By Hayatullah Amanat, CTVNews.ca Staff Writer
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REGINA (CTV Network) – Canada’s underground economy is estimated to be worth $68.5 billion in 2021, accounting for 2.7 per cent of total GDP, according to a Statistics Canada report.
The report shows that the shadow economy recorded significant growth of 4.8 percent in real terms in 2021, largely due to an 18 percent increase in shadow economy activity related to investments in residential structures.
In contrast, the shadow economy recorded a decline of 4.5 percent in 2020, mainly due to lower shadow economy activity in household consumption expenditure, which fell by 8.4 percent.
According to the report, the shadow economy consists of market-based economic activities, whether legal or illegal, that evade measurement due to their hidden, illegal or informal nature.
StatCan excluded some illegal activities in the report, such as those related to drugs (other than cannabis) and prostitution.
HOUSING CONSTRUCTION TAKES THE LEAD IN CANADA’S UNDERGROUND ECONOMY The StatCan report shows that the residential construction industry played a significant role in the underground economy in 2021, contributing 35.0 per cent or $23.9 billion, making it the largest contributor.
Real estate landlords come in second place with 12.7 percent, followed by retail with 10.5 percent and the accommodation and catering industry with 7.3 percent.
According to the report, these four industries together accounted for approximately two-thirds of all illicit economic activity in Canada.
The report highlights that underground economic activity in housing construction recorded an increase of 32.8 percent in 2021. This represents a 31.3 percent increase in business investment in residential structures across the economy.
In 2021, nearly 45 percent of unreported income, totaling $30.6 billion, went to workers as wages. This represented about 2.4 percent of total employee compensation in the economy. Meanwhile, registered entrepreneurs received about 30 percent and unregistered entrepreneurs about 24 percent of the remaining underground income.
The StatCan report found that the shadow economy related to household spending was $38.3 billion in 2021. More than a quarter (26.3 percent) of this came from purchases of alcohol, tobacco and cannabis, accounting for four percent of total household spending in the 2021 economy.
The next factors contributing to the shadow economy in household spending were housing rental fees (19.5 percent) and food and beverage services (18.8 percent).
ONTARIO LEADS CANADA IN UNDERGROUND ECONOMIC ACTIVITY According to the report, Ontario led the nation with the highest value of underground economic activity, with a total value of $26.9 billion in 2021. Quebec followed with $15.5 billion, while British Columbia and Alberta reported $11.1 billion and $6.8 billion, respectively.
These four provinces together represented 87.9 percent of total underground economic activity, which was very close to their contribution to the overall economy of 87.1 percent.
However, in 2021, Prince Edward Island and British Columbia had the highest share of shadow economic activity as a percentage of total economic GDP, at 3.4 percent and 3.2 percent, respectively. In contrast, Nunavut had the lowest proportion at just 0.4 percent.
Reporting for this story was funded by the Meta-funded Afghan Journalists in Residence Project.
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