Ottawa neglects self-employed workers by not ensuring they have access to business programs and incentives, according to a new alliance of self-employed workers.
“Self employed folks are not being represented” by trade associations and chambers of commerce that help set government business policies, said Nancy Wilson, CEO of the Canadian Women’s Chamber of Commerce. The Women’s Chamber of Commerce is one of 12 members of the new Economic Equity Alliance, which also includes the Canadian Labour Congress and the Canadian Freelance Union.
Self-employed workers — who earn income through a business without employees — accounted for 10 per cent of total employment in Canada in 2021, the most recent data available.
According to 2023 Statistics Canada data, 25 per cent of self-employed workers are racialized people and 37 per cent are female. Racialized groups are disproportionately represented in self-employment, with 48 per cent of Black and more than 65 per cent of Indigenous entrepreneurs being self-employed.
The lack of policy support for self-employed workers has increased gender and racial disparities in the workforce, says Judy Rebick, who co-authored the alliance’s new report.
Rebick hopes the new alliance “can form a political force in the country representing this… diverse group of people that the government has been ignoring for decades.”
‘Short end of the stick’
The majority of business policies are crafted to support businesses with employees, says Wilson. Self-employed people “are certainly hampered by the fact that small business policies have left them out.” They “are getting the short end of the stick.”
More than 80 per cent of female entrepreneurs are self-employed, meaning they don’t employ other workers, according to the Women Entrepreneurship Knowledge Hub, a national network that advocates for female entrepreneurs.
A lot of self-employed women earn less than $50,000 a year, said Wendy Cukier, founder and academic director of the Ted Rogers School of Management’s Diversity Institute at the Toronto Metropolitan University. This matters because many government grants and other funding opportunities require businesses to have higher income to be eligible for funding.
When self-employed workers make less than $50,000, it often means their job is a side hustle, Cukier says. In her experience, female self-entrepreneurs often veer towards work that affords flexibility to fit family needs, while men opt for all-or-nothing initiatives like tech or manufacturing.
Self-employed workers can also struggle to access other programs, such as health benefits and pension plans. They may neglect to opt into programs such as Employment Insurance, which would make them eligible for benefits like parental, caregiver and sick leave.
Learning about how to pay into benefits is a learning curve for many entrepreneurs. Workshops are key for self-employed workers to know how to manage their business, said Aki Tchitacov, executive director at YES, a non-profit that promotes entrepreneurship skill development in Quebec.
Many professional artists sign onto workshops, such as learning how to file taxes, or one-on-one sessions to develop the business side of being a self-employed artist.
“They’re artists by nature and being an artist by nature means that… [their] skills are around [their] art, and the business part of it is just a foreign universe,” said Tchitacov.
Self-employed workers also said the Canada Revenue Agency needs better training on how to give them advice on filing taxes.
“Every time I’ve had an issue with [Canada Revenue Agency], and I call in, it’s a nightmare,” a filmmaker and part-time farmer is quoted as saying in the alliance’s report. “I spent so much time explaining my situation as a sole proprietor, and I get passed around and every time… They’re like, where’s your T4? I’m like, I don’t have one.”
‘Employers of one’
Focus groups of self-employed workers involved in the alliance’s report recommended projects to support growing their businesses. One example is the “Cross the Chasm Fund,” where self-employed workers receive 50 per cent of the funds necessary to pay a first employee for up to six months.
Micro-loans of up to $50,000 are available under the Women Entrepreneurship Strategy, a federal program to help women access funding and networking opportunities. Small loans are key to helping businesses develop, according to a report co-authored by Cukier for the Women Entrepreneurship Knowledge Hub.
“We are continuing to advocate for our startup funds in the under $5,000 range because we know that more than half of businesses start with less than $5,000,” said Cukier.
The alliance supports the expansion of Ottawa’s pharmacare and dental care plan to ensure self-employed workers are covered for health costs that may otherwise need to be covered by a private plan. Both programs may also make it easier for self-employed workers to bring on employees, as employees may not need the employer to provide a comprehensive benefits package.
Women and Black entrepreneurs are underrepresented among small businesses with employees. Of firms with one to 99 employees, only 18 per cent are owned by women and a small percentage are Black.
“It’s that kind of gender gap that really starts to widen when you hit employer status,” said Rebick.
But self-employed people are important regardless of their plans to upscale their business.
“Self-employed folks, regardless of their intent to grow, are valuable, they contribute to the economy,” said Wilson. “They deserve policy support, regardless of their intentions.”
