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Key Small Business Statistics - July 2005
How many jobs do small businesses create?
The data that make it possible to answer this question are derived from Statistics Canada's Survey of Employment, Payrolls and Hours (SEPH), and are regularly published in Industry Canada's Small Business Quarterly. SEPH data exclude self-employed workers who are not on a payroll. Other limitations also apply (see How many people work for small businesses?). Historical employment data for the period from 1994 to 2000 are reported for only three firm size categories, so job creation over these years was estimated for the seven size categories using ratios to distribute annual employment levels across the size categories. Since 2000, Statistics Canada has been publishing the SEPH data with the seven size categories.
Table 6 and Figure 4 display relative contributions to the net year-over-year change in private sector paid employment by small, medium and large businesses from 1994 to 2004. Over the years, the relative contribution in terms of size varied greatly. During the period under review, each of the business-size categories played the leading role at different times in net job creation in Canada. For six years, in 1996 and 1997 and from 2000 to 2003, small businesses made the greatest contribution to net job creation. On the other hand, at the beginning of this period, in 1994 and 1995, medium-sized businesses created the most jobs, and in 1998, 1999 and 2004, large businesses played the leading job-creation role. Because both small and medium-sized businesses simultaneously shed jobs while large businesses created a large number of jobs, 2004 was an atypical year. The jobs created were concentrated in retail trade; administrative, waste management and remediation services; and accommodation and food services.
| Year | Size of Business – Number of Employees (Percent Contribution) | ||||||
|---|---|---|---|---|---|---|---|
| 0–4 | 5–19 | 20–49 | 50–99 | Small (<100) |
Medium (100–499) |
Large (500+) |
|
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Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), March 2005, and calculations by Industry Canada. Historical data are frequently revised, and as of 2000 are available on a North American Industry Classification System (NAICS) basis. Updates for the total economy covered by SEPH are regularly published in Small Business Quarterly. Note 1: SEPH data exclude self-employed workers who are not on a payroll, and employees in the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. Data in this table also exclude employment in public administration, public utilities (water, sewage and other systems), postal services, public transit, educational services, and institutional and other government-funded health care services, but include employment in the CBC, private practices (physicians, dentists and other health practitioners) and beer and liquor stores. Note 2: Differences between these data and those published in previous versions of Key Small Business Statistics are largely due to revisions to the historical SEPH data. A small proportion of the differences is the result of refinements in the methodology used to separate the private and public sectors. A technical note on the separation of public and private sector employment is available upon request by contacting Customer Services at sbrp-rppe@ic.gc.ca. |
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| 1994 | -7 | -93 | 21 | 46 | -32 | 102 | 30 |
| 1995 | 2 | -5 | 7 | 23 | 27 | 38 | 34 |
| 1996 | 7 | 88 | 38 | -20 | 114 | -53 | 38 |
| 1997 | 3 | 25 | 11 | 10 | 49 | 10 | 41 |
| 1998 | 2 | 3 | 14 | 12 | 31 | 29 | 40 |
| 1999 | 4 | -1 | 9 | 11 | 23 | 25 | 52 |
| 2000 | 4 | 18 | 17 | 11 | 50 | 15 | 34 |
| 2001 | 16 | 10 | 17 | 13 | 57 | 9 | 34 |
| 2002 | -1 | 5 | 28 | 31 | 62 | 9 | 29 |
| 2003 | 7 | -3 | 19 | 23 | 46 | 24 | 30 |
| 2004 | -27 | 73 | -19 | -39 | -12 | -21 | 133 |
Figure 4: Percent Contribution to the Net Change in Private Sector Paid Employment by Size of Business Enterprise, 1994–2004
Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), September 2004, and calculations by Industry Canada. Historical data are frequently revised, and as of 2000 are available on a North American Industry Classification System (NAICS) basis. Updates for the total economy covered by SEPH are regularly published in Small Business Quarterly.
A significant limitation of these data is that they are for a period when the economy was generally expanding, with only a mild downturn in 1995–96. In a more severe downturn or a recession, the percentage contributions to job creation (or loss) by smaller businesses may be quite different.
Table 7 and Figure 5 show year-over-year quarterly changes in paid employment, starting in the first quarter of 2002, by business size. These data indicate that total private sector jobs continued to increase over the 12 consecutive quarters since the first quarter of 2002. The rate of increase declined between 2002 and 2004, but the rate of change began to increase again in the final two quarters of 2004.
