Canadian Occupational Projection System (COPS)

Industrial Scenario (2017-2026)

Changes in external and domestic drivers of aggregate demand are projected to lead to changes in the pace of growth of industrial output and employment, which in turn affect occupational labour demand over the period 2017-2026. See the Macroeconomic Scenario (2017-2026) for more information.

Historical and Projected Trends in Real GDP, Employment and Productivity by Aggregate Sector

The four aggregate sectors of the economy are the primary, construction, manufacturing and services sectors. The construction sector is covered in the first and last sections of the presentation

Figure 1 presents growth in real gross domestic product (GDP) by aggregate sector over the periods 2007-2016 and 2017-2026. It shows that over the period 2017-2026, real GDP growth is projected to improve markedly in the primary and manufacturing sectors and to remain essentially unchanged in construction and services, leading to faster growth in total GDP relative to the period 2007-2016.

Figure 1: Real GDP Growth by Aggregate Sector

Bar figure showing the average annual percentage growth of the real gross domestic product over the projection periods 2007-2016 and 2017-2026. The data is shown on the table following this figure

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 1: Real GDP Growth by Aggregate Sector

The acceleration projected in total real GDP growth over the period 2017-2026 reflects faster output growth in the primary sector and a solid recovery in manufacturing production. Output growth in construction and services is expected to remain essentially unchanged from the period 2007-2016.

In the primary sector, the acceleration projected in output growth is primarily driven by renewed growth in support activities for oil extraction as energy-related investment is expected to bounce back with the gradual recovery in crude oil prices. Higher production capacity in mining and non-conventional oil extraction and renewed growth in forestry’s output, due to stronger housing activity in the United States, are also expected to contribute to faster real GDP growth in the primary sector.

The projected recovery in manufacturing production is stimulated by stronger growth in foreign demand, particularly from the United States where growth in household consumption and business investment is expected to accelerate due to solid labour market conditions and the need to increase production capacity. The relatively low value of the Canadian dollar and better access to the European market through the Comprehensive Economic Trade Agreement (CETA) are also expected to contribute to faster growth in Canadian exports of manufactured products, although the renegotiation of the North American Free Trade Agreement (NAFTA) represents a downside risk to the outlook.

Output growth in the construction sector is projected to be similar to the past ten years, as stronger growth in non-residential investment is expected to be accompanied by weaker growth in residential investment. Energy-related construction projects are expected to pick up progressively following a period of major investment cutbacks in oil and gas engineering structures, while commercial, industrial and institutional building construction are projected to benefit from stronger growth in non-residential building investment. However, the gradual decline in household formation and further increases in mortgage rates are expected to lower investment in new housing, restraining construction activity in Canada and leaving renovation spending as the only source of growth in residential investment.

Output in the services sector is also projected to increase at the same pace as the past ten years. Growth in output is expected to be primarily driven by business services and health care and by the fact that population aging is expected to increase the share of services and lower the share of goods in consumer spending.

Figure 2 presents employment growth by aggregate sector over the periods 2007-2016 and 2017-2026. It shows that employment growth in Canada is projected to be little changed from the period 2007-2016, as the marginal rebound anticipated in primary and manufacturing jobs is expected to be accompanied by weaker job creation in construction and services.

Figure 2: Employment Growth by Aggregate Sector

Bar figure showing the average annual percentage growth of employment by aggregate sector over the periods 2007-2016 and 2017-2026. The data is shown on the table following this figure

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 2: Employment Growth by Aggregate Sector

Over the period 2017-2026, employment is expected to stabilize in the primary sector, rebound modestly in manufacturing, and keep growing in construction and services, albeit at a much slower pace than during the period 2007-2016. The resulting rate of growth in total employment is projected to average 0.9% annually, compared to 1.0% in the previous ten years.

After contracting significantly from 2007 to 2016, employment in the primary sector is expected to stabilize over the projection period, as a result of faster growth anticipated in real GDP. More specifically, employment is expected to keep growing in mining, oil and gas extraction, partly recover from recent job losses in support activities for mining, oil and gas, and continue to contract in agriculture, fishing and forestry, but not as severely as in the previous ten years. Net job creation for the entire sector is projected to be marginal, averaging 0.1% annually.

The recovery anticipated in manufacturing output is expected to result in modest employment gains after many years of significant declines. Job creation in this sector will continue to be constrained by automation and the desire of manufacturers to improve their competitiveness on foreign and domestic markets in response to increased international competition, particularly from China. Manufacturing employment is projected to advance at an average annual rate of 0.4% over the period 2017-2026, remaining well below its historical peak of 2004.

Employment growth in the construction sector is expected to weaken substantially despite little change anticipated in output growth. Employment in this sector is projected to increase at an average pace of 0.9% annually, down from 2.6% over the period 2007-2016. Weaker job creation in construction reflects a major turnaround in productivity (as illustrated on figure 3).

Employment growth is also projected to weaken in the services sector despite the fact that output growth is expected to remain identical as in the previous ten years. Employment in this sector is projected to increase at an average pace of 1.0% annually, compared to 1.4% over the period 2007-2016. Weaker job creation in services reflects the need to strengthen productivity growth in response to the deceleration anticipated in overall labour force growth. Indeed, with the gradual tightening of the labour market in Canada, employers are expected to replace labour by capital wherever possible.

