Entrepreneurial activity in Canada has not recovered from the impact of
the recession. Only 0.23% of the Canadian workforce started a new
business that hired employees in 2011-far less than before the
recession and the second-lowest rate in 12 years.
Ontario, British Columbia and Quebec have seen slight to modest
recoveries in entrepreneurial activity since the recession, but the
Prairies and the Atlantic provinces are still struggling with a
significant and continuing decline in entrepreneurship. British
Columbia is the most entrepreneurial province in the country, even
Canadians aged 45 and up have dived into entrepreneurship. Those aged 45
to 54 have seen their index shoot up from 0.18% in 2008 to 0.27% last
year, while people 55 years old and more have gone from 0.09% in 2008
to 0.17% in 2011.
Immigrants are highly entrepreneurial, with 0.35% starting new
businesses that created jobs in 2011-nearly double the 0.20% rate of
MONTREAL, Oct. 2, 2012 /CNW Telbec/ - Canadians remain reluctant to
start new businesses, with new entrepreneurial activity still barely
above the worst levels seen during the recession, according to a new
study by the Business Development Bank of Canada (BDC).
Slightly over 43,000 Canadians started a new business that hired
employees in 2011—or 0.23% of the almost 19-million-strong Canadian
workforce. That's only a slight increase from the 2009 recession low
point of 0.22%. Last year's rate was also well below the 2005
pre-recession high of 0.30%.
The study is the first to use BDC's newly created Index of New
Entrepreneurial Activity ("The BDC Index"), which measures the rate at
which Canadians are launching new job-creating business ventures across
the country. The study will be prepared annually by BDC's Research and
Market Intelligence group.
"This study is important because it gives us our first health check-up
for Canadian entrepreneurship," says Pierre Cléroux, BDC's Vice
President, Research and Chief Economist. "The slow economic recovery
appears to have discouraged risk-taking on new business ventures. This
is a concern because entrepreneurship is an indicator of economic
dynamism, creates jobs and drives innovation."
BDC's study also found:
The BDC Index is still at a much lower level than before the recession
British Columbia, Quebec and Ontario have seen the country's best
recovery in entrepreneurship, with a BDC Index in 2011 of 0.27%, 0.23%
and 0.22% respectively.
The Prairies and Atlantic provinces are still struggling to reverse
their declines in new entrepreneurial activity. In 2011, the BDC Index
for the Prairies stood at 0.22%—an all-time low. In the Atlantic
region, the BDC Index was 0.23% in 2011, tied with the region's
previous all-time worst year in 2007.
Entrepreneurship has started to recover in three of the six industry
sectors studied. Recoveries have occurred in the trade sector (0.21% in
2011); health care and social assistance (0.24% in 2011); and
professional services (0.38% in 2011).
Construction, the sector with the highest rate of entrepreneurship, has
yet to rebound, though there are signs the decline may be over. The
sector had an index of 0.49% in 2010 and 2011, down from 0.62% in 2008.
Two other sectors continue to decline: accommodation and food services
(with an index of 0.42% in 2011), as well as manufacturing from a high
of 0.10% in 2009.
Canadian women are far less likely than men to start a new job-creating
business, with 0.14% of women doing so last year—less than half of the
0.31% rate for men.
Canadians aged 25 to 44 were the most likely age group to start a new
business with employees in 2011, with a BDC Index of 0.28%. But that
figure has declined sharply since peaking at 0.40% in 2006. Meanwhile,
the baby-boomers aged 45 to 54 have seen their index shoot up from
0.18% in 2008 to 0.27% last year, while people 55 years old and more
have gone from 0.09% in 2008 to 0.17% in 2011.
"We expected the level of new entrepreneurial activity to be stronger
because the fundamentals of the Canadian economy are solid; there are
still many opportunities to be mined out there," added Mr. Cléroux.
For detailed study findings consult BDC's "Analysis and research" section.
About the BDC Index of New Entrepreneurial Activity ("The BDC Index")
The BDC Index of New Entrepreneurial Activity ("The BDC Index") was
developed to measure the rate at which Canadians are launching new
job-creating businesses nationally, regionally and in various
subpopulations and to provide a baseline for future trends. It provides
current information on where the greatest entrepreneurial dynamism
resides in the country, and the characteristics of new entrepreneurs.
The BDC Index is calculated by measuring the number of people who
became independent workers with employees in the past 12 months as a
portion of the total labour force, using Statistics Canada's monthly
Labour Force Survey.
Canada's business development bank, BDC puts entrepreneurs first. With
almost 2,000 employees and more than 100 business centres across the
country, BDC offers financing, subordinate financing, venture capital,
securitization and consulting services to more than 28,000 small and
medium-sized companies. Their success is vital to Canada's economic
Image with caption: "2000 to 2011 Trend in new entrepreneurial activity in Canada (CNW Group/BUSINESS DEVELOPMENT BANK OF CANADA)". Image available at: http://photos.newswire.ca/images/download/20121002_C3316_PHOTO_EN_18728.jpg
SOURCE: BUSINESS DEVELOPMENT BANK OF CANADA
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Senior Advisor, Public Relations