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.