The ranks of self-employed workers in Canada are on the rise.

Following several years of little growth, the number of self-employed Canadians has increased 1.7% year-to-date, outpacing the 1.3% rise in paid employment, finds Scotiabank.

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Self-employment is on track to account for about one-quarter of net job creation in 2013, significantly higher than its 15% share of the overall workforce. The recent upswing appears to reflect improving confidence in the economy, rather than weak labour market conditions pushing Canadians into self-employment.

Many factors are contributing to the expansion of a more stable, formalized self-employment sector in Canada. These range from structural (e.g. the outsourcing of corporate business functions to small firms and/or independent contractors), to demographic (e.g. an aging population and continued high levels of immigration) to lifestyle (e.g. the desire for more flexible work hours). At the same time, changes in the taxation and regulatory environment may have encouraged more self-employed workers to incorporate.

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From an industry perspective, the fastest growing areas of self-employment are service-based activities, including finance & real estate, professional & technical services, business services, health care and education. Self-employment also has increased sharply in construction, piggybacking on expanding residential and non-residential building and renovation activity. Meanwhile, traditional small business formation in the retail and manufacturing sectors has lagged amid highly competitive market pressures both domestically and internationally.

Scotiabank expects self-employment will continue to trend higher over the coming year, as global economic uncertainty eases and domestic growth gathers momentum.

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Profile of self-employed workers in Canada

  • There are currently about 2.7 million self-employed individuals in Canada, accounting for 15% of the total workforce.
  • 60% of self-employed workers are owners of unincorporated businesses, including independent workers such as childcare providers. The vast majority (86%) do not employ any paid help. The other roughly 40% are owners of incorporated businesses, with a fairly even split between those with and without employees.
  • Women account for about 36% of Canada’s self-employed.
  • The likelihood of being self-employed increases with age, with one-third of workers aged 65 and over choosing self-employment over paid work compared with less than 10% for those aged 25-34. The majority of self-employed workers are between the ages of 35 and 64.
  • Industries with the largest share of self-employed workers include agriculture, construction, and professional and business services. In absolute numbers, the majority of self-employed work in construction, professional services, retail/wholesale trade and health care.

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