Canadian Entrepreneurship in Sharp Decline, Warns Think Tank
A free-market think tank is sounding the alarm about a significant decline in private sector entrepreneurship across Canada, attributing the trend to burdensome regulations, high taxes, and government policies that stifle innovation.
Alarming Statistics on Business Ownership
The Montreal Economic Institute's report reveals that the number of self-employed Canadians with paid employees peaked at approximately 867,000 in 2005. By 2025, this figure had plummeted to 716,000, marking a 17 percent decline. This drop occurred despite Canada's population growing by roughly one-third during the same period.
Self-employment accounted for about 16 percent of total employment in Canada at the start of the 2000s but had fallen to 11 percent by 2025, indicating a substantial shift away from entrepreneurial ventures.
Government Policies Blamed for the Decline
Charles Lammam, Senior Fellow at MEI and the report's primary author, noted that the decline in job creators has accelerated over the past decade, largely due to unfavorable government policies. "I think it has to do with a change in public policy where you have more hostility toward entrepreneurs," Lammam stated.
He pointed to the Trudeau government's tax hikes on top earners and the massive expansion of the federal public service as factors that diverted talent away from the private sector. Additionally, controversial changes to small business tax rules proposed in 2017 by then Finance Minister Bill Morneau created uncertainty, even though the proposals were ultimately abandoned.
The Burden of Red Tape and Compliance Costs
The report highlights that the average Canadian business owner loses 32 working days each year to red tape, with annual compliance costs exceeding $10,200 per employee. Lammam emphasized that a "steady but marked growth in regulations" has made it increasingly difficult to launch and expand businesses in Canada.
"It's become an enormous burden for entrepreneurs to start businesses, hire people and expand in Canada," Lammam remarked, underscoring the challenges faced by small business owners.
Aging Population and Future Outlook
Lammam also noted that some of the decline in entrepreneurship can be attributed to Canada's aging population, as people typically start businesses in their 30s and 40s. While he expressed optimism about the Carney government's more business-friendly tone, he expressed concern over its focus on government-led initiatives rather than supporting grassroots entrepreneurship.
"A lot of the discussion so far has been around big projects, which are obviously important... but there's really been nothing meaningful put forward to help drive entrepreneurship," Lammam concluded, calling for policy changes to revive Canada's entrepreneurial spirit.
