Taking the plunge

Self-employment is rising in Canada, and that may — or may not — hold a key to revitalizing entrepreneurial activity

A RECENT REPORT from the Business Development Bank of Canada (BDC) is arguing that Canada’s self-employed workforce could be a serious goldmine — if they can be supported in growing from sole proprietorships into small businesses that hire employees.

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Self-employment, the BDC report said, “saw a resurgence in 2024 after a sharp drop during the pandemic,” with an estimated 70,000 new self-employed workers at the end of 2024. “While the ratio of self-employment to total employment remains below historical averages, this increase signifies a notable trend toward self-employment,” the report stated, adding that around two million Canadians are self-employed.

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“We estimate that nearly half of new micro-businesses are launched by self-employed individuals who become entrepreneurs when they hire their first employees,” said BDC chief Pierre Cléroux. “This transition alone could contribute 0.8 per cent to Canada’s GDP.”

The report estimates that if 11 per cent of self-employed workers could transition to entrepreneurship in the next year, it would generate the potential to create 213,000 new businesses and help offset the normal rate of micro-business closures each year. Time is ticking, though: a survey of around 850 self-employed workers revealed the jump to entrepreneurship is most likely to be made in the first few years. “After this time,” the report explained, “the likelihood of becoming an employer drops, and after 15 years, only a few choose to hire employees.”

It is, of course, easy enough to point this out — it’s another thing altogether to help make it happen. Whether or not there is a desire on behalf of self-employed folks to become entrepreneurs is question number one. Rising unemployment, a slack labour market and frustrations with the corporate sector are very likely part of why self-employment has been on the rise, as opposed to more robust enthusiasm for entrepreneurial life.

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Indeed, the BDC’s study found that 35 per cent of self-employed workers sort themselves into the ‘stable’ category — people who have no plans to turn themselves into employers. So, what the report views as missed opportunities might in fact be reflecting some very deliberate choices.

But whatever the reasons, self-employment is on the rise, and the BDC sees in that an opportunity. “Ultimately, fostering self-employment is essential to reviving Canada’s entrepreneurial spirit,” the report said. “By supporting the ambitions of self-employed individuals and facilitating their transition to becoming employers, we can stimulate economic growth and ensure the sustainability of Canada’s entrepreneurial ecosystem.”

If they want to, that is. Kieran Delamont