Self-Employed Slump Signals Slowdown

October 24, 2001 ( - Offering further proof of the economic slowdown, the number of self-employed in Canada has leveled off after plummeting by more than 200,000 in the 18 months beginning January 2000, a study by the Canadian Imperial Bank of Commerce (CIBC) finds.

A fall in the number of the self-employed generally occurs during the peak of the business cycle, as people who had been forced into self-employment by payroll cuts are successful in finding salaried positions, according to the CIBC.

Findings supported this conclusion, results of the study revealing that one-person operations accounted for almost all of the change.

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Reversal of Fortune

The study, Trends in Small Business, which reviews issues affecting small businesses in a slowing economy, also anticipates an increase in self-employment in the coming months as this trend reverses.

The survey also showed that since early 2000, the drop among self-employed women has been sharper than that of men, with the trend reversing in recent months.

Small World

Sharp regional differences were observed, for example, the number of very small firms jumped more than 5% in Alberta but declined by about 1% in British Columbia and the Atlantic provinces.

Not surprisingly, the number of businesses in large urban centers has risen faster than that of small cities and rural areas. Cities with the best record of business formation include:

  • Calgary, with the most new businesses employing between one and four employees,
  • Oshawa, with the most new firms hiring between five and nine workers, and
  • Saint John, in both the 10 and 19 employees and 20 to 49 employees categories

Shapes and Sizes

A shift in the distribution of growth in small business formation was also observed, with the increase in the number of very small businesses slowing and the growth in the number of larger firms accelerating.

Overall, business formations grew 2% among firms with 10 to 19 employees and over 5% for those with 20 to 49 employees.

– Camilla Klein