On the surface, Canada’s labour market has made a complete comeback since losing nearly three million jobs at the start of the pandemic, but dig a little deeper, and you’ll see that the recovery hasn’t been for everyone, including self-employed Canadians.
Self-employment in Canada had been growing steadily for several years, but over the course of 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. Now, there are just over 2.6 million.
Some of the losses in self-employment have been made up by gains in paid employment in the same industries, according to Statistics Canada. Those include professional, scientific and technical services.
But in other industries, such as agriculture, construction and services, including personal care, declines in self-employment haven’t been offset.
Richard Dias, founder and head of research at Acorn Macro Consulting in Halifax, blames the drop on government pandemic policies that weren’t tailored to support the success of Canada’s self-employed. These policies include blanket business closures and capacity restrictions, complicated applications for financial support and PPE requirements.
“It favoured giant corporates, who obviously are structured much, much better to navigate difficult situations … versus the humble shopkeeper,” said Dias.
Statistics Canada breaks self-employment into several categories, including people who own an incorporated or unincorporated business, farm or professional practice, or those without a business, such as newspaper carriers or babysitters. Most self-employed Canadians are a business-of-one, but about one-third employ other people.
Dias is also worried about those self-employed Canadians who stretched themselves financially to survive the pandemic.
“After doing all the right things, they burned through their savings,” he said. “There’s no recognition, frankly, of that profound systemic error and the prolonged impacts that it’s going to have on our economy.”
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 it.
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Owner of Pause Beauty Boutique, Michelle Palmer, holds onto hope that she can turn around her business. 1:09
“I’ve encountered the idea and the thought of closure so many times in the last two years, I can’t even count,” said Palmer.
She was forced to close her spa business for 10 months out of the past two years because of public health lockdowns. Despite applying for all the financial help she could, she reopened her doors deep in debt.
“Our debt load is in the six figures right now, and that’s not going to go away overnight.”
Falling through the cracks
Some self-employed Canadians fell through the cracks of government support programs, according to Dan Kelly, the president of the Canadian Federation of Independent Business.
“I’ve talked to thousands of self-employed people who really got almost no support through the COVID emergency,” said Kelly.
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CFIB president Dan Kelly on the need to encourage entrepreneurship post-COVID. 0:30
He says many of them didn’t qualify for programs that their large or medium-sized counterparts did. For example, the Canada Emergency Business Account provided interest-free loans of $40,000, but initially, applicants had to show they had an annual payroll of at least $50,000 in 2019 to access it.
Self-employed workers were eligible to apply for the Canada emergency response benefit (CERB) and its replacement, the Canada recovery benefit (CRB), but Kelly argues the income support was not enough to keep a business going.
Palmer says she was cut off from the personal support programs this year because her 2020 taxes showed she didn’t make the required $5,000 to be eligible for CERB or CRB. That’s because she is a sole proprietor, which means that her business and personal taxes are filed together, and because of the closures, Palmer’s business operated at a loss.
“The message that we’ve sent to entrepreneurs over the last two years has been a pretty negative one,” said Kelly.
The CFIB expects a wave of business closures in 2022 as the federal pandemic support programs wind down.
“I think many business owners will not see a pathway back to profitability,” said Kelly.
Potential new cohort of entrepreneurs
But a new wave of self-employment could be on the horizon. According to a recent survey, 30 per cent of “traditionally employed” Canadians expect to transition to self-employment in the next two years.
The online survey of 3,000 people who work full-time was conducted in August and September of 2021 by data company Dynata for cloud accounting firm Freshbooks. The survey results were balanced against Statistics Canada data on age, gender and industry.
Such a shift to self-employment would be welcome news to the CFIB’s Kelly, who wants to see the group of self-employed Canadians grow — not shrink.
“They are the group that we’re counting on to replace many of the businesses that are now boarded up,” he said. “We’re also counting on them to create jobs for other Canadians.”
Seeking out job security
In the professional, science and technical fields, the trend may be headed in the opposite direction: toward salaried positions, which increased by close to 22 per cent between November 2019 and November 2021. Statistics Canada suggests the rise is a sign a pandemic-related shift to more standard forms of employment may be underway.
Many of those newly hired employees likely want the stability of a salaried position, according to Scotiabank deputy chief economist Brett House.
“It’s not a sign that Canadians are becoming less entrepreneurial. It is a sign that the labour market recovery is continuing and getting firmer,” said House.
Shannon Mulligan, with her two young children, has traded freelancing for a full-time role with a growing tech company. (Tina Mackenzie/CBC)
Copywriter Shannon Mulligan is among that crowd. While freelancing was a lifeline during the pandemic, a position with a tech start-up in Toronto recently won her over.
“Moving from freelance to full-time was not something I was really ready to do, but… it was just an overwhelmingly exciting opportunity,” said Mulligan.
Her new job comes with the flexibility of working from home, something that was more common for freelancers than paid employees pre-pandemic.
“Being able to have that still helped seal the deal for me,” said Mulligan.
Sticking with self-employment
But others aren’t ready to give up their self-employment status just yet.
Despite having thoughts of walking away from Pause Beauty Boutique, Palmer says she hasn’t followed through with it yet because she still loves it despite the stress and the financial cost.
“[Working for myself] is the most empowering thing I’ve ever done … and I am not willing to give that up lightly.”
Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.
“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.
“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.
Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.
Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.
Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.
The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.
As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”
“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.
The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.
Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.
The recall has so far grounded six aircraft, Guérard said on the call.
“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”
Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.
“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.
“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.
“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.
This report by The Canadian Press was first published Sept. 12, 2024.