Figure 3 presents the productivity growth by aggregate sector over the periods 2007-2016 and 2017-2026. It shows that while productivity growth is projected to be little changed in the primary and manufacturing sectors, it is expected to improve significantly in construction and services, resulting in weaker job creation in those two sectors and much faster productivity growth in the overall economy.

Figure 3: Productivity Growth by Aggregate Sector*

Bar figure showing the average annual percentage growth of productivity by aggregate sector over the periods 2007-2016 and 2017-2026. The data is shown on the table following this figure

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections) .
* Note: In this document, the term productivity always refers to labour productivity.

Text version of Figure 3: Productivity Growth by Aggregate Sector

Over the projection period, productivity growth is expected to return to positive territory in construction, accelerate significantly in services, and remain essentially unchanged in the primary and manufacturing sectors. The resulting pace of growth in productivity for the overall economy is projected to be twice as fast as in the previous ten years, primarily stimulated by much stronger growth anticipated in machinery and equipment (M&E) investment, including investment in a wide range of new applications enabled by technological progress.

The primary sector is expected to keep showing the strongest growth in productivity. However, the source of growth is expected to shift from agriculture, forestry and fishing towards mining, oil and gas industries. Indeed, after showing negative growth for several years, productivity in mining, oil and gas industries has started to strengthen significantly in recent years and this trend is expected to amplify over the projection period (see figure 7 for more details on the drivers of productivity growth in the primary industries).

In the manufacturing sector, productivity growth should continue to be driven by automation, as employment in this sector is largely composed of routine tasks that can be increasingly performed by advanced robotics. Other technologies such as augmented reality, 3D printing and Internet of Things (IoT) are also transforming manufacturing operations.

Most of the turnaround anticipated in productivity for the construction sector is projected to come from the residential component. Indeed, population aging is expected to lead to a shift in the composition of housing starts from single-unit homes to multiple-dwellings (apartments and condominiums). Because multiple-dwellings are more capital intensive and require less labour by unit of output, productivity is projected to increase markedly in the construction sector.

In the services sector, the significant acceleration anticipated in productivity growth is driven by rapid advances in digital and cognitive technologies, such as mobile applications, smart systems, machine learning, artificial intelligence and autonomous transport. Those technologies are expected to boost productivity and increase the number of tasks that could potentially be automated across a wide range of occupations, including human-centric jobs or those requesting a higher level of education.

Figure 4 presents the decomposition of real GDP growth into employment and productivity growth by aggregate sector over the projection period. It shows that productivity is projected to account for most of GDP growth in the primary and manufacturing sectors, and about half of GDP growth in the construction and services sectors as well as in the overall economy.

Figure 4: Decomposition of Real GDP Growth by Aggregate Sector, Projections 2017-2026

Bar figure showing the decomposition of real GDP growth by aggregate sector over the projection period of 2017-2026. The data is shown on the table following this figure

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections) .
* Note: In this document, the term productivity always refers to labour productivity.

Text version of Figure 4: Decomposition of Real GDP Growth by Aggregate Sector, Projections 2017-2026

Productivity growth is expected to account for 96% of real GDP growth in the primary sector over the period 2017-2026, compared to 75% in manufacturing, 50% in services and 47% in construction. For the overall economy, this ratio is expected to be 53%.

The large shares of GDP growth attributable to productivity in the primary and manufacturing sectors reflect the fact those two sectors are generally more capital intensive and strongly exposed to international competition and globalization. Productivity allows firms to lower production costs and improve competitiveness on foreign and domestic markets.

Inversely, the lower shares of GDP growth attributable to productivity in the construction and services sectors reflect the fact those two sectors are generally more labour intensive. They are also largely oriented towards the domestic market and less exposed to international competition and import penetration.

Figure 5 presents the distribution of real GDP and employment by aggregate sector. It shows that long-term shifts in the industrial structure of the Canadian economy are projected to continue over the period 2017-2026, albeit at a much slower pace than during the previous two decades.

Figure 5: Distribution of Real GDP and Employment by Aggregate Sector

Two line figures showing the percentage distribution of real GDP over the period 1998-2026 and employment over the period 1990-2026, by aggregate sector . The data is shown on the link following these figures

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections). Shaded area = projections.

Text version of Figure 5: Distribution of Real GDP and Employment by Aggregate Sector

In terms of real GDP and employment, the relative importance of the services sector is expected to increase marginally, with average growth rates in real output and employment slightly exceeding those of the overall economy. By 2026, the services sector is projected to account for 73% of total production and 80% of overall employment.

The remaining three sectors (primary, construction and manufacturing) would account for 27% of total output and 20% of overall employment by the end of the projection period.

The relative importance of the primary sector is projected to increase in terms of production but to decline in terms of employment.

In comparison, the share of the construction sector is projected to contract somewhat in terms of production and to remain unchanged in terms of employment.

