The IT Nerd

With Small Business Month approaching in October, new first-party payroll data from, Employment Hero, the all-in-one employment platform for Canadian businesses, offers a timely look at how SMEs are faring heading into the final quarter of 2026.

The latest data points to a growing workforce balancing act: SMEs are pulling back on headcount, while continuing to pay more for talent.

Key findings include:

• SME headcount declined 1.7% year-over-year in August, marking the second consecutive month of negative annual growth.
• At the same time, wages rose 5.5% year-over-year, the highest annual increase recorded in the report’s 13-month reporting window, up from 4.1% in July.
• The picture varies across the country: headcount declined 2.6% in Ontario and 3.1% in B.C., while remaining positive in Alberta (+0.5%), Quebec (+1.4%) and Nova Scotia (+2.4%).
• Consumer-facing businesses are bucking the national trend, with headcount across retail, hospitality and tourism up 1.7% year-over-year.

The data suggests Canadian SMEs are becoming more cautious about adding people while continuing to invest in the talent they need, putting retention, productivity and smarter workforce planning firmly on the agenda as businesses head into Small Business Month and Q4.

Full findings are available here: Canadian SMEs Enter Small Business Month with Softer Employment and Rising Wages, New Employment Hero Data Shows.

As Canadian businesses head into the second half of the year amid ongoing economic uncertainty, new research from Employment Hero, the global AI-powered employment platform, suggests SMEs are entering Q4 with cautious optimism – continuing to invest in talent and AI while taking a more disciplined approach to growth, hiring and productivity.  

The inaugural Employment Hero SME Pulse, a quarterly survey of 600 Canadian senior business leaders, found 58% of SMEs are optimistic about their business outlook over the next six months, compared to just 18% who are pessimistic. At the same time, businesses are taking a measured approach to growth, balancing hiring and investment decisions against continued economic uncertainty.  

Hiring remains a priority, but employers are becoming increasingly selective. More than one-third (34%) of SMEs expect to expand hiring over the next six months, while another 32% say they plan to hire selectively, suggesting businesses continue to invest in talent while taking a more deliberate approach to workforce growth.  

Technology continues to be a key part of that strategy. Nearly two-thirds (62%) of Canadian SMEs report increasing their investment in AI, signalling that businesses are moving beyond experimentation and embedding AI into day-to-day operations to drive efficiency and support future growth.

The survey also highlights the biggest challenges facing Canadian SMEs heading into Q4. Productivity (41%) ranked as the leading business pressure, followed by wages (39%) and hiring and talent acquisition (36%), underscoring the balancing act many employers face as they continue to grow while managing costs and workforce demands.  

The findings also suggest businesses remain focused on long-term growth. More than one-quarter (26%) of SMEs say expansion or growth is their primary financial focus over the next six months, while 41% are focused on maintaining a balanced approach between growth and operational stability.  

As Canadian SMEs prepare for the busy fall season, Employment Hero says the findings point to a business community that remains optimistic about future opportunities while taking a disciplined approach to hiring, investment and workforce planning. 

Employment Hero has released new data pointing to a growing workplace paradox: AI is quickly becoming an essential skill, yet many Canadian workers continue to associate its use with guilt, uncertainty and even cheating.

Employment Hero’s newly released AI Paradox Report found that 43% of Canadian workers feel guilty using AI to produce work, rising to 56% among Gen Z workers.. Nearly four in ten (39%) believe using AI to complete parts of their job feels like cheating, while more than one-third (34%) admit hiding their AI use from their employer. Furthermore, almost half of businesses (45%) believe employees are using personal AI accounts at work – highlighting the growing challenge of “shadow AI.”

The findings suggest Canada’s AI challenge is no longer simply whether employees will adopt the technology. It is whether organizations can create workplace cultures where employees feel confident using AI openly, responsibly and effectively.

