Work for yourself? There are fewer and fewer people like you in Canada – and here’s why
On the surface, the Canadian labor market has made a full comeback since the loss of nearly three million jobs at the start of the pandemic, but dig a little deeper, and you will see that the recovery has not been for all. the world, including the self-employed Canadians.
Self-employment in Canada had been growing steadily for several years, but during the pandemic it fell to its lowest level in more than a decade. There were nearly 2.9 million self-employed Canadians in February 2020. Today, they are just over 2.6 million.
Some of the self-employment losses were offset by gains in paid jobs in the same industries, according to Statistics Canada. These include professional, scientific and technical services.
But in other industries, such as agriculture, construction and services, including personal care, declines in self-employment have not been offset.
Richard Dias, founder and head of research at Acorn Macro Consulting in Halifax, attributes the decline to government pandemic policies that were not designed to support the success of Canada’s self-employed. These policies include general business closures and capacity restrictions, complicated requests for financial support, and PPE requirements.
âThis has favored the giant companies, who are obviously much, much better structured to navigate tough situationsâ¦ compared to the humble trader,â Dias said.
Statistics Canada divides self-employment into several categories, including people who own an incorporated or unincorporated business, a farm or a professional practice, or those who do not have a business, such as newspaper carriers or babysitters. Most self-employed Canadians are sole proprietorships, but about a third employ other people.
Dias is also worried about self-employed Canadians who have gone to great lengths financially to survive the pandemic.
âAfter doing all the right things, they burnt their savings,â he said. “Frankly, this profound systemic error and the prolonged impacts it will have on our economy goes unrecognized.”
Business on the brink
Michelle Palmer has been self-employed for eight years, but the owner of Pause Beauty Boutique in Toronto said the pandemic has made her question herself.
âI’ve encountered the idea and the thought of shutting down so many times over the past two years, I can’t even count,â Palmer said.
She has been forced to shut down her spa business for 10 months out of the past two years due to public health lockdowns. Although she asked for all the financial help she could, she reopened her doors heavily in debt.
“Our debt load is at six figures right now, and it’s not going to go away overnight.”
Fall through the cracks
According to Dan Kelly, president of the Canadian Federation of Independent Business, some self-employed Canadians have fallen through the cracks of government support programs.
âI’ve spoken to thousands of self-employed people who have really received almost no support thanks to the COVID emergency,â Kelly said.
He says many of them did not qualify for the programs their large and medium counterparts had. For example, the Canada Business Emergency Account offered interest-free loans of $ 40,000, but initially applicants had to prove that they had an annual payroll of at least $ 50,000 in 2019 to access them. .
Self-employed people were eligible for the Canada Emergency Response Benefit (ECP) and its replacement, the Canada Stimulus Benefit (CRP), but Kelly argues that the income support was not enough to maintain a business .
Palmer says she was cut from personal support programs this year because her 2020 taxes showed she did not earn the $ 5,000 required to qualify for CERB or CRB. This is because she is a sole proprietor, which means her business and personal taxes are deposited together, and because of the closures, Palmer’s business has operated at a loss.
âThe message we’ve sent to entrepreneurs over the past two years has been pretty negative,â Kelly said.
CFIB expects a wave of business closures in 2022 as federal pandemic support programs end.
âI think a lot of business owners won’t see a path to profitability,â Kelly said.
Potential new cohort of entrepreneurs
But a new wave of self-employment could be on the horizon. According to a recent poll, 30 percent of âtraditionally employedâ Canadians plan to transition to self-employment within the next two years.
The online survey of 3,000 full-time people was conducted in August and September 2021 by data firm Dynata for cloud accounting firm Freshbooks. The survey results were compared to Statistics Canada data on age, sex and industry.
Such a shift towards self-employment would be good news for Kelly of the CFIB, who wants to see the group of self-employed Canadians grow, not shrink.
“This is the group we are counting on to replace many businesses that are now closed,” he said. âWe are also counting on them to create jobs for other Canadians.
In search of job security
In the professional, scientific and technical fields, the trend could be reversed: towards salaried positions, which increased by nearly 22% between November 2019 and November 2021. According to Statistics Canada, this increase is the sign of a pandemic on A shift to more standard forms of employment may be underway.
Many of those new hires likely want the stability of a salaried position, according to Scotiabank deputy chief economist Brett House.
“This is not a sign that Canadians are becoming less enterprising. It is a sign that the labor market recovery is continuing and strengthening,” House said.
One of that crowd is editor Shannon Mulligan. While freelancing was a lifeline during the pandemic, a position at a tech start-up in Toronto recently won her over.
âGoing to freelance full time wasn’t something I was really ready to do, butâ¦ it was just an extremely exciting opportunity,â Mulligan said.
Along with her new job comes the flexibility of working from home, which was more common for freelancers than paid employees before the pandemic.
âBeing able to still have that helped me get the deal done,â Mulligan said.
Stick to self-employment
But others are not yet ready to give up their self-employed status.
Although she had thought to walk away from Pause Beauty Boutique, Palmer says she has yet to follow through because she still loves it despite the stress and the financial cost.
“[Working for myself] is the most empowering thing I have ever doneâ¦ and I’m not ready to give up on that lightly. “