The relative importance of the manufacturing sector in production and employment is expected to keep declining, albeit at a much slower pace than the previous ten years. Smaller declines reflect the solid recovery projected in manufacturing output and a modest increase in the number of manufacturing workers.

Table 1 presents the employment level (in thousands) and its distribution by aggregate sector in 1996, 2006, 2016 and 2026. It shows that the sectoral distribution is projected to shift somewhat further towards the services sector, which is expected to account for 88% of total job creation between 2016 and 2026.

Table 1: Employment by Aggregate Sector
(in thousands, percentage share of total employment in brackets)
  1996 2006 2016

2026

(Projection)

Change

2016-2026


Primary

710.3

(5.3%)

681.7

(4.2%)

616.2

(3.4%)

621.1

(3.1%)

+4.9

(0.3%)


Manufacturing

1,924.5

(14.3%)

2,102.2

(12.8%)

1,694.8

(9.4%)

1,753.8

(8.9%)

+59.0

(3.6%)


Construction

711.9

(5.3%)

1,068.5

(6.5%)

1,386.8

(7.7%)

1,518.3

(7.7%)

+131.5

(8.0%)


Services

10,073.9

(75.1%)

12,545.2

(76.5%)

14,383.7

(79.5%)

15,825.4

(80.3%)

+1,441.7

(88.1%)


Total

13,420.1

(100.0%)

16,397.6

(100.0%)

18,081.5

(100.0%)

19,718.7

(100.0%)

+1,637.2

(100.0%)

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

More precisely, Table 1 shows that:

Table 2 presents the top- and bottom-three industries in terms of employment size for years 2006, 2016 and 2026. This table shows that the distribution of employment among the 42 industries covered by COPS is projected to be little changed between 2016 and 2026.

Table 2: Top- and Bottom-Three Industries in Terms of Employment

Figure presenting a table that shows the industries with the largest and smallest number of workers in 2006, 2016 and 2026. The data is shown on the table following this picture

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

Text version of Table 2: Top- and Bottom-Three Industries in Terms of Employment

The three largest employers are projected to remain the same, although the first and second positions are expected to be reversed. Health care is projected to become the largest employer with 2.2 million workers by 2026, surpassing retail trade by 83,000 workers. Construction is expected to remain in third position with 1.5 million workers. With a total of 5.9 million workers by the end of the projection period, those three industries are expected to account for 30% of overall employment.

The smallest employers are also projected to remain unchanged, with fishing, hunting and trapping; forestry and logging; and printing and related activities as the bottom-three industries. By 2026, those three industries are expected to account for only 0.7% of total employment with 51,000 workers in printing and related activities, 47,000 in forestry and logging, and 13,000 in fishing, hunting and trapping.

Projections for Real GDP, Employment and Productivity in the Primary, Manufacturing and Services Industries

Figure 6 presents real GDP and employment growth among the primary industries over the projection period. It shows that support activities for mining, oil and gas are projected to post the strongest growth in real GDP and employment across the primary sector over the period 2017-2026, followed by mining and oil and gas extraction. Employment is expected to keep declining in forestry, agriculture and fishing.

Figure 6: Real GDP and Employment Growth: Primary Industries, Projections 2017-2026

Scatter figure showing the projected average annual percentage growth of the real GDP and employment in the industries of the primary sector over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 6: Real GDP and Employment Growth: Primary Industries, Projections 2017-2026

After being severely affected by major investment cutbacks in the energy sector in recent years due to the sharp decline in crude oil prices, support activities for mining, oil and gas extraction are expected to recover progressively over the projection period, boosting production and employment growth in this industry well above the primary sector average.

In comparison, output and employment growth in mining and in oil and gas extraction is projected to be much more moderate. Most of the growth in output is expected to come from the oil sands and the fact that several mining projects are entering in their production phase. However, conventional oil production is projected to decline slightly, while natural gas production is expected to be dampened by quickly rising production and competition from U.S. producers resulting from shale gas extraction. Job creation in those industries is expected to be constrained by renewed growth in productivity.

Subdued growth projected in fishing and forestry’s output is expected to be accompanied by further declines in employment. After the U.S. housing market recovers, growth in forestry’s output is projected to weaken as demographic factors should dampen the outlook for housing starts in North America. The reduction anticipated in annual allowable cuts (AAC) in several provinces and anaemic growth in the paper manufacturing industry are also expected to weigh on forestry’s output. In the fishing industry, supply constraints resulting from various quotas and moratorium imposed on different fish species are the main factors expected to restrain production. The declines projected in forestry and fishing’s employment reflect additional gains in productivity and the increasing difficulty to attract new workers due to youth out-migration from rural and coastal communities.

Employment in agriculture is also expected to keep declining, although output growth is projected to be in line with the primary sector average, primarily driven by demand for global food consumption and the growing use of biofuels. Difficulties to attract domestic workers due to the seasonal nature of the industry, its rural location, low wages and long hours have resulted in greater utilization of foreign temporary workers in agriculture activities.

Figure 7 presents the decomposition of real GDP growth into employment and productivity growth for the primary industries over the projection period. It shows that productivity is expected to account for the totality of GDP growth in agriculture, forestry and fishing, and most of GDP growth in the three industries related to mining, oil and gas extraction.

