A Guide to the BC Economy and Labour Market
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  Finance, Insurance, Real Estate & Leasing (FIRE)  

A long history of lending, borrowing...

Finance, Insurance, Real Estate & Leasing (FIRE)Banking, in one form or another, has existed as far back as ancient times, when temples were the safest place to store valuables. There are records of merchants who obtained loans from temple priests in Babylon as early as the 18th century BC. As well, Greek temples made loans, accepted deposits, exchanged currency, validated coinage, and even offered credit to merchants. Interest was charged on loans and paid on deposits in ancient Rome.

The Canadian bank rate is at its lowest level in more than 74 years

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The Canadian bank rate is at its lowest level in more than 74 years

Source: Statistics Canada

It is not known how much interest priests charged borrowers in ancient Babylon, but in Canada, the official bank rate is set by a central agency, the Bank of Canada. It's the rate that the Bank charges its best borrowers (usually commercial banks), and is currently at its lowest level since at least 1935, after being significantly reduced in an effort to provide a boost to the economy.

...investing and speculating

Trading in debts, commodities, and government securities began in the middle ages. In 1602, the Dutch East India Company became the first company to issue stocks and bonds. Stock market activities were sometimes risky. During the tulip mania of the 1630s, speculators purchasing options on the exchange drove the cost of a single tulip bulb up to the equivalent of about $76,000. Many of these speculators were bankrupted when bulb prices eventually declined.

Stock market speculation during the early 1700s left Britain 10 million pounds in debt. The stock market crash of 1929 is widely held to have contributed to the Great Depression. More recently, the current economic slowdown is strongly linked to chaos in financial markets which led to the failure of a number of well-established companies, and helped produce a global recession.

But in between the trading frenzies and inevitable crashes, stock markets have worked as a mechanism by which companies get access to the funds they need to operate and expand their businesses. At the same time, investors who are willing to accept a certain amount of risk have the opportunity to benefit from the growth and development of these businesses.

Despite losses in late 2008, the Toronto Stock Price Index is still higher than it was in 2003

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Despite losses in late 2008, the Toronto Stock Price Index is still higher than it was in 2003

Source: Statistics Canada

The ups and downs of the stock market are followed with great interest and sometimes, with great anxiety. Since the end of 2008, the market has lost a great deal of momentum and the value of stocks and mutual funds has plummeted. There are some indications that a recovery is underway, but the recent plunge has been dramatic. Despite all the losses, the overall value of stocks traded on the Toronto Stock Exchange remains higher than it was after the economic downturn at the beginning of the decade.

Lloyd's of London began insuring ships in the 1600s

Although some forms of insurance were available in medieval times, the insurance business has its roots in 1680s London, when Edward Lloyd's coffee-house became a meeting place where ship owners, captains, and merchants could get the latest shipping news, and where the business of underwriting shipping ventures began. Lloyd's of London still operates as an insurance underwriter.

In BC, the industry has only been around for about 150 years

British Columbia's finance, insurance, real estate & leasing (FIRE) industry does not have a long history. The early settlers (and the Aboriginals before them) didn't have much need for cash, since most goods were exchanged by barter and coins were hard to come by. A small amount of English silver and gold was sent to BC in 1861 and, together with American coins, these were in use until the province joined confederation and adopted the Canadian currency.

As the population grew, branch offices of the big banks were eventually opened. The first credit union, born in reaction to the hardships of the Great Depression, opened its doors in South Burnaby in 1936. Credit union membership in BC now surpasses 1.5 million.

What's included in finance, insurance, real estate & leasing?

All types of banks and banking institutions, from the Bank of Canada and the big chartered banks to local credit unions, are part of the finance & insurance component of this industry. Consumer loan, mortgage, and credit card companies, investment companies, stock and commodity exchanges and brokerages are also included, as are pension funds, trusts, and similar financial vehicles. The group also includes insurance underwriters, agents, and brokers.

One in three workers in FIRE is employed in banking & financial services

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One in three workers in FIRE is employed in banking & financial services

Source: Statistics Canada

The real estate, rental & leasing component of the industry includes establishments that rent or lease housing, non-residential buildings and other property, sell real estate on a fee for commission basis, and rent or lease vehicles, computers, consumer goods, and industrial machinery & equipment. It also includes establishments that manage or operate buildings-from apartments to office towers and shopping malls.

What's happened since 1990?

FIRE is an important industry in BC. Although it employs just 6% of the province‘s workforce, its contribution to BC's economy is much greater. In fact, it generates nearly a quarter (24%) of the province's GDP, considerably more than any other industry.

