Key Small Business Statistics - July 2005

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 4% to 167% per year between 1977 and 2004 (Table 12 and Figure 8).^{Footnote 7} 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) — 167% in 1983 and 103% 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, 1977–2004^{1, 2,3}

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, March 2005. 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. Note 3: Differences between these data and those published in previous versions of Key Small Business Statistics are due to revisions made to data from the Labour Force Survey.
1977	112.7	87.4	78	25.3	22
1978	273.6	220.5	81	53.1	19
1979	452.5	391.2	86	61.3	14
1980	240.2	201.3	84	38.9	16
1981	278.1	216.5	78	61.6	22
1982	-344.2	-402.2	(-) 117	58.0	(+) 17
1983	35.9	-24.1	(-) 67	59.9	167
1984	270.8	244.3	90	26.5	10
1985	311.9	155.5	50	156.4	50
1986	344.5	396.4	115	-51.9	(-) 15
1987	299.7	260.7	87	39.0	13
1988	336.7	269.5	80	67.1	20
1989	272.3	261.6	96	10.7	4
1990	73.3	22.9	31	50.5	69
1991	-231.9	-286.2	(-) 123	54.2	(+) 23
1992	-140.8	-174.5	(-) 124	33.7	(+) 24
1993	91.4	-2.4	(-) 3	93.8	103
1994	293.7	279.0	95	14.8	5
1995	286.6	245.7	86	40.9	14
1996	203.5	109.8	54	93.7	46
1997	301.7	121.6	40	180.1	60
1998	359.5	292.9	81	66.6	19
1999	227.4	194.6	86	32.7	14
2000	196.6	263.8	134	-67.2	(-) 34
2001	119.9	226.8	189	-106.9	(-)89
2002	289.6	248.6	86	41.0	14
2003	304.9	224.1	74	80.7	26
2004	195.6	143.6	73	52.0	27

Figure 8: Private Sector Total Net Employment Change and Net Self-employment Change, Year-over-year (Thousands), 1977–2004

Source: Statistics Canada, Labour Force Survey, March 2005.

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Footnote 7. 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.