Figure 7: Decomposition of Real GDP Growth: Primary Industries, Projections 2017-2026

Bar figure showing the decomposition of real GDP growth among productivity and employment for the primary industries over the projection period. The data is shown on the table following this figure

* Note: The term productivity refers to labour productivity.
Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 7: Decomposition of Real GDP Growth: Primary Industries, Projections 2017-2026

Productivity growth is expected to account for the totality or most of GDP growth in the primary industries over the period 2017-2026.

In agriculture, forestry and fishing, productivity is expected to be driven by further consolidation, mechanization and computerization of operations. Technological innovations include the use of drones to survey crops and land area, dairy cow self-milkers, precision seeding equipment, and nautical and hydraulic lifting equipment.

The development of new wood-based products, such as biofuels, biochemicals and biopolymers, is also expected to increase the value added and boost productivity in the forestry industry.

Productivity in industries related to mining, oil and gas extraction is driven by the fact that the production capacity in oil sands is increasing while becoming less labour intensive and the fact that several mining projects are moving from the construction to the production phase.

Technological innovations are also expected to boost productivity in those industries due to major developments in hydraulic fracturing and horizontal directional drilling techniques, GPS surveying, three-dimensional data maps, airborne technologies, remote-operated equipment, automated loading and transportation systems, robotics and seismic mapping and imaging.

Table 3 presents the projected change in employment for the primary industries over the period 2017-2016. It shows that the three industries related to mining, oil and gas extraction are projected to account for the totality of net job creation in the primary sector.

Table 3: Projected Change in Employment: Primary Industries (in thousands)
Industry
(Ranked)
Employment
in 2016
Employment
in 2026
Average
Annual
Growth
Cumulative
Change

1. Support Activities for Mining/Oil/Gas
93.2 108.2 +1.5% +15.0

2. Mining
79.2 85.6 +0.8% +6.4

3. Oil and Gas Extraction
91.4 97.1 +0.6% +5.7

4. Forestry and Logging
48.1 47.0 -0.2% -1.1

5. Fishing, Hunting and Trapping
14.9 12.7 -1.5% -2.2

6. Agriculture
289.4 270.5 -0.7% -18.9

TOTAL - PRIMARY SECTOR
616.2 621.1 +0.1% +4.9

Sources: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

In the primary sector, employment gains in industries related to mining, oil and gas extraction are projected to be largely offset by additional losses in forestry, fishing and agriculture, resulting in net job creation of only 4,900 between 2016 and 2026.

Support activities for mining, oil and gas are expected to experience the largest gains in employment, up by 15,000, while agriculture is expected to experience the deepest losses, down by 18,900.

Employment in support activities for mining, oil and gas is expected, however, to remain significantly below its historical peak of 2013 (i.e. prior to the oil price shock of 2014).

Figure 8 presents real GDP and employment growth among the manufacturing industries over the projection period. It shows that in aerospace/rail/ship transportation equipment is projected to post the strongest growth in real GDP and employment across the manufacturing sector over the period 2017-2026, followed by plastics/rubber, fabricated metals/machinery, chemicals, and primary metals/mineral products.

Figure 8: Real GDP and Employment Growth: Manufacturing Industries, Projections 2017-2026

Scatter figure showing the projected average annual percentage growth of the real GDP and employment in the industries of the manufacturing sector over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 8: Real GDP and Employment Growth: Manufacturing Industries, Projections 2017-2026

Most of Canada’s manufacturing industries rely on exports and are exposed to international competition. Consequently, global and U.S. economic conditions, exchange rates, trade agreements, import penetration and globalisation strongly influence the performance of those industries.

Aerospace, rail, ship and other transportation equipment is projected to post the strongest growth in output and employment. This industry is expected to benefit from rising global demand for commercial and business aircraft, particularly from the emerging markets. Increased road congestion and environmental concerns are also expected to sustain world demand for transit systems, including rail.

Plastics and rubber products, fabricated metals and machinery, chemical products, and primary metals and minerals products (such as bricks, glass, iron, steel) are also projected to post above average growth in production and employment, partly reflecting stronger investment growth in machinery and equipment (M&E) in North America and additional growth in construction activity.

Paper manufacturing and printing activities are projected to post the weakest growth in output and employment, primarily because the increasing use of electronic media should continue to restrain demand for paper and printed materials. Additional job losses are expected in these two industries.

Production and employment growth in textiles, clothing, leather and furniture as well as in computer, electronic and electrical products is expected to be constrained by the intensification of foreign competition and the shift in production to low-cost producers. Employment is also expected to keep declining in these two industries.

Output and employment growth in wood products are expected to return to positive territory, primarily supported by the ongoing recovery in residential investment in the United States.

In food and beverage products, production and employment growth is projected to be in line with the manufacturing average as healthy growth in foreign demand is expected to offset some of the weakness anticipated in domestic demand due to demographic factors.

Output growth in motor vehicles, trailers and parts is expected to be constrained by foreign competition, notably from Mexican producers who benefit from generous government subsidies and low wage costs. But weak gains anticipated in productivity are expected to result in some job creation.

