Canada Service Industry

The service industry plays an extremely vital role in the economy of Canada.  The industry employs 75% of the labour force and contributes billions to the GDP of Canada. The main parts of the industry are the goods production sector and the service sector. The industries of agriculture, mining, fishing, construction forestry and manufacturing fall under the goods production sector. The service sector has under it the healthcare and welfare industry, the education system, religion and charity, commercial services, hotels, restaurants, recreation, personal care and trade, retail trade as well as wholesale. 

The finance industry, including banking, transportation, communication, insurance industry, real estate sector, investment, all fall under this industry. This list is enough to tell you about the importance of the service industry in the economic growth and development of Canada. 

With the expansion of the service industry, there has also been an increase in its contribution to the GDP growth and the number of people employed by the industry. Both the sector making goods and the service-providing sector have seen steady growth, employing people in both high skill demand and low skill demand jobs. 

Many service industries provide personal or special services that need a lot of labour force. As a result, people working in this industry receive higher wages than people in other industries. A 2004 study also found that this industry employs more women than men. 

Nova Scotia, the province of Manitoba, British Columbia and the Canadian province of Prince Edward Island have the highest concentration of service industries in their provinces. Service industries in Alberta and Saskatchewan have seen rapid growth in the last 20 years. This is attributed to the vast wealth of natural resources present in these provinces. 

Service industries concentrate on CMAs

CMA are known as Census Metropolitan Areas. These areas are whenever service industry-related jobs are most concentrated. These include Ottawa, Gatineau, Halifax, Victoria, Regina and Quebec. 

The five most populated Census Metropolitan Areas are Toronto, Montréal, Vancouver, Gatineau and Calgary. Professional services, scientific services and technical services are said to be the most important industries in the service sector today. Designing computer systems and related industries have the fastest growth rate, going from contributing 0.6% to 1.1% of GDP in 6 years. Industries involved in legal services, accounting, tax and bookkeeping and advertising contribute 1.4% of the Gross Domestic Product. 

Trends affecting profits 

Profit margins can fluctuate in this industry, from lucrative to razor-thin. Not only the short term trends but also the long term trends and patterns, affect the profits made by this industry. Taking the real estate industry as an example, with the boom in housing, the profits of the real estate as well as the banking industry rose to 22% and 35% respectively as people took out loans to rent or buy property and there was an increase in consumer spending. 

Profits made by the food industry are comparatively low due to the high cost of food-related raw material, and labour costs. However, the travel industry took a hit when the Severe Acute Respiratory Syndrome broke out in Iraq creating panic and a shift in global travel industries. 

History of the Service Industry

The service industry saw a steady growth from the Confederation in 1867 to World War ll. After the World War, Canada began exporting natural resources and manufactured goods. Therefore, more services began to become available and affordable, especially healthcare and education. 

During this period, Canada’s Economy also saw a boom in the manufacturing sector. As a result, there was an increase in the demand for transportation services for exports as well as the storage industry. This growth was a result of advancement in technology and its application to manufacturing all goods and services. All sectors of the economy saw an increase in domestic demands as well as international trade with the global economy.  There was a direct increase in personal service demand as a result. Accounting services, communications and supporting activities became high demand services. The tasks which were internally performed by companies such as data processing, consulting, computer-related services, designing as well as maintenance grew as their own service industries. 

The first industrial computer installation was done in Canada in 1957. From then on, technological advances expanded giving rise to new service industries. Industries providing online information about the stock market, finances, weather and general news came to life. Some industries focused on providing efficient methods to existing processes. Automatic tellers in the banking industry increased productivity throughout the globe with the help of computers and communication satellites. Technological advancements in the medical field helped in improving the detection and prevention of many diseases and ailments.

The service industry was a private-sector, much less regulated and faced grave competition from industries in other countries, particularly the United States in the 1970s and 1980s. At first, it was not an issue. However, as the competitiveness grew, the Canadian service industries of data processing, banking and tourism were directly affected and industries involved in communications were indirectly affected. 

This is when the Trade Agreement named NAFTA was signed and the Bilateral Trade Agreement between the US and Canada became official. This led to the relaxation of trade barriers between the two countries. 

Many scientists and economists predicted in the 1960s that technological advancements would take over many jobs, leading to unemployment. However, they failed to predict the creation of newer goods and services that led to job creation in the service sector. Secretarial, clerical and sales jobs were introduced due to advancements in technology.

Future of the Canada Service Industry

The growth of the service sector is leading to people having high-quality jobs and enjoying a better standard of living. This is a sign of economic growth that is sustainable as well. Indeed, technological advancements have led to new services produced. This is sometimes referred to as creative destruction and has led to an increase in the number of people employed in the service sector and the output of the manufacturing industry. 

Jobs created in the service sector have above-average incomes better living standards. Job growth and productivity growth in this tertiary sector has led to significant economic growth. This is especially true for the Information Technology industry, Artificial Intelligence industry and custom software industries that create high-skill high-wage jobs. 

The expansion of Canada Service Industry  is especially significant for economic growth as the Canadian economy is recovering from a loss in the export capacity before and during the years of the global financial crisis, as well as the drop in the prices of natural resources prices in 2014. 

Many policies, both monetary policy and fiscal policies are aiding the economic recovery, expansion of the service industry has proven to be the most important. Economic analysis shows that the service industry will continue to see stable and steady growth in the foreseeable future.