Canada

Canadian Entrepreneurs Are Quitting While Government Employment Soars

Canada prides itself on being an ideal environment for entrepreneurs but stats disagree. Statistics Canada (Stat Can) employment data shows self-employment is shrinking. These individuals now represent the smallest share of employment since the early 1980s. At the same time, the public sector has been hiring roughly two people per self-employed job lost. Employment might be recovering but it’s a totally different labor market.

Self-Employment Drops To The Smallest Share of Workers Since The Early 80s

Canadian entrepreneurship has taken a hit and not just because of the recession. The number of Canadians that identify as self-employed fell to 2.92 million in October, down 3.8% from last year. It’s now 12.1% lower than the peak reached in September 2019. The public health restrictions definitely accelerated this trend but it started before 2020. The environment was weakening before the recession, meaning bigger issues are present.

Self-employed Canadians have shrunk to their smallest share of employment since the 1980s. They represent 15.7% of total employment, down from 17.2% a year ago. The share hasn’t been this small since June 1982. That was also right around the last inflation crisis Canada faced.

Canadian Share of Employment

The share of self-employed and public sector employees, as a percentage of total employment in Canada.

Source: Statistics Canada; Better Dwelling.

Public Sector Employment Hits The Largest Share of Employment Since 1992

Canada has been leaning on public employees to help pad its employment numbers. There were 4.15 million public sector employees in October, up 5.7% from last year. Annual growth advanced a point faster than general employment. This helped the sector to hit a new record high.

Public sector employment has captured its largest share of employment in three decades. It now makes up 21.8% of all people employed in the country as of October, the highest share since 1992. Canada’s public sector essentially hired two people for every self-employed person lost. 

This is the second time Canada recently used a 2-for-1 strategy to pad losses. At the start of the pandemic, Canada replaced every $1 of disposable income lost with $2 in support. It allowed a significant economic boost short-term but it’s different from organic growth. It’s using debt to pad the economic numbers — like paying your mortgage with a credit card. It buys you time, but you really need to get your sh*t together here.

It’s also a high-risk gamble for Canada. The country is increasingly dependent on immigration to cover its ballooning costs. Any hiccup to the inflow and Canada finds itself with a bigger issue. That’s already a risk as more immigrants are less happy with the cost of living they discover after arrival

8 Comments

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  • Trader Jim 1 week ago

    Great paper from Cambridge on the role of self-employment being a contributor to higher per capita wage growth and reducing inequality,

    It’s unfortunate you can’t have much of a discussion about the importance of self-employment without people getting upset and making up that it’s just low paid gig work.

    https://www.cambridge.org/core/journals/journal-of-agricultural-and-applied-economics/article/abs/economic-impacts-of-selfemployment/499310DD4A11026C214F2DE0900D743D

  • RW 1 week ago

    I’ve said it before and I’ll say it again, Canada’s biggest competitor to job creation is the government itself. Just like they’re dropping pet infrastructure projects to boost the economy at the same time as there’s a housing labor shortage, driving up the cost of housing.

    The government is just making issues and correcting them over and over.

  • WEXIT 1 week ago

    Column is all you need to know, what it is like doing business in Canada. If you are wanting to start a business, the best thing you could do for yourself is move to a different country.

    I did 30 years of business in Canada, and 8 years in the USA. In the states, you get honesty from their government sector workers, you do not get that in Canada

  • Jim Straughan 7 days ago

    RW One wonders what part of making issues is purposeful versus incompetent ?

  • Bala 7 days ago

    People choose the goverment based on their policy frame work. What we choose is what we get.

  • david 7 days ago

    The strategy for many Canadians is to work for the public sector, buy homes and let newer immigrants fight to rent or buy at a higher price. The only thing saving our economy are commodities and finding immigrants who are ready to bear the brunt, but we don’t want to admit it.

    I arrived 10 years ago. Worked as employee, then consultant through my own company then employee again for a major financial firm; I’m starting to have enough to live in this country. I came here ’cause life was cheaper than Western Europe and people seemed more reasonable but it is not the case anymore.

    Will grab my passports and go find if the grass is greener elsewhere within the next 2 years.

  • Lee Harding 6 days ago

    Your chart doesn’t match your narrative or numbers. “Public sector employment has captured its largest share of employment in three decades. It now makes up 21.8% of all people employed in the country as of October, the highest share since 1992.”

    • Trader Jim 5 days ago

      Unless an analyst says “seasonally adjusted” they’re comparing October to other Octobers, but I guess they should make that clear for non-paywalled content.

      Seasonal variations for public sector employment would mean summers are always larger.

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