Figure 9 presents the decomposition of real GDP growth into employment and productivity growth for the manufacturing industries over the projection period. It shows that productivity is expected to account for the totality of GDP growth in four (out of 13) manufacturing industries, and the largest part of GDP growth in most other manufacturing industries, restraining job creation significantly in the sector

Figure 9: Decomposition of Real GDP Growth: Manufacturing Industries, Projections 2017-2026

Bar figure showing the decomposition of real GDP growth among productivity and employment for the manufacturing industries over the projection period. The data is shown on the table following this figure

* Note: The term productivity refers to labour productivity.
Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 9: Decomposition of Real GDP Growth: Manufacturing Industries, Projections 2017-2026 (average annual growth, in percentage)

Productivity growth is expected to account for the totality or the largest part of GDP growth in most manufacturing industries over the period 2017-2026. This reflects the fact that employment in those industries is largely composed of routine tasks that can be increasingly automated with new applications enabled by technological progress. The faster pace of growth anticipated in machinery and equipment (M&E) investment is expected to increase the amount of capital and technology available per worker, boosting productivity.

Some of the most innovative technologies that are expected to transform manufacturing operations and improve productivity over the projection period are:

Motor vehicles, trailers and parts are the only manufacturing industry where productivity is not projected to account for the majority of GDP growth. This situation primarily reflects chronic under-investment over the past several years due to fierce competition from Mexico. NAFTA renegotiations also represent a risk to automakers’ investment and production on Canadian soil over the projection period.

Table 4 presents the projected change in employment for the manufacturing industries over the period 2017-2016. It shows that metal fabrication and machinery along with food and beverage products are expected to account for 60% of net job creation in the manufacturing sector.

Table 4: Projected Change in Employment: Manufacturing Industries (in thousands)
Industry
(Ranked)
Employment
in 2016
Employment
in 2026
Average
Annual
Growth
Cumulative
Change

1. Fabricated Metal Products and Machinery
270.1 291.2 +0.8% +21.1

2. Food and Beverage Products
286.7 300.8 +0.5% +14.1

3. Motor Vehicles, Trailers and Parts
151.7 161.0 +0.6% +9.3

4. Plastics and Rubber Products
91.0 99.9 +0.9% +8.9

5. Aerospace, Rail, Ship and Other Transp. Equip.
84.9 93.4 +1.0% +8.5

6. Primary Metals and Mineral Products
131.1 139.2 +0.6% +8.1

7. Miscellaneous Manufacturing
107.3 114.9 +0.7% +7.6

8. Chemical Products
94.9 101.7 +0.7% +6.8

9. Wood Products
122.2 124.7 +0.2% +2.5

10. Computer, Electronic and Electrical Products
106.6 103.8 -0.3% -2.8

11. Paper Manufacturing
60.2 53.4 -1.2% -6.8

12. Printing and Related Activities
59.2 51.5 -1.4% -7.7

13. Textiles, Clothing, Leather and Furniture
128.9 118.3 -0.9% -10.6

TOTAL - MANUFACTURING SECTOR
1,694.8 1,753.8 +0.3% +59.0

Sources: Statistics Canada (historical data) and ESDC 2017 COPS industrial scenario (projections).

Among the thirteen manufacturing industries, employment is projected to increase in nine industries and decline in four industries, resulting in net job creation of 59,000 in the overall manufacturing sector between 2016 and 2026.

Industries expected to experience the strongest gains in employment (in terms of number) are not necessarily those expected to show the strongest growth rates in employment (in terms of percentage). This is because the size of employment differs significantly across the industrial breakdown, with industries having a much larger number of workers than others.

As a result, fabricated metals and machinery along with food and beverage products are expected to account for 60% of net job creation in the manufacturing sector.

Total employment in the sector is projected, however, to remain well below its historical peak of 2004, with a deficit of about 540,000 jobs by 2026.

Figure 10 presents real GDP and employment growth among the commercial services industries over the projection period. It shows that computer systems design is projected to post the strongest growth in real GDP and employment across commercial services over the period 2017-2026, followed by legal, accounting and consulting services and architectural, engineering, design and R&D services.

Figure 10: Real GDP and Employment Growth: Comercial Services Industries, Projections 2017-2026

Scatter figure showing the projected average annual percentage growth of the real GDP and employment in the industries of the commercial services sector over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 10: Real GDP and Employment Growth: Comercial Services Industries, Projections 2017-2026

Most of Canada’s commercial services industries rely on the domestic market, with consumer spending and business activity as the main drivers of demand for such services. Tourism activity is also a key driver for some specific services (transportation, accommodation, food, entertainment).

Computer systems design and related services are projected to post the strongest growth in output and employment over the period 2017-2026. This industry is expected to benefit from rapid technological innovations and the need for firms across a wide range of sectors to continually upgrade their IT infrastructure to remain competitive. Cyber security, cloud-based platforms, big data, Internet of Things, video game development, virtual and augmented reality, machine learning and artificial intelligence, fintech/insurtech and blockchains represent a multitude of growth opportunities.

