One conspicuous element in Canada's unsteady and unpredictable employment statistics in recent months has been the prominence of self-employment in the gyrating numbers. A lot of the jobs the country has created lately have involved Canadians working – with varying success – for themselves.
It doesn't say much for the health of Canada's labour market. But it may help explain why the month-to-month job readings have become so moody.
Statistics Canada's latest figures, released last Friday, revealed considerably better-than-expected employment growth of 35,000 net new jobs in January. But that included a jump of 41,000 workers who are self-employed; the number of workers on payrolls of public and private employers actually declined.
It reflects what may be an emerging trend, though not necessarily a healthy one, in Canada's lukewarm labour market. Statistics Canada estimated that nearly 2.8 million Canadians were self-employed in January, a record high. (That's 15.5 per cent of all workers in this country.) Over the past six months, when the Canadian economy has added 94,000 net new jobs, more than half of those (55,000) were self-employed.
Statscan's definition of self-employment includes "both incorporated and unincorporated working owners, self-employed persons who do not have a business and persons working in a family business without pay." In other words, pretty much anyone doing work but not getting a formal paycheque for it, that's a self-employed worker. Heck, if it's a family business, you don't even need to receive any compensation.
Sam Boshra, an independent economist and statistical analyst based in Montreal, has further crunched Statscan's numbers to shed additional light on self-employment. He found that the number of full-time self-employed (a category that includes high-quality professional jobs such as doctors and accountants) has essentially been flat since before the Great Recession, at a little more than two million. But part-time self-employed jobs have surged – to nearly 700,000 in January, up nearly 30 per cent from the end of 2007 (based on seasonally adjusted figures).
Of the roughly 700,000 (unadjusted) new jobs the Canadian economy has added since the end of 2007, more than one-fifth of them have been part-time self-employed. Statscan defines part-time as fewer than 30 hours a week, but in practice, nearly 40 per cent of self-employed part-timers work fewer than 15 hours a week.
This trend should be of particular interest to the Bank of Canada, which has turned its focus toward Canada's nagging underemployment problem as it tries to gauge the strength (or lack thereof) of Canada's economic recovery. Senior deputy governor Carolyn Wilkins gave a speech Tuesday noting that despite the country's apparently healthy unemployment rate and shrinking excess production capacity, the lack of full employment – seen in such factors as stubbornly low average weekly hours worked and nearly a million Canadians who are in part-time jobs but want to work full-time – is strong evidence that the country remains a long way from full speed. She didn't mention the self-employment phenomenon, but it undoubtedly is another piece of the puzzle.
Self-employment is also, by its nature, bound to be susceptible to month-to-month choppiness. As Mr. Boshra noted, contract work comes and goes; depending on the timing of contracts and how a self-employed contractor spreads out the work, in any given month the same self-employed worker can be full-time, part-time or unemployed.
Consider that prior to January's surge in self-employment, the country had seen two other sizable jumps in the self-employed tally in the past year: jumps of 28,000 in June and 33,000 in August. In both cases, the spike upward was fully wiped out – and then some – by even bigger declines the very next month.
(You might remember that the August number was originally reported as a headline-grabbing 87,000 gain in self-employment; the figure was sharply reduced in Statscan's recent census-related revisions to its historical labour data. Even as the data were originally reported, the August spike was followed by a 56,000 tumble back to earth in September.)
If history repeats itself, we can expect Canada to hand back many of January's 41,000 new self-employed jobs in February. The job category may be growing, but it looks unstable and unreliable as a contributor to Canadian employment. It's another sign that traditional employers aren't stepping up – a job segment that has grown more out of necessity than strength.
Editor's note: An earlier version of this column used non-seasonally-adjusted figures. It should have said part-time self-employed jobs have surged – to nearly 700,000 in January, up nearly 30 per cent from the end of 2007 (based on seasonally unadjusted figures). Of the roughly 700,000 (unadjusted) new jobs the Canadian economy has added since the end of 2007, more than one-fifth of them have been part-time self-employed. This version has been corrected.