| Year and Quarter | Total Net Change | Net Private Sector Paid Employment Change by Size of Business | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 0–4 | 5–19 | 20–49 | 50–99 | Small (<100) |
100–299 | 300–499 | Medium (100-499) |
Large (500+) |
||
|
Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), March 2005, and calculations by Industry Canada. Note 1: SEPH data exclude self-employed workers who are not on a payroll, and employees in the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. Data in this table also exclude employment in public administration, public utilities (water, sewage and other systems), postal services, public transit, educational services, and institutional and other government-funded health care services, but include employment in the CBC, private practices (physicians, dentists and other health practitioners) and beer and liquor stores. Note 2: Statistics Canada cautions that data by firm size produced for quarters prior to year 2001 were estimated from the previous data based on the 1980 SIC and then backcast on the new NAICS classification. Especially in the smallest size categories, more volatility in the data should be expected. Note 3: Differences between these data and those published in previous versions of Key Small Business Statistics are largely due to revisions to the historical SEPH data. A small proportion of the differences is the result of refinements in the methodology used to separate the private and public sectors. A technical note on the separation of public and private sector employment is available upon request by contacting Customer Services at sbrp-rppe@ic.gc.ca. Note 4: Minor discrepancies between total net employment change and the sum of changes by size are largely due to small differences between aggregate and the sum of disaggregated source data. |
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| 2002 Q1 | 88 918 | -9 258 | 30 486 | 40 973 | 31 936 | 94 137 | -5 048 | -23 115 | -28 162 | 22 941 |
| Q2 | 205 828 | -4 123 | 9 503 | 71 816 | 77 313 | 154 509 | 41 871 | -27 943 | 13 928 | 37 387 |
| Q3 | 307 575 | -1 590 | 2 636 | 76 253 | 90 732 | 168 030 | 71 610 | -23 305 | 48 305 | 91 226 |
| Q4 | 388 799 | -4 421 | 8 506 | 91 029 | 105 930 | 201 044 | 68 482 | -13 669 | 54 813 | 132 943 |
| 2003 Q1 | 320 200 | 5 831 | 1 576 | 64 425 | 80 720 | 152 552 | 53 217 | 7 315 | 60 533 | 107 116 |
| Q2 | 191 737 | 13 690 | 1 255 | 23 546 | 24 198 | 62 689 | 31 679 | 9 872 | 41 551 | 87 499 |
| Q3 | 69 510 | 13 248 | -6 940 | 17 292 | 14 296 | 37 896 | 16 048 | 6 486 | 22 533 | 9 077 |
| Q4 | 34 594 | 7 809 | -13 540 | 13 364 | 20 906 | 28 538 | 15 401 | 7 446 | 22 847 | -16 787 |
| 2004 Q1 | 16 843 | -3 399 | 3 032 | 1 194 | 8 619 | 9 446 | -3 963 | -23 653 | -27 616 | 35 014 |
| Q2 | 58 571 | -24 154 | 75 666 | -28 091 | -42 702 | -19 281 | -34 837 | 12 174 | -22 663 | 100 513 |
| Q3 | 120 773 | -36 598 | 82 734 | -16 191 | -45 507 | -15 563 | -28 655 | 9 501 | -19 154 | 155 497 |
| Q4 | 136 717 | -25 167 | 81 629 | -20 956 | -50 218 | -14 711 | -3 916 | 4 302 | 386 | 151 041 |
| % Contribution to Private Sector Employment Change by Size of Business | ||||||||||
| 2002 Q1 | 100 | -10.4 | 34.3 | 46.1 | 35.9 | 105.9 | -5.7 | -26.0 | -31.7 | 25.8 |
| Q2 | 100 | -2.0 | 4.6 | 34.9 | 37.6 | 75.1 | 20.3 | -13.6 | 6.8 | 18.2 |
| Q3 | 100 | -0.5 | 0.9 | 24.8 | 29.5 | 54.6 | 23.3 | -7.6 | 15.7 | 29.7 |
| Q4 | 100 | -1.1 | 2.2 | 23.4 | 27.2 | 51.7 | 17.6 | -3.5 | 14.1 | 34.2 |
| 2003 Q1 | 100 | 1.8 | 0.5 | 20.1 | 25.2 | 47.6 | 16.6 | 2.3 | 18.9 | 33.5 |
| Q2 | 100 | 7.1 | 0.7 | 12.3 | 12.6 | 32.7 | 16.5 | 5.1 | 21.7 | 45.6 |
| Q3 | 100 | 19.1 | -10.0 | 24.9 | 20.6 | 54.5 | 23.1 | 9.3 | 32.4 | 13.1 |
| Q4 | 100 | 22.6 | -39.1 | 38.6 | 60.4 | 82.5 | 44.5 | 21.5 | 66.0 | -48.5 |
| 2004 Q1 | 100 | -20.2 | 18.0 | 7.1 | 51.2 | 56.1 | -23.5 | -140.4 | -164.0 | 207.9 |
| Q2 | 100 | -41.2 | 129.2 | -48.0 | -72.9 | -32.9 | -59.5 | 20.8 | -38.7 | 171.6 |
| Q3 | 100 | -30.3 | 68.5 | -13.4 | -37.7 | -12.9 | -23.7 | 7.9 | -15.9 | 128.8 |
| Q4 | 100 | -18.4 | 59.7 | -15.3 | -36.7 | -10.8 | -2.9 | -3.1 | 0.3 | 110.5 |
Figure 5: Percent Contribution to Year-over-year Net Private Sector Employment Change, by Size of Business Enterprise, Quarterly, 2002 Q1 to 2004 Q41, 2, 3
Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), September 2004, and calculations by Industry Canada.
Note 1: SEPH data exclude self-employed workers who are not on a payroll, and employees in the following industries: agriculture, fishing and trapping, private household services, religious organizations and military personnel of defence services. Data in this figure also exclude employment in public administration, public utilities (water, sewage and other systems), postal services, public transit, educational services, and institutional and other government-funded health care services, but include employment in the CBC, private practices (physicians, dentists and other health practitioners) and beer and liquor stores.
Note 2: Statistics Canada cautions that data by firm size produced for quarters prior to year 2001 were estimated from the previous data based on the 1980 SIC and then backcast on the new NAICS classification. Especially in the smallest size categories, more volatility in the data should be expected.
Note 3: Differences between these data and those published in previous versions of Key Small Business Statistics are largely due to revisions to the historical SEPH data. A small proportion of the differences is the result of refinements in the methodology used to separate the private and public sectors. A technical note on the separation of public and private sector employment is available upon request by contacting Customer Services at sbrp-rppe@ic.gc.ca.
Small businesses created the majority of net new jobs between the first quarter of 2002 and the second quarter of 2004, except for the first two quarters of 2003. In the second, third and fourth quarter of 2004, small businesses had negative net job creation. Over these quarters, large firms were responsible for all of the net job creation.