Key Small Business Statistics - July 2006

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 1995 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-sized and large businesses from 1995 to 2005. 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 1995, medium-sized businesses created the most jobs, while large businesses played the leading job-creation role in 1998, 1999, 2004 and 2005. 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.

Table 6: Percent Contribution to the Net Change in Private Sector Paid Employment by Size of Business Enterprise (Annual Averages), 1995-2005^1,2

Year	Size of Business — Number of Employees (Percent Contribution)
	0–4	5–19	20–49	50–99	Small (<100)	Medium (100–499)	Large (500+)
Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), March 2006, 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.
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	-2	5	28	31	62	9	28
2003	6	-2	19	22	46	24	30
2004	-27	74	-18	-38	-9	-21	130
2005	-1	4	5	2	10	22	68

Figure 4: Percent Contribution to the Net Change in Private Sector Paid Employment by Size of Business Enterprise, 1995–2005

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Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), March 2006, 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 at the beginning of the period (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 third quarter of 2002, by business size. These data indicate that total private sector jobs continued to increase over the 14 consecutive quarters since the third quarter of 2002. Although job creation was positive over each of these 14 quarters, the number of jobs created increased over the third and fourth quarters of 2002 but declined thereafter until the second quarter of 2004. The number of jobs created increased in each successive quarter of 2004 and remained fairly constant in 2005.

Table 7: Year-Over-Year Net Private Sector Paid Employment Change, and Percent Contribution by Size of Business Enterprise, Quarterly, 2002 Q3 to 2005 Q4^1,2,3

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 2006, 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: 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 3: 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.
2002 Q3	307 045	-1 379	2 759	76 570	90 742	168 692	71 951	-22 814	49 137	88 719
Q4	393 341	-4 188	9 567	92 254	106 146	203 779	69 139	-13 391	55 748	130 345
2003 Q1	328 094	6 098	3 733	65 901	81 425	157 157	53 914	8 229	62 143	108 798
Q2	200 490	14 094	3 083	24 804	25 786	67 767	32 379	11 809	44 189	88 534
Q3	75 097	13 524	-6 092	18 668	14 968	41 068	16 930	6 880	23 809	10 704
Q4	42 064	7 810	-12 423	15 170	21 781	32 337	16 132	8 077	24 209	-14 482
2004 Q1	18 904	-3 327	3 647	2 282	8 860	11 461	-3 503	-24 287	-27 790	35 233
Q2	58 690	-24 245	76 670	-27 206	-42 819	-17 599	-34 889	12 699	-22 191	98 477
Q3	121 302	-36 775	84 362	-15 281	-44 308	-12 002	-28 976	9 547	-19 428	152 739
Q4	137 428	-25 262	82 799	-19 956	-50 329	-12 748	-3 700	3 657	-44	150 220
2005 Q1	138 662	-14 112	49 820	-24 664	-41 544	-30 499	10 802	25 934	36 737	132 418
Q2	134 091	-5 975	-9 373	19 770	15 513	19 934	40 725	-16 584	24 140	90 025
Q3	118 330	5 356	-9 361	22 948	20 536	39 478	34 164	-5 673	28 491	50 353
Q4	133 367	11 865	-11 690	9 583	15 833	25 590	20 580	3 938	24 518	83 259
% Contribution to Private Sector Employment Change by Size of Business
2002 Q3	100	-0.4	0.9	24.9	29.6	54.9	23.4	-7.4	16.0	28.9
Q4	100	-1.1	2.4	23.5	27.0	51.8	17.6	-3.4	14.2	33.1
2003 Q1	100	1.9	1.1	20.1	24.8	47.9	16.4	2.5	18.9	33.2
Q2	100	7.0	1.5	12.4	12.9	33.8	16.2	5.9	22.0	44.2
Q3	100	18.0	-8.1	24.9	19.9	54.7	22.5	9.2	31.7	14.3
Q4	100	18.6	-29.5	36.1	51.8	76.9	38.4	19.2	57.6	-34.4
2004 Q1	100	-17.6	19.3	12.1	46.9	60.6	-18.5	-128.5	-147.0	186.4
Q2	100	-41.3	130.6	-46.4	-73.0	-30.0	-59.4	21.6	-37.8	167.8
Q3	100	-30.3	69.5	-12.6	-36.5	-9.9	-23.9	7.9	-16.0	125.9
Q4	100	-18.4	60.2	-14.5	-36.6	-9.3	-2.7	2.7	0.0	109.3
2005 Q1	100	-10.2	35.9	-17.8	-30.0	-22.0	7.8	18.7	26.5	95.5
Q2	100	-4.5	-7.0	14.7	11.6	14.9	30.4	-12.4	18.0	67.1
Q3	100	4.5	-7.9	19.4	17.4	33.4	28.9	-4.8	24.1	42.6
Q4	100	8.9	-8.8	7.2	11.9	19.2	15.4	3.0	18.4	62.4

Figure 5: Percent Contribution to Year-Over-Year Net Change in Private Sector Employment, by Size of Business Enterprise, Quarterly, 2002 Q3 to 2005 Q4^1,2

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Source: Statistics Canada, Survey of Employment, Payrolls and Hours (SEPH), March 2006, 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: 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 third quarter of 2002 and the fourth quarter of 2003, except for the second quarter of 2003. In the second, third and fourth quarters of 2004, and in the first quarter of 2005, small businesses had negative net job creation. From the first quarter of 2004 to the fourth quarter of 2005, large firms were responsible for most of the net job creation.