Labour Statistics at a Glance
Self-employed Canadians: Who and Why?

by Lahouaria Yssaad and Vincent Ferrao

Release date: May 28, 2019

Highlights

Introduction

Self-employment is a major aspect of labour-market activity and can be an important source of employment growth. While increases in self-employment have sometimes been linked to economic downturns, there appears to be no evidence that economic neccessity is a significant factor in “choosing” this type of work arrangement.Note   In fact, “changes in the self-employment rate are more likely driven by structural factors in the economy, such as changes in the age [structure] of the population and increasing importance of certain industrial sectors [which are more amenable to self-employment than] others, rather than business cycle variation.”Note 

Data from the Labour Force Survey (LFS) show increases in self-employment during 2007 and 2008—peak years of the most recent pre-recession labour market—that exceeded growth in the number of employees. Yet, the number of self-employed workers also rose in 2009—a recession year—as the number of employees fell. During the last decade, the rate of self-employment—that is the number of self-employed workers as a share of total employment—has been stable, hovering around 15%.Note 

Circumstances and motivations of being one’s own boss differ, mirroring the complex dynamic of the labour market. Indeed, one may be “pushed” into self-employment when the labour market deteriorates and the number of employees declines. However, when the number of employees grows, but self-employment also grows and does so even faster, this might suggest that individuals are being “pulled” into self-employment.Note 

This study presents a historical profile of self-employed workers over a four-decade-period, from 1976 to 2018. It also describes results from a recent supplement to the September 2018 LFS which probed on the reasons motivating workers to be self-employed in their main job. This was the first time that the LFS collected data on the reasons for self-employment. (See Data source and definitions.)

Self-employment in Canada: Historical summary

In 2018, 2.9 million Canadians were self-employed, up from 1.2 million in 1976. Their proportion of total employment rose from 12% to 15% over the four-decade period (Chart 1). Among all self-employed workers, those who were incorporated (with or without paid help) made up 46% in 2018, up from 21% in 1976. At the same time, the share of those who were unincorporated (with or without paid help) fell from 68% to 53%, while the share of unpaid family workers dropped from 11% to 1%.Note 

Chart 1 Self-employment rate at stable levels in last decade Canada, 1976 to 2018

Data table for Chart 1 
Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1 Self-employed as a proportion of total employment (percent)
(appearing as column headers).
Self-employed as a proportion of total employment (percent)
1976 12.2
1977 12.2
1978 12.4
1979 12.4
1980 12.4
1981 12.6
1982 13.6
1983 14.0
1984 13.9
1985 14.3
1986 13.8
1987 13.8
1988 14.0
1989 13.9
1990 14.0
1991 14.7
1992 15.1
1993 15.7
1994 15.5
1995 15.7
1996 16.2
1997 17.1
1998 17.2
1999 17.0
2000 16.1
2001 15.3
2002 15.2
2003 15.4
2004 15.4
2005 15.6
2006 15.3
2007 15.5
2008 15.6
2009 16.1
2010 15.8
2011 15.5
2012 15.4
2013 15.4
2014 15.3
2015 15.4
2016 15.3
2017 15.2
2018 15.3

British Columbia was the province with the largest prevalence of self-employment in 2018, with 18% of its employed population working as self-employed in their main job; this was up from 12% in 1976 (Table 1). In Saskatchewan, too, the proportion of self-employed workers (17% in 2018) was higher than the national average. However, this was 12 percentage points lower than in 1976, reflecting changes in the industry composition in the province. Indeed, the share of agriculture (an industry characterized by a high prevalence of self-employment) in Saskatchewan’s total employment fell from 25% in 1976 to 7% in 2018. 


Table 1
Self-employment rate in 2018 higher in Western Canada, Ontario and Prince Edward Island
Table summary
This table displays the results of Self-employment rate in 2018 higher in Western Canada 2018 and 1976, calculated using percent units of measure (appearing as column headers).
2018 1976
percent
British Columbia 17.9 12.0
Saskatchewan 17.4 29.2
Alberta 17.2 18.1
Ontario 15.5 10.5
Canada 15.3 12.2
Prince Edward Island 15.3 20.0
Manitoba 14.2 13.9
Nova Scotia 13.3 10.6
Quebec 13.3 10.0
New Brunswick 11.2 10.6
Newfoundland and Labrador 8.6 12.0

While men make up the majority of self-employed (62%) in 2018, women’s share increased from 26% to 38% over the last four decades. This increase mirrors women’s growing participation in the labour market over this time period.

