Economic and Social Reports
Working from home for an employer located in another province or territory

The substantial increase in telework observed since the beginning of the COVID-19 pandemic has raised the possibility that in the near future, some Canadian workers might be able to work from home for an employer located remotely, i.e. located: a) abroad; b) in another province or territory or c) far within their own province (Mehdi and Morissette 2021). Such possibility has potential implications for hiring, wage setting, and worker mobility since it would enable firms to recruit new workers from a larger pool of applicants while allowing workers to apply to a broader set of jobs than had been possible until recently. It also raises several questions:

1. in recent years, how many Canadian employees have worked from home for an employer located remotely?
2. which groups of workers were more likely to do so?
3. how did their earnings compare with those of other teleworkers?
4. how many employees do Canadian employers expect to telework for a business located remotely in the near future?

This article uses the Canadian Survey on Business Conditions (CSBC: fourth quarter of 2021) and integrated data from Statistics Canada’s Longitudinal Worker File (LWF) and the 2001 and 2016 Censuses of Population to answer these questions for a subset of these teleworkers: those whose employer is located in another province or territory.^Note  While CSBC measures the number of employees that are expected to telework exclusively in the near future for a business located in another province or territory, the LWF and Census data measure the number of employees who worked from home for an employer located in another province or territory in 2001 and 2016.^Note  Because many individuals living in Ottawa-Gatineau work for the federal public administration in a province other than their province of residence, the analysis excludes employees living in this area.

Roughly 13,000 Canadians worked from home for an employer located in another province or territory in 2016

Of all employees aged 20 and over who were not students and had only one paid job in 2016, 0.15% worked from home for an employer located in another province or territory that year (Table 1). These workers represented 12,600 employees, up from roughly 3,500 in 2001.^Note 

The proportion of employees working at home from another province or territory in 2016 varied across education levels, industries, occupations and union status. Workers holding post-bachelor’s degree diplomas were about four times more likely (0.29%) to do so than those with no postsecondary education (0.07%). Likewise, employees in professional, scientific and technical services were about four times more likely to work from home from another province or territory (0.49%) than employees in goods-producing industries (0.12%).

About 0.30% of employees in natural and applied sciences, arts, culture, recreation and sports and managers worked at home from another province or territory, more than twice the rate of 0.12% observed for employees in business, finance and administrative occupations. Partly because of differences in the type of occupations they hold, non-unionized employees in the commercial sector—which excludes public administration, educational services as well as health care and social assistance—were more likely (0.22%) than unionized workers (0.01%) to work from home for a business located in another province or territory. All of the aforementioned qualitative patterns hold for men and women in multivariate analyses.

Table 1 also shows that, in 2016, interprovincial teleworkers represented only 4.8% of all teleworkers considered in this study (column 6). Hence, the vast majority of employees working from home in 2016—95.2%—worked for an employer located within their own province or territory of residence.

For both men and women, teleworkers working from another province or territory generally earned more than other teleworkers. In 2016, the former group averaged $101,300 (in 2016 dollars), compared with $66,900 for other teleworkers. At least 80% of this earnings gap remains after controlling for broad occupations, thereby indicating that differences in the types of occupations held are not the main factor underlying these pay differences.

Canadian employers expect that roughly 113,000 of their employees will telework exclusively from another province or territory in the near future

While 12,600 Canadians usually worked most of the time from home for an employer located in another province or territory in 2016, a growing number of them are expected to do so in the near future. Survey responses collected from employers during the fourth quarter of 2021 indicate that Canadian businesses expected about 113,000 of their employees to telework exclusively from another province or territory over the next three months (Table 2). This represents 0.85% of their workforce. Since businesses expected about 963,000 their employees to telework exclusively and about 1.8 million to combine work from home with on-site work over the next three months, the number of employees expected to telework exclusively from another province or territory represents 4.1% (113,000 divided by 2.8 million) of employees expected to do some telework.^Note 

Employers in information and cultural industries expected almost 5% of their workforce to telework exclusively from another province or territory over the next three months, roughly twice the rates expected in wholesale trade (2.0%), finance and insurance (2.2%), professional, scientific and technical services (2.3%), as well as administrative and support, waste management and remediation services (2.6%).^Note  In several other industries, less than 0.5% of the workforce was expected to telework exclusively from another province or territory over the next three months.

Conclusion

While roughly 0.15% of Canadian employees worked at home from another province or territory in 2016, recent data indicate that Canadian businesses expect 0.85% of their workforce to do so in the near future. These interprovincial teleworkers represent about 4% of all employees expected to do some telework in the near future. Employees most likely to work from home for an employer located in another province or territory are highly educated and often work in high knowledge industries such as professional, scientific and technical services. They average substantially higher wages than other teleworkers.

Taken together, these findings convey two messages. First, they highlight the fact that, following the COVID-19 pandemic, some Canadian businesses are moving towards more flexible work arrangements. Second, they make it clear that teleworking from another province or territory is a possibility that is still confined to a fairly narrow segment of the workforce.

Yet several questions remain unanswered and deserve further investigation: 1) how many employees work from home for an employer located abroad or for an employer located far within their own province?; 2) are employees working from home for an employer located abroad concentrated in specific occupations?; 3) among employees expected to combine work from home and on-site work in the near future, what percentage are expected to work most of their hours from home?

 

References

Mehdi, T. and R. Morissette. 2021. “Working from home in Canada: what have we learned so far?”, Economic and Social Reports, Vol. 1 No. 10, Statistics Canada Catalogue no. 36-28-0001. Ottawa: Statistics Canada.