Why are some geographic regions using staffing services more than others? Culture vs. Economics?

Where hiring exists, usually you can find staffing services, however, some geographic area seem to use staffing services more than others.  Is there a business reason for this or perhaps a cultural propensity of the area to lean heavily on staffing services?  Time to find out!  While my data is Canadian, for our US recruiting colleagues, the same information may exist and may be a worthy exercise to determine the hot beds of staffing. 


Quick and Dirty Data Method

Stats Canada released the latest data on the staffing industry and for the last three years there is continued support that some areas of Canada are over-developed in regard to the staffing industry.   The methodology employed takes a population vs. industry top line dollars approach.  The population chosen was 25-54 years as the bulk of staffing placements – temporary or permanent- draw from this pool of labour.  This methodology was applied to all provinces in Canada and what was found was the following:



Alberta, despite only having the 4th largest working population, drives 42% more industry dollars than the Canadian average.  Alberta moreover drives 17% more than Ontario who has 3X the population and 68% more than Quebec with 2X the population base.  It appears that Alberta industries use the staffing industry to a far greater extent than any other region, creating more than its fair share in industry dollars.  Ontario is the next largest recruitment hot bed, 30% more than the Canadian average and 60% more than Quebec.


Alberta and Ontario are the only two regions that show higher than average acceptance and use of the staffing industry – significantly higher.  What is the driver?  The question becomes one of culture vs. economics. My vote is for economics – when we take profits into consideration.  For example British Columbia (BC) has low levels of contribution to industry revenue; however, the profit margin is 4.3%.  This makes BC the most profitable region and almost double the profit percentage of Alberta.  In fact all regions of Canada posted higher profit percentages than the Canadian average of 3.2% - except Alberta and Ontario.  This sounds like the same old economic stories as in the days of Adam Smith: reduce price – drive demand.  Alberta and Ontario have historically demonstrated smaller profit margins than every other geographic region, leading us to conclude that if you drop price and profit, you can drive market participation and revenue. 


Do Alberta and Ontario carry cultures of business that support greater staffing industry acceptance?  Maybe, but most likely they just have more competitive fees encouraging a greater level of staffing industry participation.  And for these two provinces that strategy pays off, despite smaller profit margins, in absolute dollars, those two regions drive the lion’s share of profit in the country (66%).  This is a good example of how to use economics correctly, and perhaps a lesson for all other regions – reducing price is not always bad.



Executrade - Your Recruitment Specialist



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