The industry's share of employment has fallen slightly, but its contribution to GDP is rising

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The industry's share of employment has fallen slightly, but its contribution to GDP is rising

Source: Statistics Canada

The industry's share of employment has fallen slightly since 1990, but its share of total GDP has risen from 20% to 24%, largely because imputed rental income has been growing faster than the economy as a whole. The GDP generated by market-based financial, insurance and real estate services has shown slower growth.

How can 6% of the workforce produce nearly a quarter of the province's total GDP?

Finance, Insurance, Real Estate & Leasing (FIRE)The discrepancy between the industry's share of employment and its contribution to GDP may seem puzzling, but there are some factors that help explain the large, and growing, gap between the two measures. The most important reason for the gap is that the industry's GDP includes an estimate of the imputed rental income on owner occupied housing. This is the potential income that homeowners could get if they rented out their residence instead of living in it.

Why is this estimate included in GDP? Your home is an asset that has rental value in the marketplace. In economic terms, the benefit you get from living in your house or condo is equal to the amount of rent that you would have to pay for it if you were not the owner. There is no market transaction associated with the use of owner-occupied housing, but paid rent is captured as part of the revenues and GDP of the real estate industry.

Does this matter? Whether people own or rent their homes would not matter as much if the number of renters versus homeowners always stayed the same, or if homeownership was equally common in every economy. However, in order to make comparisons among economies with different characteristics, or to compare the same economy over time, it's important to ensure that the income generated by the use of an asset such as housing is valued in a consistent way.

Suppose, for example, there was a change in consumer behaviour, so that more people decided to buy, rather than rent, the place they lived in. If this happened, the GDP of the real estate industry would shrink, because less rent would be paid to landlords. Although the stock of housing would still be producing services, the value of those services would not be reflected in a market transaction. The economy would appear to be contracting simply because consumer preferences had changed. However, because imputed rent is included in GDP, the decline in the real estate industry would be offset by an increase in the imputed rental income on owner-occupied housing.

Thus, the value associated with the use of housing, whether owner or tenant-occupied, is always reflected in total GDP. A consistent yardstick is used, so it is possible to make valid comparisons over time or among economies.

Imputed rental income is a significant factor, accounting for nearly 12% of BC's total GDP. However, there are no jobs associated with this imputed value, and that is one of the reasons for the big gap between GDP and employment in FIRE.

But it doesn't explain all of the difference. Even when imputed rental income is excluded, the FIRE industry's share of GDP (12%) is still about twice its share of total employment. The output per worker in FIRE is higher than in other industries, largely because of the extent to which computer and other technologies are used to produce financial and insurance services.

Technological changes have reduced the financial services industry's need for front-line workers

Banking used to involve mainly face-to-face transactions. Thirty years ago, customers who wanted access to their funds would have to visit a bank or credit union during normal banking hours (usually from Monday to Friday, between 10 a.m. and 3 p.m.). Employees usually received a paycheque on payday, which they would then cash at a bank or credit union. Tourists and business travellers had to use credit cards, traveller's cheques or cash to make purchases when they were away from home, since it wasn't easy to get direct access to their bank accounts.

Some people still do their banking this way, but the industry has become much more dependent on technology to deliver services. Automated teller machines (ATMs) or cash dispensers can now be found at corner stores, shopping malls, airports, gas stations, and various other venues. They are quick and convenient to use, and are often accessible 24 hours a day. You can pay bills, transfer funds, and get cash from these types of machines in most parts of the world.

Consumers frequently use debit or credit cards instead of cash to pay for purchases. Many companies use the direct deposit method to pay employees or suppliers. Utilities, newspapers, credit card companies, and other organizations that regularly issue bills offer customers the option of pre-authorizing payments, so funds can be transferred automatically once an invoice has been issued. Online banking services allow customers to pay bills, transfer funds, make investments and otherwise manage their accounts from their office or the comfort of their homes.

Customers have been quick to adopt these methods. According to the Canadian Bankers Association14, Canadians are among the highest per capita users of ATMs and debit cards in the world. Customers of Canada's six biggest banks made an average of 101 debit card, and 33 credit card transactions in 2007.

One in three Canadians relies mainly on ATMs to do their banking. Other types of self-service banking such as online (23%) and telephone (8%) banking are also common. Only 29% of Canadians primarily use tellers to do their banking.

The investment industry now makes online investment services available to customers. These types of transactions used to require face-to-face meetings or telephone conversations with clients. Now, clients can obtain information about the past and current performance of stocks, bonds and mutual funds, and can purchase and sell these investments online.