Self-employment down in agriculture, up in professional, scientific and technical services

Agriculture remains the industry with the highest prevalence of self-employment, although the proportion fell from 68% in 1987 (when such data first became available) to 57% in 2018 (Chart 2). This likely reflects the rising trend in farm concentration and industrialisation of agriculture. 

Professional, scientific and technical services have emerged as the industry with the second highest rate of self-employment among all industries (32% in 2018, up from nearly 27% in 1987). Professional, scientific and technical services include occupations in legal services, accounting, architectural, engineering and related services, computer systems designs, management, scientific and technical consulting, as well as scientific research and development. This is one of the higher paid industries, and much of the expertise in it requires university or college education.

Chart 2 Self-employment share in selected industries, Canada, 1987 and 2018

Data table for Chart 2 
Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2 1987 and 2018, calculated using Proportion of self-employed workers (percent) units of measure (appearing as column headers).
1987 2018
Proportion of self-employed workers (percent)
Agriculture 68 57
Professional, scientific and technical services 27 32
Other services 29 29
Construction 27 27
Business, building and other support services 19 26
Finance, insurance, real estate, rental and leasing 9 19

As women made inroads in the labour market, their share of self-employment increased in a number of industries such as professional, scientific and technical services, where their proportion rose from 23% to 38% between 1987 and 2018. Self-employed women’s proportion also grew in the finance, insurance, real estate, rental and leasing services industry, increasing from 21% to 39% over the same period (Table 2).


Table 2
Women self-employed in selected industries, Canada, 1987 and 2018
Table summary
This table displays the results of Women's share of total self-employed workers in selected industries Women's share of total self-employed workers, Number of self-employed women, percent, thousands and percent change (appearing as column headers).
Women's share of total self-employed workers Number of self-employed women
percent thousands percent change
2018 1987 2018 1987 1987 to 2018
All industries 37.7 30.2 1079.0 513.2 110.2
Health care and social assistance 69.7 63.1 219.7 75.1 192.5
Educational services 66.0 68.4 54.7 11.9 359.7
Other services 55.2 54.7 129.8 101.2 28.3
Business, building and other support services 49.2 39.3 97.9 20.6 375.2
Information, culture and recreation 44.4 35.2 60.0 22.2 170.3
Accommodation and food services 42.7 34.1 44.4 25.0 77.6
Finance, insurance, real estate, rental and leasing 38.6 21.1 84.2 13.9 505.8
Professional, scientific and technical services 37.6 23.0 174.7 30.9 465.4
Agriculture 26.7 26.0 42.6 82.5 -48.4
Construction 9.0 6.1 35.1 11.7 200.0

Reasons for being self-employed

In 2018, the Labour Force Survey collected data on the reasons for self-employment. According to these data, about one third (33.5%) of self-employed workers reported having this type of work arrangement for the independence and freedom it affords (Table 3). Nature of the job, that is, ‘had to be self-employed’ because of the type of employment, was the second top reason at 15%. Fewer than 1 in 10 reported work-family balance as a reason for their choice of self-employment. 


Table 3
Top reasons for being a self-employed worker, Canada, 2018
Table summary
This table displays the results of Top reasons for being a self-employed worker , calculated using percent units of measure (appearing as column headers).
percent
Independence, freedom, being one's own boss 33.5
Nature of job - had to be self-employed 15.2
Work-family balance 8.6
Flexible hours 8.4
Challenge, creativity, success, satisfaction 6.6
Could not find suitable paid employment 5.0
Joined or took over family business 4.8
Control, responsibility, decision making 3.4
More money and unlimited income 3.2

The proportion of self-employed who reported independence, freedom or being their own boss varied provincially: from a low of 29% in Newfoundland and Labrador to a high of 38% in New Brunswick. This proportion was 36% in Quebec and 34% in Ontario, compared to a national average of about 33% (Table 4).


