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Impact of COVID-19 on businesses majority-owned by various sub-population groups and visible minorities, third quarter of 2021

September 19, 2021

By Statistics Canada

The COVID-19 pandemic continues to impact Canadians in different communities in numerous ways. Real gross domestic product (GDP) expanded 0.7% in June, following two consecutive monthly declines, placing total economic activity 1.5% below February 2020’s pre-pandemic level.Note Growth in retail trade and accommodation and food services were influenced by the easing of public health measures in many provinces in June.

While all businesses in Canada have been impacted by the COVID-19 pandemic, different types of businesses have been impacted in different ways. This is also true for different communities that operate businesses in Canada.

Over a full year has passed since Canada felt the impact of the COVID-19 pandemic and as the recovery unfolds, Statistics Canada continues to report on its impacts on specific populations within Canada. From the beginning of July to early August, Statistics Canada conducted the Canadian Survey on Business Conditions to better understand the ongoing effects of the pandemic on businesses and business expectations moving forward. This article provides insights on those expectations.

This article explores results from the Canadian Survey on Business Conditions by looking at the businesses majority-owned by women, First Nations, Métis or Inuit persons, immigrants to Canada and visible minorities.  In the third quarter 2021, differences were noted in various areas, such as long term optimism, in addition to obstacles such as rising input costs, increasing selling prices of goods and services, recruiting and retaining skilled employees and shortage of labour. Results for businesses majority-owned by First Nations, Métis or Inuit persons as well as businesses majority-owned by women reported a similar proportion of positive optimism over the upcoming year to all private sector businesses. Businesses majority-owned by immigrants and visible minorities were less likely to be optimistic than all private sector businesses.

Future outlook of businesses majority-owned by women have a positive future outlook

Businesses majority-owned by women accounted for 15.6% of all small and medium enterprises (SMEs) in 2017. Women-owned businesses were more prevalent in service industries such as retail trade (24.3%) and accommodation and food services (19.9%).Note

Over three-quarters of businesses majority-owned by women (76.7%) indicated that they have an optimistic future outlook over the next 12 months, up from just over two-thirds in the second quarter (68.3%). These businesses were as likely as all private sector businesses (74.8%) to be optimistic over the next 12 months. Businesses majority-owned by women were more likely to expect increases in their sales of goods and services (24.5%) and number of employees (18.6%) than all private sector businesses (21.3% and 14.5% respectively). In comparison, businesses majority-owned by women in the second quarter were less likely to expect increases in their sales of goods in services (16.3%) and number of employees (11.7%) than all private sector businesses (19.6% and 12.4% respectively).

Businesses majority-owned by women (53.5%) were as likely as all private sector businesses (55.8%) to report being able to take on more debt. Additionally, businesses majority-owned by women (53.7%) were as likely as all private sector businesses (53.0%) to report being able to operate for 12 months or more at their current level of revenue and expenditures before considering closure or bankruptcy. For comparison, in the second quarter, about two-thirds of both businesses majority-owned by women (66.9%) and all private sector businesses (67.8%) believed the same.

Over one-third (37.0%) of businesses majority-owned by women expect to face challenges in recruiting skilled employees, slightly higher than all private sector businesses (34.6%). Nearly one-third (32.5%) of businesses owned by women expect the rising costs of inputs to be an obstacle compared to nearly two-fifths of all private sector businesses (39.9%) in the third quarter. This trend held from second quarter to third quarter where businesses majority-owned by women were also less likely (32.7%) to consider rising costs of inputs to be an obstacle to their business as all private sector businesses (39.1%).

Businesses majority-owned by immigrants to Canada less likely to have a positive future outlook

Immigrants to Canada constituted over one-fifth (21.9%) of the population in Canada. Note Immigrants to Canada are the primary decision makers for approximately 25.0% of SMEs in Canada, a proportion that has been rising over the past decade.Note This section presents results on individuals born outside of Canada who run businesses in Canada.

Businesses majority-owned by immigrants to Canada were less likely (67.8%) to indicate having a positive future outlook over the next 12 months than all private sector businesses (74.8%).

Over two-fifths (44.1%) of businesses majority-owned by immigrants to Canada reported they could continue to operate for 12 months or more at current revenue and expense levels before considering closure or bankruptcy. In contrast, more than half (53.0%) of all private sector businesses reported they could do the same. Businesses majority-owned by immigrants were less likely (49.9%) to be able to take on more debt than all private sector businesses (55.8%).

Businesses majority-owned by immigrants to Canada reported that they were less likely to expect to face obstacles such as recruiting skilled employees (27.5%), shortage of labour force (25.2%) and retaining skilled employees (22.1%).  In contrast, private sector businesses are more likely to expect rising costs of inputs (39.9%), recruiting skilled employees (34.6%) and shortage of labour force (30.8%) to be obstacles.

Over the next three months, businesses majority-owned by immigrants were less likely than all private sector businesses to expect increases in sales of goods and services offered (18.5%), number of employees (13.6%) and profitability (12.3%).  More than two-fifths (42.7%) of businesses majority-owned by immigrants expect to see an increase in operating expenses over the next three months, compared with 38.2% of all private sector businesses.

Businesses majority-owned by visible minorities less likely to be optimistic

According to the 2016 census, close to one-quarter (22.3%) of the Canadian population were visible minorities. In 2017, nearly one-eighth (12.3%) of SMEs were majority-owned by visible minorities. This proportion has remained relatively the same between 2007 and 2017.Note For the purposes of the Canadian Survey on Business Conditions, visible minorities are defined as individuals, other than Indigenous persons, who self-identified as non-white in colour or race, regardless of place of birth.

Businesses majority-owned by visible minorities were less likely to indicate being optimistic about their future over the next 12 months (64.3%) compared to all private sector businesses (74.8%). These findings are relatively unchanged from the second quarter.

Businesses majority-owned by visible minorities were less likely than all private sector businesses to be able to continue to operate at current revenue and expense levels for 12 months or longer before considering laying off staff (36.9%) or considering closure or bankruptcy (45.3%). Over two-fifths (43.5%) of businesses majority-owned by visible minorities could take on more debt compared with 55.8% of all private sector businesses.

Over the next three months, rising costs of inputs (44.1%) and retaining skilled employees (27.5%) were more likely to be obstacles for businesses majority-owned by visible minorities compared with all private sector businesses (39.9% and 24.5% respectively). Businesses majority-owned by visible minorities are more likely to expect increases in the demand for their products and services (24.3%), sales of goods and services (22.5%) and number of employees (15.6%), than all private sector businesses (23.2%, 21.3% and 14.5% respectively).

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