tariff situation, supporting the chambers of commerce and other relevant stakeholders to discuss strategies for addressing these changes and how the staffing industry can help.
Amid all the shifts this year may bring, the need for rigorous compliance will remain a constant.
As Ontario moves forward with new licensing requirements for temporary help agencies, recruiters and their clients that took effect last July, it joins British Columbia, Alberta and Quebec, which have similar regimes. This spring, Ontario will begin targeted enforcement of this new legislation or once all licenses have been issued.
In other provinces, we continue to monitor proposed changes in the area of employment standards and pay transparency.
And there’s also a possibility that Canada’s efforts to hone a positive relationship with the new Trump administration may trigger changes that impact the staffing industry.
Either way, ACSESS is committed to keeping our members updated on changes that affect their businesses and advocating for them on initiatives that impact the staffing services industry.
