How do women impact the Canadian economy?
5-minute read
In honour of International Women’s Day, we wanted to highlight and celebrate women's multiple and indispensable roles in the Canadian economy.
Although the Canadian economy has not yet reached full gender equality, significant progress has been made over the past decades. Women are contributing more and more to gains in productivity, consumption, investment, and, ultimately, to improving the well-being of Canadians.
Let’s look into some facts and figures illuminating Canadian women's significant impact on the economy.
Women are a growing force in the labour market
Over the years, women have steadily increased their participation in the Canadian workforce.
While the labour participation rate of women aged 25 to 54 stood at 52.3% in 1976, it reached a record high of 85.7% in September 2023.
The gap in employment rates between men and women also shrunk to its lowest level. The employment rate of core-aged men stood at 87.5%, while it was 81.7% for women in the Fall of 2023. This is a difference of 5.8 percentage points.
Not only has greater women's employment rate helped improve their own financial independence and reduce their risk of poverty, but it also benefited the Canadian economy. Promoting integration into the job market of underrepresented groups provides a greater and more diverse supply of labour to businesses and helps reduce dependency on many costly social programs.
Women are responsible for 75% to 80% of consumer spending through purchasing power or influence (amounting to about $1.2 trillion in 2023).
They make most of the important household spending decisions
Women make up more than half the population but wield far more economic power.
Consumer spending is the driving force behind the country's economic growth, and women are responsible for 75% to 80% of consumer spending through purchasing power or influence (amounting to about $1.2 trillion in 2023). In the household, women are responsible for almost all purchases of home furnishings, vacations and homes, as well as the majority of purchases of automobiles and consumer electronics.
Part of the reason women have so much influence on purchasing decisions is that they continue to perform the majority of unpaid household work, regardless of whether they have children or are married. In Canada, it is estimated that women do 50% more household work than men. This unpaid work is evaluated to be worth close to $490 billion.
Women are paid less and don’t rise as high
Unfortunately, while more and more women work outside the home, they remain underrepresented at the board and management levels. In Canada, women only hold 20% of board of directors and 24% of top executive roles.
Women also continue to earn less than men. For every dollar men earn, women earn 87 cents, on average per hour.
Although women are increasingly participating in the economy and finish university at a higher rate than men, they still don’t appear to have the same access to economic opportunities. This directly impacts their financial security and well-being.
Canada needs more women entrepreneurs
Furthermore, women of all backgrounds are underrepresented among entrepreneurs.
In 2023, 1.2% of women were entrepreneurs while the average for the Canadian population stood at 2.3%. This means Canada would need about 182,000 more women entrepreneurs for the entrepreneurship rate to reach the country’s average and another 185,000 more to reach parity with their male peers.1
In other words, the current number of women entrepreneurs would need to almost triple for the entrepreneurship rate of women to equal that of men in Canada.
The gap between male and female entrepreneurship rates in Canada
Canada is lagging behind our southern neighbour in terms of female business-ownership too. Currently, less than 18% of private sector businesses in Canada are majority-owned by women. Meanwhile, an estimated 40% of all companies are estimated to be women owned in the U.S.
From a funding perspective, even though women-led start-ups generate 10% more cumulative revenue over five years, they don’t get the same financial backing. In fact, since 2016, women-led start-ups have received only 4.4% of venture capital (VC) deals in the U.S. Those companies have garnered only about 2% of all capital invested.2
A missed opportunity
Canada’s economy would benefit from having more women entrepreneurs.
For example, revenues of women-owned businesses grew about four times faster than the national average in 2023 (6.4% vs. 1.7%). These companies are also more innovative, with 30.6% of women-owned businesses reporting implementing at least one type of innovation vs. 27% of men-owned businesses. Women entrepreneurs also tend to focus more on diversity and inclusivity.
There is a reason why this year’s theme for International Women’s Day is “Invest in women: accelerate progress.”
Closing the gender gap does not only benefit women. It is smart economics. Ensuring the full participation of women in the economy would add up to $150 billion to the Canadian economy.
Continuing to progress on gender equality is one way of improving Canada’s economic prosperity, especially in the current context of declining productivity.
We all have a role to play in this. We need to support one another. We need to buy and recommend the products and services of women-owned businesses. We can offer help and mentorship to our women colleagues who are considering starting a business or asking for career advice. And collectively, we can push for more gender equality in hiring, salaries, boards and funding.
We are better and more prosperous when everyone in the economy contributes, and we can all act to make a difference in gender equality.
1 Special tabulations from the Labour Force Survey, BDC calculations.
2 MassChallenge and BCG analysis, 2018