Paying cash to entrepreneurs boosts the underground economy
StatsCan noted that although the latest data on the underground economy predates the Covid-19 pandemic, “it provides an important benchmark for measuring the full effect of the pandemic on the Canadian economy.”
Underground activity generally represents an average of 2.7% to 2.9% of GDP, although the proportion of off-book activity varies considerably from province to province.
In British Columbia, underground activities accounted for about 3.7% of GDP in 2018, followed by Prince Edward Island with 3.3%. In Nunavut, underground activity represented only 0.5% of GDP.
“Industries that are more prone to underground activity, such as agricultural production, residential construction, and accommodation and food services, have a greater economic presence in provinces and territories that have a higher share of ‘underground economic activity,’ StatsCan said.
Home-based entrepreneurs paid below the table continue to account for the largest share of underground activity at 26.2%, followed by retail at 12.3% and companies involved in finance, insurance, real estate. , renting and leasing at 10.3%, StatsCan reported.
StatsCan does not detail exactly how it arrives at estimates of underground activity, noting that its data collection is based on “assumptions, indicative information and various indirect methods.”
While these estimates of underground economic activity exclude some illegal transactions, such as drug trafficking and prostitution, the data now includes unlicensed cannabis production, following the legalization of cannabis in 2018.