Legal, accounting and consulting services and architectural, engineering, design and R&D services are also projected to post above average growth in production and employment, benefiting from the increasing trend in business-to-business outsourcing; growing demand for professional advice on planning, logistics, mergers, acquisitions, environmental regulations and implementation of new technologies; faster growth in non-residential building and engineering construction; and renewed growth in corporate profits, manufacturing production, M&E investment, and R&D spending.

While output growth in most other commercial services is expected to gravitate around the average, employment growth is expected to be more scattered. This implies that productivity growth differs significantly across industries, with those posting above average employment growth being more labour intensive, and those posting below average employment growth being less labour intensive.

For example, retail trade is projected to post among the lowest growth in employment, although growth in output is projected to be close to the average. This means that productivity growth in this industry is expected to be strong (the second strongest across all commercial services industries).

Postal, courier, warehousing and storage services are projected to post the weakest growth in output and employment. Indeed, postal and courier services will continue to be affected by the growing use of e-mail, electronic billing and online advertising. However, the growing demand for parcel delivery and warehousing services resulting from the increased adoption of e-commerce by households and businesses should help to support continued expansion in he industry.

Figure 11 presents the decomposition of real GDP growth into employment and productivity growth for the commercial services industries over the projection period. It shows that productivity is expected to account for a significant part of GDP growth in many commercial services industries. This excludes, however, industries that are more labour intensive such as food services and arts, entertainment and recreation services.

Figure 11: Decomposition of Real GDP Growth: Commercial Services Industries, Projections 2017-2026

Bar figure showing the decomposition of real GDP growth among productivity and employment for the commercial industries over the projection period. The data is shown on the table following this figure

* Note: The term productivity refers to labour productivity.
Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 11: Decomposition of Real GDP Growth: Commercial Services Industries, Projections 2017-2026 (average annual growth, in percentage)

Productivity growth is expected to account for a significant part of GDP growth in many commercial services industries over the period 2017-2026. Because those industries are the largest employers of the Canadian economy, the weaker pace of growth anticipated in the working-age population will force businesses to strengthen productivity and eventually replace labour by capital in response to the gradual tightening of the labour market.

Rapid advances in digital and cognitive technologies are expected to support productivity and alleviate some of the labour market pressures resulting from demographic factors. Major developments in on-line and mobile applications, smart systems, artificial intelligence, machine learning and autonomous transport are expected to increase the number of tasks that could potentially be performed or complemented by technology across a wide range of services occupations, including human-centric jobs or those requesting a higher level of education.

For example, e-commerce, e-banking, and on-line insurance and housing services have improved productivity and restrained labour demand in retail trade and finance, insurance and real estate services over the past decade. This trend is expected to amplify over the projection period with new applications arisen from advanced technologies, such as inventory software, warehouse robotics, automated on-line customer support (chatbots), smart price tags (that can be changed in real time), indoor positioning and detection systems (beacon technology), fintech, insurtech, blockchain transactions, artificial and virtual agents, etc.

The advent of digital platforms supporting the on-demand economy such as Airbnb and Uber, and the growing use of streaming platforms such as Netflix and Spotify, are also transforming the ways services are provided. Those platforms are challenging the traditional ways of delivering services, particularly in the accommodation, transportation and cultural industries.

A number of commercial services industries remain, however, less subject to technological disruptions as they are generally more labour intensive. Food services and arts, entertainment and recreation services are characterized by a large number of human-centric jobs that are unlikely to be performed or complemented by technology. Head cooks, artists and professional athletes are relevant examples.

Table 5 presents the projected change in employment for the commercial services industries over the period 2017-2016. It shows that food services are expected to create the largest number of jobs in commercial services, followed by finance, insurance and real estate (FIRE); legal, accounting and consulting; as well as management, administrative and support services.

Table 5: Projected Change in Employment: Commercial Services Industries (in thousands)
Industry
(Ranked)
Employment
in 2016
Employment
in 2026
Average
Annual
Growth
Cumulative
Change

1. Food Services
1,019.7 1,147.6 +1.2% +127.9

2. Finance, Insurance and Real Estate (FIRE)
1,127.0 1,219.8 +0.8% +92.8

3. Legal, Accounting and Consulting Services
651.5 741.2 +1.3% +89.7

4. Management, Administrative and Other Support
766.4 848.7 +1.0% +82.3

5. Computer Systems Design and Related Services
346.1 418.1 +1.9% +72.0

6. Retail Trade
2,067.8 2,139.0 +0.3% +71.2

7. Wholesale Trade
678.1 735.7 +0.8% +57.6

8. Arts, Entertainment and Recreation
424.3 481.4 +1.3% +57.1

9. Architectural, Engineering, Design, R&D Services
396.1 448.8 +1.3% +52.7

10. Truck and Ground Passenger Transportation
473.3 511.6 +0.8% +38.3

11. Repair, Personal and Household Services
774.9 811.9 +0.5% +37.0

12. Air, Rail, Water and Pipeline Transportation
251.6 280.3 +1.1% +28.7

13. Information, Culture and Telecommunications
358.1 378.6 +0.6% +20.5

14. Accommodation Services
193.0 204.4 +0.6% +11.4

15. Electric, Gas and Water Utilities
137.2 146.8 +0.7% +9.6

16. Postal, Courier, Warehousing, Storage Services
182.5 186.0 +0.2% +3.5

TOTAL - COMMERCIAL SERVICES
9,847.6 10,699.9 +0.8% +852.5

Sources: Statistics Canada (historical data) and ESDC 2017 COPS industrial scenario (projections).

