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Research: Immigrant Business Owners in Canada

On March 21, Statistics Canada released its research paper Immigration, Business Ownership and Employment in Canada. A synopsis of the report can be found in its publication The Daily.

Multi-ethnic Group Of StudentsThis study marks the first time that Statistics Canada has released data providing an overview of immigrant business ownership and the associated job creation in Canada. Results are presented for immigrants who entered Canada since 1980 and who were still in the country in 2010.

This article highlights some of the study’s findings and notes some implications for immigrant entrepreneurs and REAPontario.

In summary, according to The Daily,

“Immigrants who have been in Canada for more than 10 years have higher rates of private incorporated business ownership than individuals born in Canada. However, the types of businesses owned by immigrants tend to employ fewer paid workers than those owned by individuals born in Canada, according to a new study.”

The article goes on to specify in greater detail:

“Among immigrant taxfilers who had been in Canada for 10 to 30 years in 2010, about 6% were owners of private incorporated businesses that employed paid workers. This compares with about 5% of Canadian-born taxfilers. But, while immigrant-owned private incorporated businesses employed, on average, about four paid workers, those owned by Canadian-born individuals had about seven paid workers.”

Immigrant entrepreneurs more concentrated in certain sectors

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According to the report, immigrant-owned private incorporated businesses span a wide range of sectors. Just under half (45%) were located in four industries, compared to only one-third of those owned by Canadian-born individuals:

  • professional, scientific and technical services
  • retail trade
  • accommodation and food services
  • transportation and warehousing

In other words, immigrant entrepreneurs are more highly concentrated in the above industries.

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Since firm size differs across industries, the distribution of immigrant-owned businesses does not necessarily reflect their job-creation activity by industry.

Immigrant business owners are only one-fourth as likely to own businesses in Agriculture, forestry, fishing and hunting. Among private incorporated businesses in these sectors, there were 1,760 firms or 1.2% of businesses owned by immigrants, compared to 30,830 firms or 4.8% of businesses owned by the Canadian-born. (Table 6, page 26) In contrast, immigrants had twice the concentration of the Canadian-born in Accommodation and food services (11.1% v. 5.1%).

Business ownership increases with time in Canada

Similar to previous studies released by Statistics Canada on this topic, the data indicated that rates of business ownership increase with time in Canada. They are relatively low among immigrants during first years in Canada, but, eventually the rates surpass those for individuals born in Canada.

This trend holds true for self-employment as well. The rate of unincorporated self-employment was higher among longer-term immigrants (22%) than among individuals born in Canada (16%). Among individuals receiving at least one-half of their total earnings from unincorporated self-employment, these rates were 12% for the longer-term immigrants and 8% for individuals born in Canada. In other words, 10% of longer-term immigrants received at least half their earnings from self-employment, and another 12% of them received a lower portion of income from self-employment. In sum, for many immigrants, self-employment supplements paid work.

Bakeries owner

As with the non-immigrant population, roughly two-thirds of business owners were men and more than two-thirds are between 35 and 54 years of age. No region of origin or education level dominated among business owners.

Not surprisingly, the highest incidence of incorporated business ownership or primary unincorporated self-employment was among immigrants who were principal applicants in the business class. Fully 40% of them either owned an incorporated or unincorporated business, compared to 17% of principal applicants in the economic class, and 15% among family-class immigrants and refugees.

 

Why are immigrant-owned firms smaller?

Very few immigrant-owned private businesses are large, with only 8.9% reporting 10 or more employees, compared with 17.7% of the comparison-group companies.

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There are several possible reasons that immigrant-owned firms tend to be smaller. Some explanations could include:

  • concentration in industries where firms tend to be smaller.
  • firms often take a generation or more to attain a significant size, by which time a firm started by an immigrant would be considered to be owned by a Canadian-born person.
  • Relatively younger than Canadian-owned firms

Among the self-employed, only about 3% have any paid employees; these individuals primarily create jobs for themselves.

Sarah V Wayland

Sarah Wayland, Principal Investigator

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