Employment services in 2023: A year of transition

The employment services industry group—which includes employment placement agencies and executive search services, temporary help services, and professional employer organizations—reported continued growth in 2023, with operating revenues increasing 5.2% to $24.7 billion.

However, the pace of growth in 2023 was significantly slower compared with the double-digit gains seen in 2021 (+23.2%) and 2022 (+18.6%). While businesses continued to face challenges in recruiting skilled workers in 2023, labour shortages began to ease, in part because of a declining job vacancy rate and strong population growth. Although these factors contributed to easing demand for employment services, in 2023, the industry group's operating revenues remained above (+44.1%) levels seen in 2019, before the COVID-19 pandemic.

Operating expenses in the industry group rose 5.9% to $23.4 billion in 2023, outpacing revenue growth. As a result, the operating profit margin fell to 5.2%. Rising costs were driven in large part by continued wage pressures, with salaries, wages, commissions and benefits (54.2%) and subcontracts (33.7%) accounting for almost nine-tenths of operating expenses.

In 2023, Ontario (53.7%) accounted for the largest proportion of operating revenues in the industry group among the provinces, followed by Quebec (17.9%), Alberta (14.8%) and British Columbia (10.0%).

Sales to businesses (79.4%) comprised the largest proportion of sales in the industry group in 2023, although this share declined for the fifth year in a row. The share of sales to the public sector rose for the fourth straight year, reaching 15.4% of sales in 2023, as staffing services in the health care and social assistance sector continued to grow as a proportion of sales. Sales outside Canada (4.0%) and sales to individuals (1.2%) once again made up the smallest shares of sales.

Temporary staffing services represented just under half (48.7%) of total sales in the industry group in 2023. Permanent placements and contract staffing services accounted for 42.6% of sales, while other services (8.7%) made up the remaining sales.

Looking ahead

Following a year of transition in 2023, in which labour market dynamics began to shift, the employment services industry group may encounter challenges in 2024. Continued easing of labour shortages, due to demographic changes and increased immigration, could reduce the factors that previously bolstered demand for employment services.

The ongoing decline in Canada's job vacancy rate throughout 2024—coupled with robust population growth and softening economic conditions—could contribute to falling demand for employment services.

However, the retirement of large cohorts of baby boomers will continue to pose challenges to the labour supply, ensuring that workforce availability will remain critical. As a result of this issue, paired with persisting labour-related obstacles such as finding and retaining qualified workers, employment services should remain a vital resource for businesses.

While the overall demand for employment services may soften because of economic and demographic factors, the ongoing need to address skills mismatches and workforce shortages should help buoy the industry group in 2024.

Detailed financial statistics on the employment services industry group for 2024 will be provided following survey data collection in 2025.