Employment is projected to increase in all sixteen commercial services industries between 2016 and 2026, resulting in the creation of about 853,000 jobs.

Industries expected to experience the strongest gains in employment (in terms of number) are not necessarily those expected to show the strongest growth rates in employment (in terms of percentage). This is because the size of employment differs significantly across the industrial breakdown, with industries having a much larger number of workers than others.

As a result, food services are expected to create the highest number of jobs, followed by finance, insurance and real estate; legal, accounting and consulting services; and management, administrative and other support services. Those four industries alone are projected to account for almost half (46%) of total job creation in commercial services by 2026.

It is also worth noting that the relatively small computer systems design and related services industry is expected to create about the same number of jobs as the very large retail trade industry.

Figure 12 presents real GDP and employment growth among the non-commercial services industries over the projection period. It shows that health care is projected to post the strongest growth in real GDP and employment across non-commercial services over the period 2017-2026, followed by social assistance and elementary and secondary schools.

Figure 12: Real GDP and Employment Growth: Non-Commercial Services Industries, Projections 2017-2026

Scatter figure showing the projected average annual percentage growth of the real GDP and employment in the industries of the non-commercial services sector over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 12: Real GDP and Employment Growth: Non-Comercial Services Industries, Projections 2017-2026

Canada’s non-commercial services industries largely consist of government and para-public services. Such services strongly rely on public finance and demographic factors.

Health care is projected to experience the strongest growth in output and employment over the period 2017-2026, in response to the growing demand from an aging population as many baby-boomers will be entering in their costliest health care years. The commitments of many provinces to reduce wait times for medical care and surgeries are also expected to boost government spending, output and job creation in health care institutions, although labour shortages in high demand occupations represent significant challenges.

Social assistance is also projected to post above average growth in production and employment Continued growth anticipated in youth population (0-17) is expected to result in additional demand for child day-care and family services, while population aging is expected to increase demand for elderly care services and senior citizen centres.

Output and employment growth in elementary and secondary schools is expected to be primarily driven by the faster pace of growth anticipated in population aged 5 to 17. In contrast, demand for post-secondary education is expected to be constrained by the projected decline in population aged 18 to 25, resulting in weaker growth in output and employment for colleges, CEGEPs, vocational schools and universities. That said, the growing demand for higher educated and skilled workers across the economy should continue to push up enrolment rates in post-secondary education.

In public administration, growth in output and employment is projected to be lowered by fiscal constraints. Population aging is expected to erode the federal and provincial tax bases, while simultaneously putting further pressures on the health care system, limiting the ability to expand expenditures in government programs and public administration. In addition to the moderate pace of growth anticipated in output, the need to improve efficiency and productivity growth in the government machinery is expected to restrain job creation in public administration.

Figure 13 presents the decomposition of real GDP growth into employment and productivity growth for the non-commercial services industries over the projection period. It shows that, with the exception of public administration, employment is expected to account for the largest part of GDP growth in non-commercial services, as such activities are generally more labour intensive than most of the goods-producing and commercial services industries.

Figure 13: Decomposition of Real GDP Growth: Non-Commercial Services Industries, Projections 2017-2026

Bar figure showing the decomposition of real GDP growth among productivity and employment for the non-commercial industries over the projection period. The data is shown on the table following this figure

* Note: The term productivity refers to labour productivity.
Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 13: Decomposition of Real GDP Growth: Non-Commercial Services Industries, Projections 2017-2026 (average annual growth, in percentage)

The measurement of output and productivity in non-commercial services also differs from the other sectors of the economy where goods and services are traded and more easily valued in monetary terms. Consequently, the term productivity in the government and para-public sectors is often associated with improved efficiency and effectiveness of an activity.

Nevertheless, productivity (or efficiency) is projected to account for a notable part of GDP growth in most non-commercial services. The weaker pace of growth anticipated in the working-age population, combined with fiscal constraints, will force governments and para-public institutions to improve effectiveness and implement new labour-saving ways of delivering services, particularly in health care where labour shortages are expected to persist.

New models of services delivery include the expansion of the private sector involvement in the provision of health care services, the growing use of home care for terminally ill patients, and the consideration of permitting nurses and pharmacists to perform services that used to be provided by doctors. Technology is also playing an important role in almost all processes, including patient registration, data monitoring, lab tests and self-care tools. Smartphones and tablets are starting to replace conventional monitoring and recording systems, and people are now given the option of undergoing a full consultation in the privacy of their homes. Services are being taken out of hospital walls and integrated with user-friendly accessible devices.

In educational services, productivity (or efficiency) can be influenced by factors such as the ratio of students per teacher, the availability of on-line courses and e-learning applications for post-secondary education, or access to computers in elementary and secondary schools.

