Key Small Business Statistics - April 2004

How has self-employment contributed to job creation?

Generally, the increasing trend toward self-employment has supported total employment growth. Positive contributions to total net employment growth in the private sector have ranged from 3% to almost 200% per year between 1977 and 2003 (Table 12 and Figure 8).^{Footnote 6} During that time there have been just three years (1986, 2000 and 2001) when the net change in self-employment was negative. In 1982 and 1991–92, self-employment grew strongly, while total employment growth turned negative due to economic recessions. It is interesting to note that the two greatest changes in the number of self-employed persons relative to the overall change in private sector employment occurred at the end of these recessions (in 1983 and 1993) — 197% in 1983 and 127% in 1993. This is because, when job market conditions tighten, people who cannot find suitable employment tend to start their own businesses and become self-employed.

Table 12: Net Private Sector Total Employment Change and Net Self-employment Change, Year-over-year, Thousands and Percent, 1977–2003^1,2

Year	Private Sector Total Net Employment Change (Thousands)	Private Sector Employees		Self-employed Persons
		Net Change (Thousands)	% of Total Private Sector Employment Change	Net Change (Thousands)	% of Total Private Sector Employment Change
Source: Statistics Canada, Labour Force Survey, January 2004. Note 1: (-) indicates a negative contribution to Total Net Employment Change; (+) indicates a positive contribution, despite a negative Total Net Employment Change. Note 2: Net change figures may not add up to total net change due to rounding.
1977	94.1	61.2	65%	33.0	35%
1978	274.7	217.3	79%	57.4	21%
1979	457.8	405.2	89%	52.6	11%
1980	229.8	180.1	78%	49.7	22%
1981	284.4	227.8	80%	56.6	20%
1982	-331.4	-392.5	(-)118%	61.2	(+)18%
1983	24.2	-23.4	(-)97%	47.7	197%
1984	265.9	248.2	93%	17.7	7%
1985	327.5	211.4	65%	116.1	35%
1986	297.6	326.7	110%	-29.1	(-)10%
1987	303.9	264.2	87%	39.6	13%
1988	345.7	269.2	78%	76.5	22%
1989	252.6	221.4	88%	31.2	12%
1990	59.0	19.8	34%	39.3	67%
1991	-270.8	-315.5	(-)117%	44.7	(+)17%
1992	-125.8	-157.7	(-)125%	31.9	(+)25%
1993	84.8	-22.9	(-)27%	107.8	127%
1994	282.9	273.7	97%	9.2	3%
1995	294.9	233.3	79%	61.5	21%
1996	164.0	92.3	56%	71.6	44%
1997	347.0	162.7	47%	184.3	53%
1998	378.8	307.3	81%	71.5	19%
1999	330.9	293.2	89%	37.7	11%
2000	287.6	329.2	114%	-41.5	(-)14%
2001	137.8	250.0	181%	-112.2	(-)81%
2002	248.8	212.0	85%	36.8	15%
2003	244.1	177.3	73%	66.7	27%

Figure 8: Net Private Sector Total Employment Change and Net Self-employment Change, Year-over-year (Thousands), 1977-2003

Source: Table 12.

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Footnote 6. In Table 12, employment in the private sector is defined as the total of self-employed workers and private sector employees, regardless of business size. The definition of private sector employees in the Labour Force Survey used in Table 12 is not identical to the definition in the Survey of Employment, Payrolls and Hours data in Tables 5 to 7 but the differences are minor.