This sector accounts for 75% of Canadian jobs and 78% of the country’s GDP. The sector includes the following sectors; transportation, economic, health care, construction, banking, communication, retail, tourism and government. As a vital part of the Canadian economy, the most popular sector is retail with some big franchise names including Walmart and Future Shop.
In recent years, the financial services, real estate and communications industries have grown exponentially, especially in the business hubs of Vancouver, Montreal and Toronto.
Known as “Hollywood North”, Canada has become a powerhouse of international and local films, with many American film studios choosing to move their sets here.
Services play a key role in economies around the world and Canada is no exception. Gradually, the proportion of our economy stemming from services has been increasing, from 65% in 2004 to 69% in 2013. The gross domestic product (GDP) of service industries in 2013 totalled $714 billion—almost double the amount in 2001.
The economy is divided into two sectors: the goods-producing sector, which makes tangible products, and the services-producing sector, which is essentially everything else. Services comprises a diverse range of activities, including high-tech and knowledge-intensive jobs, as well as low-skill, labour-intensive jobs—everything from software developer to fast food server.
Services tend to concentrate in CMAs
Census metropolitan areas (CMAs) have a large concentration of service jobs, at 78% of total employment in 2013, compared with 68% elsewhere. Throughout the 1990s, almost all CMAs became more service-oriented.
The largest concentrations of service employment in 2013 were in St. John’s, Ottawa−Gatineau, Halifax, Victoria, Regina and Québec all of which had over 85% of their work forces employed in service-related jobs.
Much of the growth in services employment can be attributed to job creation in professional, scientific and technical services (mainly business services). This was especially the case in Canada’s five most populous CMAs (Toronto, Montréal, Vancouver, Ottawa−Gatineau and Calgary), where 280,000 such jobs were created from 2010 to 2014. This job growth accounted for 11% of the total increase in all service jobs in Canada over this period.
Professional, scientific and technical services are becoming an increasingly important industry in the Canadian economy. From 1994 to 2003, their share of total GDP increased from 3.0% to 4.5%. Most of this growth took place from 1996 to 2000, primarily in a few key industries. Notably, computer systems design and related services turned in the fastest growth, increasing its share of GDP from 0.6% in 1997 to 1.1% by 2003.
Firms in the ‘other professional, scientific and technical services’ industry specialized design services, management and other technical consulting, research and development services and other scientific and technical services grew their share of GDP from 0.7% in 1997 to 1.0% in 2003. By contrast, architectural and engineering services remained fairly constant at 1.1% of GDP in 1997 and 1.0% of GDP in 2003. The rest of the professional, scientific and technical services industry legal services, accounting, tax and bookkeeping services and advertising services accounted for 1.3% to 1.4% of GDP during the same period.
Service Industries Aiding Canada’s Economy
With service-sector job growth up two per cent in December from a year ago, it’s the biggest annual increase since early 2013. The largest annual gains were in the cultural and recreational industry, while the biggest month-over-month increase was in professional and technical services.
And the trend has been building. Over the past five years, all but a fraction of new jobs were created in the service sector, with health care and social services—otherwise known as the business of taking care of old people being the biggest driver so far. What gains there have been in the goods-producing sector of the economy were overwhelming concentrated in the construction industry.
What’s more, the job market gap between the goods and services sectors doesn’t break down along the same regional lines that have led to imbalances in the Canadian economy over the last decade or so. In manufacturing-heavy Ontario, the goods sector added just 5,000 new positions last year, while services added 76,000. Meanwhile in Alberta, jobs in the goods sector fell by 53,000, while the services sector added 34,000 not enough to make the province a net job creator, but certainly proving that Alberta’s economy is more diversified than just oil and gas jobs.
It’s true that the wages of many of the new service jobs being created don’t always match the goods-sector jobs that have been lost. Wholesale and retail trade was the third-biggest driver of employment last year, yet those are not high-wage jobs, and certainly don’t come close to replacing high-paying positions in the oil and gas sector. On the other hand, the average hourly wage in the health care and social assistance sector last year’s biggest jobs winner was higher than in manufacturing.