In public administration, fiscal challenges are the main factors expected to lead to the creation of more efficient models to improve government program management and public services delivery.

Table 6 presents the projected change in employment for the non-commercial services industries over the period 2017-2016. It shows that health care alone is projected to account for two-thirds of job creation in non-commercial services, followed distantly by elementary and secondary schools and social assistance.

Table 6: Projected Change in Employment: Non-Commercial Services Industries (in thousands)
Industry
(Ranked)
Employment
in 2016
Employment
in 2026
Average
Annual
Growth
Cumulative
Change

1. Health Care
1,835.5 2,215.5 +1.9% +380.0

2. Elementary and Secondary Schools
755.9 830.6 +0.9% +74.7

3. Social Assistance
503.9 575.6 +1.3% +71.7

4. Public Administration
926.9 969.3 +0.4% +42.4

5. Colleges, CEGEPs and Vocational Schools
246.8 255.5 +0.4% +8.7

6. Universities
267.2 275.0 +0.3% +7.9

TOTAL - NON-COMMERCIAL SERVICES
4,536.2 5,121.6 +1.2% +585.4

Sources: Statistics Canada (historical data) and ESDC 2017 COPS industrial scenario (projections).

Employment is projected to increase in all six non-commercial services industries between 2016 and 2026, resulting in the creation of about 585,000 jobs.

Health care is expected to experience the highest growth rate and the largest gains in employment (+380,000), accounting for almost two-thirds of total job creation in non-commercial services.

Elementary and secondary schools and social assistance are expected to be distant followers with the creation of about 75,000 and 72,000 jobs, respectively.

Comparisons of Employment Projections across Industries

Figure 14 presents the industries that are projected to post the strongest growth in employment over the period 2017-2026.

Figure 14: Industries Projected to Post the Strongest Growth in Employment, 2017-2026

Bar figure showing the industries that are projected to post the strongest growth in employment over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 14: Industries Projected to Post the Strongest Growth in Employment, 2017-2026

Most of the industries projected to post the strongest growth in employment (i.e. above 1.0% annually) are also those projected to post the strongest growth in production. Below are some of the key drivers expected to support output and job creation in those industries:

Figure 15 presents the industries that are projected to post average or moderate growth in employment over the period 2017-2026.

Figure 15: Industries Projected to Post Average or Moderate Growth in Employment, 2017-2026

Bar figure showing the industries that are projected to post the strongest growth in employment over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 15: Industries Projected to Post Average or Moderate Growth in Employment, 2017-2026

Most of the industries projected to post average or moderate growth in employment (i.e. between 0.6% and 1.0% annually) are also those projected to post average or moderate growth in production.

This group includes six manufacturing industries and six commercial services industries. It also includes elementary and secondary schools; construction; mining; and oil and gas extraction industries.

In addition to moderate growth in production, job creation in those industries is expected to be restrained by the following factors:

Figure 16 presents the industries that are projected to post the weakest growth or declines in employment over the period 2017-2026.

Figure 16: Industries Projected to Post the Weakest Growth or Declines in Employment, 2017-2026

Bar figure showing the industries that are projected to post the strongest growth in employment over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 16: Industries Projected to Post the Weakest Growth or Declines in Employment, 2017-2026

Most of the industries projected to post the weakest growth or declines in employment (i.e. below 0.5% annually) are also those projected to post the weakest growth in production.

This group is largely composed of manufacturing and non-mineral primary industries that have experienced a stagnation or a declining trend in output and/or employment over the past several years, such as wood products, textiles, clothing, furniture, paper, printing, agriculture, forestry and fishing. Such industries are expected to face similar challenges than those experienced in the last decade, including:

Output and employment growth is also projected to be weak in a number of commercial and non-commercial services industries. The main factors expected to weigh on those industries are:

Figure 17 presents the ten industries that are projected to post the largest increases in employment (in thousands) over the period 2017-2026. It shows that those ten industries alone account for about three quarters of total job creation projected in Canada over the projection period.

Figure 17: Industries Projected to Post the Largest Increases in Employment, 2017-2026

Bar figure showing the industries that are projected to post the strongest growth in employment over the period 2017-2026. The data is shown on the table following this figure

Source: ESDC 2017 COPS industrial scenario (projections).

Text version of Figure 17: Industries Projected to Post the Largest Increases in Employment, 2017-2026

Among the 42 industries covered by COPS, 10 industries account for about three quarters of total job creation projected in Canada over the period 2017-2026.

Future changes in the level of employment by industry can be decomposed in two components:

This means that the ten industries expected to create the largest number of jobs are not necessarily those expected to show the strongest growth rates in employment.

For example, the retail trade industry is expected to create a significant number of jobs, despite the weak rate of growth projected in employment (Figure 16). This simply reflects the large size of this industry relative to other industries. The same arguments apply for construction; finance, insurance and real estate; and elementary and secondary schools which are all expected to post substantial gains in employment, despite moderate growth in employment (Figure 15).

Gender Analysis

For more details on the historical and future performance of the 42 industries covered by COPS, including key drivers of GDP and employment growth, please consult the Industrial Summaries.
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