Understanding the Diverse Landscape of Self-Employment in Canada

Understanding the Diverse Landscape of Self-Employment in Canada: Key Insights from 2023

Self-employment in Canada encompasses a wide range of experiences and circumstances. According to a recent study, “Experiences of self-employed workers in Canada, 2023,” released on June 3, 2024, by Statistics Canada, the landscape of self-employment is both varied and complex. The study, utilizing data from the Labour Force Survey (LFS) and LFS supplements from the fourth quarters of 2022 and 2023, provides an in-depth look at the self-employed population in Canada, highlighting the benefits, risks, and diverse nature of self-employment.

The Size and Scope of Self-Employment

In 2023, an average of 2,652,600 Canadians were self-employed, representing 13.2% of the employed population. This group includes individuals across a broad spectrum of industries, demonstrating the versatility and reach of self-employment in the Canadian economy.

Self-employment offers several attractive benefits, such as the autonomy to be one’s own boss, the potential for higher income, and greater control over one’s work environment and schedule. However, these benefits come with significant risks. Self-employed individuals often face greater financial instability and lack the employment protections typically afforded to salaried workers.

Characteristics of Self-Employed Businesses

The study reveals that a significant majority of self-employed workers in Canada operate small businesses with no employees. In the fourth quarter of 2023, 71.9% of self-employed individuals fell into this category. Among those who did employ others, over two-thirds (68.7%) had five or fewer employees. Additionally, nearly half (46.2%) of self-employed workers ran unincorporated businesses, and most did not have business partners (79.1%) or dedicated business premises (69.0%).

The Prevalence of Gig Work

Gig work continues to be a notable form of self-employment. Characterized by short-term tasks or projects without guaranteed steady work, gig work was the main job for just over a quarter (26.6%) of self-employed Canadians in the fourth quarter of 2023. The study also highlights demographic trends within gig work. Women and youth (aged 15 to 24 years) were more likely to be gig workers, with 41.7% of self-employed youth working in gig roles compared to 26.2% of those aged 25 to 69 years. Furthermore, self-employed immigrant males and workers from racialized groups were also more likely to engage in gig work.

Motivations for Self-Employment

The primary motivation for self-employment among Canadians was the desire for autonomy and control over work hours, wages, and work location, cited by 38.2% of respondents. Other significant reasons included a passion for their work (14.3%), the potential to earn more money than as an employee (11.3%), and the opportunity to work in their field of expertise (9.3%).

Future Plans of Self-Employed Workers

Looking ahead, nearly 30% of self-employed workers planned to expand their businesses over the next 12 months, either with or without hiring additional employees. However, a majority (61.2%) intended to maintain their current business size, while 8.9% planned to downscale or cease operations.

The propensity for business expansion varied based on the structure and size of the business. Self-employed workers with incorporated businesses (37.6%) were significantly more likely to plan for expansion compared to those with unincorporated businesses (22.6%). Similarly, those with employees (38.4%) were more inclined to expand compared to those without employees (26.6%).

What does this all mean?

The “Experiences of self-employed workers in Canada, 2023” study provides valuable insights into the diverse and dynamic nature of self-employment in Canada. While self-employment offers numerous advantages, it also presents unique challenges and risks. Understanding these nuances is crucial for policymakers, business coaches, and financial advisors aiming to support self-employed individuals. For struggling business owners, this study underscores the importance of seeking tailored advice and possibly hiring a business coach to navigate the complexities of self-employment and achieve sustainable growth.