What does all this mean for the people employed in the financial services industry? The nature of the work in this industry is changing. It now takes fewer tellers to run the day-to-day operations of a financial institution, while people who can provide financial advice, or have programming or other technical skills are more likely to be in demand.

Employment in the securities and investment industry has nearly doubled since 1990

The number of people working in FIRE has increased 44% since 1990, slightly less than the average for all industries in the province (48%). Some segments have seen strong job growth since 1990. For example, employment in banking, securities and investments has increased 51% since 1990, and the number of people working in the securities and investment industry has increased 91%.

Employment in financial services has increased significantly since 1990

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Employment in financial services has increased significantly since 1990

Source: Statistics Canada

What's the reason for the strong job growth? Until very recently, stocks, bonds, and mutual funds were becoming increasingly popular, since the return on these investments was significantly higher than the interest paid on savings accounts. As well, the popularity of registered retirement savings plans (RRSPs) may have contributed to job growth in this industry, since many RRSPs are managed by securities and investment firms.

The insurance industry has taken some hits

While banks and trust companies are usually large corporations with hundreds of employees, insurance companies can range from small family-run businesses that sell insurance policies to large corporations that underwrite them. Employment in this component of the FIRE industry has increased 49% between 1990 and 2008, with most of the job growth occurring during the last few years.

The insurance industry is affected by factors such as increases in accidents and natural disasters, or large awards granted by the courts. In recent years it has had to absorb numerous shocks, both financial and otherwise, which have strained the resources of insurance underwriters. These companies often operate all over the world, so events in distant places can have a big effect on the industry's bottom line.

The terrorist attacks of 9/11 were not only extremely traumatic on a human level, but it also caused billions of dollars of damage to property. The impact of the attacks on the insurance industry was magnified because the stock market was already in a downturn, which deepened after 9/11. This hurt the insurance industry because insurers use income from investing premiums to help pay insurance claims. The combination of a reduction in investment earnings and insurance payouts to those harmed by the terrorist attacks meant that insurers had to dig deep into their pockets to make the necessary payouts. This helped drive insurance rates up all over North America, including BC.

A number of natural disasters, such as floods, earthquakes, forest fires and devastating hurricanes in the Gulf Coast states in the late summer of 2005, followed the events of 9/11. The cost of claims arising from these manmade and natural disasters also affected premium rates. The e downturn in the stock market (which has affected the investment earnings of insurance companies) may also have an effect on the industry and its customers.

BC's real estate market has cooled down significantly as housing starts and MLS sales have slumped

The real estate industry includes small privately-owned operations as well as large national firms. Unlike finance and insurance companies, real estate companies are very sensitive to changes in the state of the economy. The number of jobs in the real estate industry has fluctuated, and in 2008 was 23% higher than in 1990.

The real estate industry is very cyclical: when times are good, people working in this industry can do very well; but during economic downturns, they are very quickly affected. If you are considering a career in real estate, you have to be prepared to go through both good and bad times.

Many real estate agents are self-employed, and even those who work for others usually earn most of their income from commissions If houses are not selling, they may have to rely on other sources of income to get by. At the same time, house prices in BC's two largest cities, Vancouver and Victoria, are among the highest in the country. That means that a real estate agent can earn a healthy commission on the sale of a house or condo.

The early years of this decade, and the first half of the 1990s, were boom years for people working in real estate, but there were a few leaner years in between, when the housing market went into a slump.

The real estate industry is very volatile, and residential sales have dropped off sharply

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The real estate industry is very volatile, and residential sales have dropped off sharply

Source: Canadian Real Estate Association

In 2008, BC's housing market entered another downturn. Even though interest rates remain extremely low, and prices have fallen in response to weaker demand, prospective buyers have held off on making real estate purchases. This is largely a reflection of the current economic situation, since people are less likely to make big purchases when they are not confident about the future. Lower housing prices may help boost sales, but they also mean that real estate agents earn lower commissions.

Rental & leasing arrangements are becoming more common

One strong-growth segment of this industry is rental & leasing, where employment has more than doubled, rising 104% since 1990. The strong growth in this industry is partly due to the increased use of consumer and business leasing arrangements for big-ticket items such as vehicles or office equipment. Other goods that are frequently rented include consumer electronics, videos, and recreational equipment.

What are the most common occupations?

FIRE is a very diverse industry. If you work in the finance, insurance or investment industry, you will probably have a salaried "nine-to-five" type of job. If you're involved in real estate, your hours are more likely to be unpredictable. You will likely have to work on weekends and evenings, and how much you earn will depend not only on your own efforts, but will be very significantly influenced by other factors (such as the state of the economy) over which you may have no control.

