Archived - Fostering Canada's Entrepreneurial Economy through Smart Labour Standards

Archived Content

Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, please contact us to request an alternate format.

Previous Table of Contents Next

Introduction

The Canadian Federation of Independent Business (CFIB) is a non-partisan, not-for-profit advocacy group representing 105,000 small- and medium-sized enterprise (SME) owners from all sectors and regions of the country. CFIB takes its policy direction from members through regular surveys on the basis of one member, one vote.

This brief consists of three parts: The first describes briefly the important and increasing role played by SMEs in today's economy in terms of economic growth and job creation; the second part outlines briefly some of our members' challenges and concerns in today's fast moving economy; and the third part outlines our members' comments and recommendations with respect to the review of the Canada Labour Code.

I. The SME Sector: Canada's Engine of Economic Growth

The Canadian economy has changed a great deal over the past 40 years since the Canada Labour Code was created. The importance of the SME sector to the Canadian economy has been growing steadily over that period. Whereas the SME sector might have accounted then for roughly one quarter of the Gross National Product (GDP), it now accounts for 43 per cent of the GDP.

Of the approximately 1 million businesses with employees in Canada, over three-quarters employ fewer than five people, and over 97 percent of businesses have less than 50 employees (see figure 1).

"Figure 1 - Majority of businesses in Canada are small
Majority of businesses in Canada are small
Source: Statistics Canada, 1983-1999 Employment Dynamics (2002)

The fact that most of today's workplaces are made up of few employees helps promote better communications between the employer and employees and leads to greater workplace satisfaction as surveys described further below show.

Another important characteristic of the SME sector is its very important role in job creation. A recent study that was commissioned by Industry Canada1 tracked Canadian firms with different sizes and growth characteristics, over a 15-year period. The study showed that a small number of growth firms created about half a million net jobs over that period. Amongst the growth firms, firms with fewer than 100 employees created 661,000 net jobs while firms with 100-499 employees created 184,000 net jobs. Large firms with more than 500 employees shed 348,000 net jobs over the same period. The government, therefore, should not introduce policies that hinder the growth and expansion of these dynamic firms.

I. A. The Self-Employed: Entrepreneurs by Choice

Increasingly, people are choosing self-employment rather than turning to it because of harsh employment conditions, which is still an assumption made by some policy-makers. Today, self- employed individuals represent approximately 15 per cent of total employment in the Canadian economy2. Over the last 15 years, despite a strong labour market, the self-employment sector increased at an annual average rate of 4 per cent3. This comprises one of the fastest growing sectors of our economy. Studies4 have showed that the growing prominence of women entrepreneurs and the increase in the number of firms run by individuals over the age of 55 are the two major factors responsible for the considerable growth in the self-employment sector.

A CIBC study5, released this year, revealed that the number of women choosing self-employment has increased by more than 50 per cent, over the last 15 years. This led the Bank to predict in June 2005 that one million Canadian women will own a small business by 2010. Furthermore, the same CIBC study showed that women entrepreneurs are well educated, and increasingly gravitate in well paying professional occupations. More than eight out of ten women entrepreneurs who were surveyed indicated they had no regrets in pursuing the self-employment route and they would start their own business all over again if given the chance. Even though, on average, self-employed individuals are reported to earn less than their firm-employed counterparts, 80 per cent of them indicate it is worth it because it allows them the flexibility to balance their work and family obligations.

For individuals over the age of 55, who in many cases represent the most skilled and experienced individuals in the economy, the self-employment route has served as a bridging mechanism to retirement. Thanks to factors such as technological progress, older individuals choose the flexibility of working from home in providing their well developed expertise and skills rather than retirement. This trend is sure to continue with the ageing of the Canadian population. Moreover, the role of older self-employed individuals is an invaluable resource in the economy, considering the Canadian economy is currently facing a severe labour shortage. Should the government choose to include self-employed individuals in Part III of the Canada Labour Code, the current flexibility enjoyed by many older self-employed individuals would be curtailed. Consequently, they could choose not to work rather than work part-time as they do when they are self-employed. Subsequently, this would exacerbate the labour shortage and could threaten the overall competitiveness of the Canadian economy.

Self-employed individuals are among the most satisfied individuals when it comes to job satisfaction, as a 1999 joint CFIB-Scotiabank study6 on workplace satisfaction showed. The study found that the most satisfied individuals were those with the greatest degree of autonomy, as almost two-thirds of business owners and the self-employed were very satisfied with their workplace. The next highest number of very satisfied employees was found in small business while public sector employees enjoyed the lowest level of job satisfaction.

Self-employed individuals are among the most satisfied when it comes to their work environment, and they do not want to be included in Part III of the Canada Labour Code. In 2000, a survey of self-employed individuals, conducted in Québec by the firm Léger and Léger7, revealed that 88 per cent of self-employed individuals surveyed were clearly against their inclusion in the Québec Labour Code. Small and medium-sized entrepreneurs also have the same opinion. In June 2005, CFIB surveyed its members as to whether or not self-employed individuals should be covered by the Canada Labour Code. Fully 52 per cent of the 12,000 respondents opposed the idea while 32 per cent were in favour, 14 per cent were undecided and two per cent had no interest (see Figure 2).

Figure 2 - Should the Canada Labour Code be extended to cover self-employed individuals?
Should the Canada Labour Code be extended to cover self-employed individuals?
Source: CFIB Mandate 218 Ballot Results, based on 12,101 responses, June 2005.

Conclusions:

  1. Canada's economy has undergone a great deal of change over the past forty years; our recent economic performance in terms of economic growth and job creation has been unequalled amongst G-7 countries. The Canada Labour code needs to be modernized to reflect that and ensure the economy continues to grow and thrive.
  2. The SME sector is Canada's engine of growth that needs a flexible labour standards framework to thrive in years to come.
  3. The self-employment sector has become a significant contributor to the dynamism of our economy and there are no compelling reasons to make it subject to Part III of the Canada Labour Code.

Previous Table of Contents Next

Footer

Date Modified:
2012-02-15