Community Futures Meridian

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Self-Employment in Canada and the New Gig Economy

  • April 1, 2016
  • Written by Meridian Admin

We’re a few months into 2016 and Industry Canada and StatsCan have released some interesting information about the world of small business. As our readers fall primarily into two Industry Canada categories; micro-enterprise (1 to 4 employees) and small business (5 to 100 employees) we thought it would be informative to review some stats surrounding these sectors.

Here’s the first statistic that might surprise you there are 2.7 million people self-employed in Canada (1.7m men and 1.0m women).

Older Canadians (55 to 64) are nearly twice as likely as 25 to 44-year-old’s to be self-employed. Why? Many can’t find work during economic downturns and look for another way to make a living. Others start their business as unincorporated self-employed on their way to building a larger incorporated business.

The ageing labour force is also having an impact; the number of people over 45-years-of-age entering self-employment increased while it dropped among younger cohorts. The largest increase between 1998 and 2010 was in the 55 to 64 age group.

Over the twenty years prior to 2010 unincorporated self-employment in the business, rental, and professional categories grew while fishing and agriculture declined.

The Situation Today

The final month of 2015 saw an increase in those self-employed of 40,000 while those in private and public sector jobs remained stable. Taking 2015 as a whole self-employment grew by nearly 91,500 a 3.4% increase year on year. What’s interesting is that this is 58% of all positions created. Most of these ‘jobs’ were in the finance, real estate, insurance and leasing sectors perhaps reflecting the lower start-up costs in service based businesses.

Much of this increase in self-employment can be laid at the door of the drop in oil prices as people struggle to find work and turn to creating their own jobs. In fact, over 25,000 jobs were lost in the resource sector – the majority in Alberta.

The Gig Economy

As mentioned earlier StatsCan starts talking about self-employment in terms of those unincorporated self-employed with 1 (the ‘owner’) to four employees as micro-enterprises. Today however we are seeing another level of self-employed; people wanting temporary positions, or part-time work – these are increasing being called gigs, a term no longer reserved entirely for performers. The Gig Economy is defined by as, “ ... an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. The trend toward a gig economy has begun. A study by Intuit predicted that by 2020, 40 percent of American workers would be independent contractors.”

Those Uber drivers you keep hearing about are part of the Gig economy as are people renting out rooms via Airbnb. This is in part due to the digital revolution – it’s never before been easier for people to connect through social media, apps and in other ways to deliver services, or product. As a small business person it’s hard to grow to the point you can afford your first employee; often you need a multitude of things doing requiring multiple skills. Consider approaching your human resources need a little differently and think of all those tasks that need doing as ‘gigs’ and build a network of people around you who can do them on a gig-by-gig basis.

The economy of the future may well be powered by millions of micro-enterprises using a wealth of talented people using their own equipment and other resources. Your sole proprietorship, or unincorporated small business in the future may have one employee but hundreds of people doing hundreds of tasks on an as needed basis.

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