Changes to methodology

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With this update, it was possible to improve the timeliness of the data by streamlining the compilation of Human Resources Module (HRM) statistics. The data can now be published approximately six months after the reference period rather than 18 months. Consequently, estimates are provided up to and including 2009, an addition of two years of data instead of one year.

With this release of the HRM, the methodology for estimating the labour portion of mixed income for self-employed jobs was updated. Up until now, it was assumed that the self-employed received the same hourly labour income (that is, wages and salaries plus supplementary labour income (SLI)) as paid employees on average. SLI is composed of employer contributions to private and public sector pension plans, employment insurance, Canada and Quebec pension plans, health and life insurance, workers compensation and retirement allowances. Currently, self-employed must contribute only to Canada and Quebec pension plans. In 2007, these contributions accounted for only 21.3% of total SLI.¹ In addition, many uninsured employees qualify for Employment Insurance (EI) sickness and maternity benefits, the self-employed do not.²

Other benefit programs or plans are available to the self-employed on a voluntary basis but not on the same terms and for the same price as the programs offered to employees. Few self-employed take advantage of these benefits.³

As result, with this update, it is assumed that the labour portion of mixed income for the self-employed is equal to wages only and excludes SLI, which is consistent with the Canadian Productivity Accounts (CPA).⁴  Excluding SLI in the calculation of the labour portion of mixed income for the self-employed has lowered self-employed hourly compensation in the tourism sector between $1.15 and $1.80 per hour from 1997 to 2007. This change reduced overall hourly compensation in the tourism sector between $0.12 and $0.15 per hour over the same period.

Self-employed hourly compensation in tourism industries is now closer to self-employed hourly compensation economy-wide, but the assumptions used to calculate the estimates are not equivalent in all cases. The calculation used in the HRM is identical to that in the CPA, except in the case where the imputed labour portion of mixed income for the self-employed exceeds the estimated mixed income for the industry. In this case, in the CPA, the estimate of the labour portion of mixed income for the self-employed is reduced to match the mixed income.⁵

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Notes:

1. Statistics Canada. 2010. Custom tabulation of supplementary labour income using 2007 data.
2. Contributions to employment insurance by the self-employed are possible, on a voluntary basis, as of January 30, 2010. However, the self-employed can start withdrawing benefits only in 2011.
3. The Survey of Labour and Income Dynamics showed that in the year 2000, about 50% of employees had coverage in an extended health insurance plan, a disability plan, or a health plan, almost three times the proportion (17%) of coverage for the self-employed. For more details see Akyeampong and Sussman 2003. The self-employed also tend to participate less in RRSPs. For example in 1996, 35% of the self-employed purchased a Registered Retirement Savings Plan (RRSP) compared with 43% of employees. For more details see Akyeampong 1999.
4. The CPA excludes SLI from the labour portion of mixed income for the self-employed.
5. The CPA approach assumes that the return to capital cannot be negative. The HRM does not make this assumption.