Fifty-two percent of the workers in FIRE are employed in business, finance & administrative occupations. About half of them are in clerical occupations, such as tellers and financial service workers. Other common occupations in this group include property administrators, financial officers, securities agents, investment dealers, auditors, financial & investment analysts, insurance adjusters, claims examiners and loan agents.

About half of the people working in this industry are in business, finance and administrative occupations

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About half of the people working in this industry are in business, finance and administrative occupations

Source: Canadian Occupational Projection System estimate

One in four workers is in a sales & service occupation. These are primarily real estate or insurance agents or brokers, retail sales clerks, janitors and building supervisors. Nineteen percent are in management occupations, such as brokerage, bank, credit or investment managers, as well as accommodation service or retail trade managers. About 2% work as information systems managers, computer programmers, or in other occupations in natural & applied sciences, and a similar number are employed in social sciences and related occupations.

How many people work in FIRE, and how much do they earn?

Finance, insurance, real estate & leasing employed 147,200 people in 2008, with 95,700 working in finance and insurance and 51,600 employed in real estate and leasing. Thirty-four percent of the jobs in this industry are in banking and financial services, while 28% of the workers are employed in the real estate industry (which includes real estate agents, developers, and operators). Securities & investment firms employ 10% of the workers, and 7% are employed by rental & leasing firms.

Wages in FIRE are a little higher than the average for all industries in the province

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Wages in FIRE are a little higher than the average for all industries in the province

Source: Statistics Canada

The average hourly wage rate in FIRE was $22.76 in 2008, or $1.30 more than average for all industries in BC. Within the industry, wages were highest in securities ($26.93), insurance ($24.06), and banking ($22.89). They were lowest in real estate ($21.50), where some workers are paid by commission, and in rental & leasing ($16.55). The usual work week in FIRE was 36 hours in length.

What are the characteristics of the workforce?

Most (83%) of the people who work in FIRE are employed full time. That is slightly higher than the average for the economy as a whole (80%). Fifteen percent of workers have union coverage, about half the average rate (31%) for the economy as a whole.

There is virtually no seasonal variation in employment in this industry, and temporary employees make up only a small percentage (5%) of the total workforce.

Six out of 10 workers in FIRE are women

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Six out of 10 workers in FIRE are women

Source: Statistics Canada

Women make up 58% of the workforce, but there are distinct differences in the male-female split between the finance and real estate components. Sixty-three percent of the workers in finance & insurance are female, compared to 49% in the real estate & leasing industry.

Unemployment rates in the industry are generally low, averaging 2.7% during the period from 1990 to 2008. The average for all industries was 7.8% during this period.

Unemployment rates in FIRE are usually quite low

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Unemployment rates in FIRE are usually quite low

Source: Statistics Canada

Self-employment has increased significantly in this industry, more than tripling between 1990 and 2008. One in four workers in the industry was self-employed in 2008. Half (51%) of the workers in real estate and 37% of those employed in the securities industry were self-employed, but rates were much lower in other industries within this group, ranging from 4% in banking & financial services to 16% in the rental & leasing industry.

Most workers in this industry are employed in small and mid-size establishments

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Most workers in this industry are employed in small and mid-size establishments

Source: Statistics Canada

Most of the people who work in this industry are employed at small (fewer than 20 workers) or mid-size (20-99) establishments. This includes employees of big banks and/or insurance companies.

An establishment is a place of work and not a company, so unless you work for a head or regional office of a financial institution-even if it's one of the big banks-you are most likely to be employed at an establishment with fewer than 100 co-workers.


Where are the jobs located?

Vancouver is the financial capital of the province, and 73% of the people who work in FIRE are located in Mainland/Southwest. In the rest of the province, the percentage of workers in this industry is lower than the regional share of the total workforce.

Nearly three-quarters of the jobs in this industry are located in Mainland/Southwest

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Nearly three-quarters of the jobs in this industry are located in Mainland/Southwest

Source: Statistics Canada

What's the outlook to 2017?

The FIRE industry has undergone many changes in the last few decades, and will likely continue to evolve. Employment and GDP growth in this industry are not expected to keep pace with the rest of the economy during the next few years.

Employment growth is expected to keep pace with the rest of the economy

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Employment growth is expected to keep pace with the rest of the economy

Source: Statistics Canada (2008)
Canadian Occupational Projection System forecast (2017)


  1. Find more information on banking practices at the Association's website at: http://www.cba.ca/en 

A Guide to the BC Economy and Labour MarketA Guide to the BC Economy and Labour Market