Trends in self-employment

According to an article in Perspectives called "The renaissance of self-employment" (Statistics Canada, Summer 1993), self-employment was a major form of employment when agriculture was the dominant industry in Canada. It has decreased dramatically along with the decline of the agricultural sector. However, in the last two decades this trend has reversed due to growth of self-employment in some industries. In 1971, 540,000 workers were self-employed; in 1991, the number was 1, 109,000, reflecting a growth that outpaced that of paid workers (105% vs. 70%). The rate of growth was similar to that of overall employment in the 1970s, but was much higher in the 1980s. In the latter decade, the increase in self-employment occurred mainly in such areas as personal services (self-employment accounted for 25.6% of overall employment in the sector in 1991), special trade contractors (22%), services to business management (20.1%), miscellaneous services (17.4%), general contractors (16.4%), amusement and recreation (13.3%), and insurance agencies and real estate (11.4%). Overall, self employment accounted for 8.4% of total employment.

Among the hypotheses explaining the rise in self-employment, three are worth mentioning because they relate to transitions into employment:

• Industrial restructuring in the economy favors the production of services, a process that generally requires less investment in capital and more in skills and knowledge, thereby opening more opportunities to more people.
  
  
• The aging and rising education level of the workforce produces more skilled and experienced workers willing to risk self-employment.
  
  
• Difficult economic times force people into self-employment because they have no other option.