The research suggests the issue isn’t a lack of willingness to adopt AI – it’s a lack of confidence and support. Only 41% of Canadian workers believe their AI skills are sufficient for an AI-driven labour market, while 60% rate their AI competence as low to average. More than half (51%) say their employer does little or nothing to develop AI skills, leaving many workers to educate themselves. In fact, 58% have learned AI skills through social media.

The findings come as the federal government looks to improve AI literacy and adoption through its AI for All strategy, underscoring the role employers will need to play in helping workers build confidence and capability.

To help Canadian businesses turn AI guilt into AI confidence, Employment Hero has developed practical guidance for both employers and employees.

For employers:

• Be clear about where AI is encouraged. Remove uncertainty by setting clear expectations around which tasks AI can support, where human judgement is essential and which tools employees are approved to use.
• Normalize talking about AI. Encourage employees to openly discuss when and how they’ve used AI, making transparency part of everyday work rather than something to hide.
• Invest in AI literacy. As AI becomes an essential workplace skill, give employees the training, guidance and policies they need to use it confidently, responsibly and securely.
• Create room to experiment. Give employees opportunities to safely test AI on low-risk tasks so they can build confidence without compromising quality or sensitive information.
• Position AI as a career skill. Frame AI as a capability that strengthens productivity and future employability, not as a shortcut or a replacement for human expertise.

• Ask where AI fits into your role. Have conversations with your manager about when AI is appropriate, where additional review is needed and what responsible use looks like.
• Be transparent about AI use. If AI helped shape a draft, brainstorm ideas or summarize information, explain how it supported your work to help build trust.
• Always apply human judgement. Treat AI as a starting point rather than a finished product. Check facts, context and tone before sharing your work.
• Protect confidential information. Only use approved AI tools and never upload sensitive customer, commercial or personal information into unauthorized platforms.
• Keep building your AI skills. AI literacy is becoming an increasingly valuable career skill. Take advantage of training opportunities and continue developing your knowledge as the technology evolves.

As Canada accelerates its focus on AI adoption and workforce readiness, Employment Hero says businesses have an opportunity to ensure employees develop one of today’s most valuable workplace skills openly rather than in the shadows.

Statistics Canada’s latest Labour Force Survey shows Canada’s labour market remains cautious amid ongoing economic uncertainty, with national employment largely unchanged in April. But beneath the surface, small businesses are telling a more nuanced story.

New data from Employment Hero shows SMB wages rose 4.2% year-over-year in April, continuing to outpace inflation (2.4%) even as overall SMB employment declined -0.9% nationally.

The findings come from Employment Hero’s newly launched first-party data engine, a monthly snapshot of labour market activity across nearly 3,000 Canadian SMBs, designed to complement broader labour reporting with a real-time view of how smaller businesses are responding to changing economic conditions.

While hiring remains soft overall, consumer-facing industries are proving more resilient ahead of the busy summer season.

Employment across retail, hospitality and tourism rose 3.8% year-over-year, while wages in the sector climbed 10.6%, the strongest wage growth recorded across all industries.

With patios reopening, festivals approaching, and Environment and Climate Change Canada forecasting one of the hottest years on record globally, Employment Hero says many businesses tied to seasonal demand are continuing to hire despite broader economic caution.

Employment Hero’s data also suggests businesses are increasingly favouring flexibility, with casual employment rising 12.7% year-over-year, pointing to a growing reliance on more adaptable staffing models.

Regional snapshot: where SMBs are still hiring

While national hiring remains soft, several regions continue to outperform YoY:

• Saskatchewan: Employment up 5.7% , wages up 5.7% (also saw recent MoM growth)
• Alberta: Employment up 2.0%, wages up 5.4% (also saw recent MoM growth)
• Nova Scotia: Employment up 4.7%
• New Brunswick: Employment up 2.5%
• Quebec: Employment up 3.8%
• Ontario: Employment down –1.8%, though wages still rose 3.3%
• British Columbia: Employment down 4.4%, while Vancouver wages climbed 5.5%