A new Statistics Canada study shows COVID-19 significantly altered self-employment patterns in Canada, with more workers abandoning entrepreneurship than entering it during the pandemic.
The study, released Monday, reveals workers were less likely to leave paid employment for self-employment and more likely to exit self-employment once the pandemic hit, according to data spanning 2017 to 2021.
During the pandemic, workers from paid employment showed decreased probability of entering unincorporated self-employment (down 0.7 percentage points) and incorporated business ownership (down 0.4 percentage points) compared with pre-pandemic levels.
The analysis, which examined transition patterns between paid employment and self-employment, identified specific demographic groups that experienced higher rates of transition.
“The largest changes in self-employment flows were observed among women, low-income earners, immigrants, workers aged 24 or younger, those with more than four children and those with a self-employed spouse,” said the report.
Women faced steeper challenges
The pandemic’s impact on self-employment transitions varied notably by gender. Women were more likely than men to exit unincorporated self-employment and return to paid employment during the COVID-19 period, the study found.
This gender disparity may reflect the disproportionate impact of pandemic restrictions on sectors where women entrepreneurs are heavily represented, such as personal services, retail, accommodation and food services.
Immigrants and younger workers hit hardest
Established immigrants showed higher rates of exiting self-employment than Canadian-born workers during the pandemic. The study found immigrant workers generally experienced higher turnover rates in self-employment compared to Canadian-born counterparts.
Workers aged 24 and younger were among the most likely to be pushed out of self-employment during the pandemic. Low-income earners similarly experienced higher rates of exit from entrepreneurial ventures.
Service sectors saw greatest shifts
Industries where workers were most affected by transition patterns included arts, entertainment and recreation, accommodation and food services, and professional, scientific and technical services.
From 2020 to 2021, entry rates into self-employment were highest for workers coming from arts and entertainment (3.60%), other services (3.50%) and professional services (3.43%).
Meanwhile, the highest exit rates from self-employment came from workers in accommodation and food services (2.45%), information and cultural industries (2.32%) and administrative services (2.32%).
The study noted that sectors requiring in-person interaction were especially vulnerable to pandemic disruptions, with limited remote work options likely contributing to higher employment transitions.
The research did not account for the impact of government support programs on employment transitions during this period.