Table 4
Independence, freedom, being one's own boss: Most cited reason for self-employment in New Brunswick and Quebec, 2018
Table summary
This table displays the results of Independence , calculated using percent units of measure (appearing as column headers).
percent
New Brunswick 37.5
Quebec 36.3
Ontario 34.1
Canada 33.5
British Columbia 32.7
Nova Scotia 32.4
Prince Edward Island 32.2
Saskatchewan 31.9
Manitoba 30.0
Alberta 29.7
Newfoundland and Labrador 29.3

In contrast, self-employed workers in Newfoundland and Labrador were more likely to cite “nature of job - had to be self-employed” as the main reason motivating their self-employment (23%, compared to a national average of 15%). Self-employed workers in Quebec (12%) and New Brunswick (12%) were the least likely to be self-employed because of the nature of the job. 

Physicians, dentists and veterinarians were by far more likely to be self-employed due to the nature of their job, accounting for about 14% of self-employed workers who stated that they had to be their own boss. Nature of job was also cited by self-employed workers in occupations as diverse as managers in agriculture and performing artists. This illustrates aspects of certain occupations that do not lend themselves to employer-employee relationship.    

While independence, freedom or being one's own boss were the top reason for both men and women in self-employment, a number of differences were evident (Chart 3). Flexible hours and work-family balance were more common reasons among women. This likely reflects the role of family responsibilities and child-care obligations in women’s preference for a work arrangement that affords more flexibility overall. 

Chart 3 Work-family balance and flexible hours more important for women self-employed, Canada, 2018

Data table for Chart 3 
Data table for Chart 3
Table summary
This table displays the results of Data table for Chart 3 Women and Men, calculated using self-employed workers (percent) units of measure (appearing as column headers).
Women Men
self-employed workers (percent)
Work-family balance 15.4 4.6
Flexible hours 11.0 6.8
Challenge, creativity, success, satisfaction 5.7 7.2
Nature of job - had to be self-employed 15.7 14.9
Independence, freedom, being one's own boss 26.3 37.8

For self-employed workers of all age groups, independence, freedom and the desire to be one’s own boss was paramount—particularly for those aged 55 or older (Chart 4). However, other reasons that motivated self-employment varied from one age group to another. For example, flexible hours and the pursuit of challenge, creativity, success and satisfaction ranked higher for younger self-employed workers than for their older counterparts.

Similarly, work-family balance was a more important reason for core-age self-employed workers (nearly 12%) compared to their younger counterparts aged 15 to 24 (0.6%) or older ones aged 55 and over (almost 4%).      

Chart 4 Work-family balance and flexible hours more important for women self-employed, Canada, 2018

Data table for Chart 4 
Data table for Chart 4
Table summary
This table displays the results of Data table for Chart 4 15 to 24, 25 to 54 and 55 and older, calculated using self-employed workers (percent) units of measure (appearing as column headers).
15 to 24 25 to 54 55 and older
self-employed workers (percent)
Independence, freedom, being one's own boss 28.9 32.4 35.4
Had to be self-employed (nature of job) 9.0 15.0 15.8
Work-family balance 0.6 11.8 3.9
Flexible hours 25.5 8.4 7.4
Challenge, creativity, success, satisfaction 11.7 6.5 6.6
Could not find suitable paid employment 5.0 4.8 5.2

Conclusion

A brief look at general trends in self-employment shows some of the changing facets of Canada’s labour market such as the industry composition and the rising labour-force participation of women. In addition, this report examines the reasons motivating some workers to be self-employed in their main job.

The most common reasons cited by self-employed workers were the independence and freedom afforded by this type of work arrangement. The nature of the job was the second most cited reason.

The main reasons for choosing self-employment varied by sex and age, with about 15% of women citing work-family balance, triple the proportion for men (close to 5%). On the other hand, self-employed older workers were more likely to state that their motivation was the independence and freedom afforded by self-employment.

Data source and definitions

Data on the reasons that motivate some workers to be self-employed were collected as part of an ad hoc supplement to the LFS of September 2018.  This study uses data from respondents aged 15 and older who reported being self-employed in their main job during the 12 months prior to September 2018. These respondents were asked to indicate the main reason motivating their self-employment. 

Main reason for self-employment:

  1. Could not find suitable paid employment
  2. Flexible hours
  3. Balance of work and family
  4. Possibility to work from home
  5. Independence / Freedom / Own boss
  6. Control / Responsibility / Decision making
  7. Challenge / Creativity / Success / Satisfaction
  8. More money / Unlimited income
  9. Lower taxes / Deductions
  10. Less stress
  11. Had to be self-employed (nature of job)
  12. Joined or took over family business
  13. Other reason- Specify

For more information on self-employment concepts and definitions, see the Guide to the Labour Force Survey (71-543-G).

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