A Guide to the BC Economy and Labour Market
Home About the Guide BC's Economy Major Industries New Economy For More Information Appendices
  How is BC's Economy Structured?  

Although BC has traditionally been viewed as largely focused on goods production, these industries account for a relatively small share of total employment in the province. Nearly four-fifths of the workforce is employed in the service sector.

The service sector employs nearly four out of five workers in the province


The service sector employs nearly four out of five workers in the province.

Data Source: Statistics Canada

What's included in the goods sector?

The goods sector includes industries most people are familiar with: agriculture, fishing, forestry, mining, manufacturing, construction and utilities5.

Construction and manufacturing are the biggest employers in the goods sector


Construction and manufacturing are the biggest employers in the goods sector.

Data Source: Statistics Canada

Construction and manufacturing are the biggest employers, providing four out of five jobs in the goods sector. Many of the manufacturing jobs are in resource-related industries: producers of wood, food, primary metals and paper provide nearly half of the jobs in manufacturing. Primary resource extraction and harvesting (agriculture, logging, mining and fishing) are relatively small employers, as is the utilities industry.

What's included in the service sector?

A wide range of industries provide services to individuals, businesses and governments. People who work in the service sector sell real estate, provide banking, insurance and other financial services, or work in stores, restaurants and hotels. They are employed by airlines, trucking companies and ports. They work at TV and radio stations, software design companies, theatres, hair salons, gyms, golf courses and dry-cleaning outlets. Workers in health care, education and defence are also included in the service sector.

Many of these industries have been part of the province's economic makeup since the first settlements came into being. Others, such as computer services or Internet providers, are part of what's often called the new economy.

The two biggest service industries, wholesale & retail trade and health care & social assistance, together employ more people than all of the goods-producing industries combined. Wholesale & retail trade alone employs nearly twice as many people as manufacturing, which has traditionally been the largest employer in the goods sector6. Accommodation & food services, professional, scientific & technical services and education also employ many service sector workers.

Fifteen percent of BC workers are employed in wholesale & retail trade


Fifteen percent of BC workers are employed in wholesale & retail trade.

Data Source: Statistics Canada

Close links between some goods and service industries

Some service industries have close ties to goods production, providing transportation, wholesaling, retailing, insurance and other services to manufacturers who must move their products from the factory gate to markets where they can be bought and sold. In some cases (for example, freight transportation), these industries wouldn't exist, or would be greatly reduced in scope, without clients in the goods sector. At the same time, some goods industries would not be able to function the way they do without service industries to support them.

Even though there are strong linkages between some industries, they are usually not completely interdependent. Most do at least some business with other customers. For example, the railway system is primarily used to move cargo, but also transports people who are travelling for pleasure. Truck companies carry freight, but may also move household goods. Airlines ship a lot of cargo, but derive the bulk of their revenues from passenger traffic.

Engineers, architects, surveyors, and building inspectors provide services to industries such as construction and mining, but also have other types of clients. Real estate, financial, legal and accounting services are used by individuals as well as businesses. Garages may provide maintenance services to taxi companies, or ambulance and police services, but also fix cars for private customers.

Some of these inter-industry relationships will be discussed in more detail later. Understanding them is important. Knowledge of the relationships among industries can be used to help predict how changes in people's tastes, habits and needs could affect future employment prospects.

What's happened since 1990?

BC's economy has become less dependent on natural resources

BC's economy has been maturing into a more diverse, less resource-dependent structure. We are no longer "hewers of wood and drawers of water" for the rest of the country or indeed, for the world. Forestry, fishing, mining and agriculture together with related processing activities are still important, especially in some communities where they are key employers. However, they are no longer the dominant and driving force in BC's economy.

Since the mid-1990s, there have been fewer people working in resource-based industries7 than in other types of goods production. There have been significant job losses in some primary industries, and also in resource-based manufacturing. The forestry, paper and wood industries have been particularly hard hit.

The role of natural resources in BC's economy is declining


The role of natural resources in BC's economy is declining.

Data Source: Statistics Canada & BC Stats

Only 8% of BC workers have jobs in resource harvesting, extracting and related processing industries. That's down from almost 13% in 1990. In contrast, nearly 14% of all jobs in the province are in goods-producing industries that are not related to natural resources. This includes construction and utilities as well as the production of transportation equipment, computers and electronics, and other non-resource-based manufacturing.

Construction has become the largest employer in the goods sector


Construction has become the largest employer in the goods sector.

Data Source: Statistics Canada

A building boom in the province has boosted the demand for construction workers, and the number of people working in this industry has increased significantly in recent years. Construction is now the largest industry within the goods sector, employing nearly a tenth of the province's workforce in 2008. This marked the first time on record8 that there have been more people working in construction than in manufacturing, which is normally the largest employer in the goods sector.

However, these employment levels may not be sustainable over the longer run. The strong job growth in construction was partly due to a building boom in both the residential and non-residential sectors during the last few years. New housing starts are slowing, and some of the increase in non-residential activity was related to infrastructure projects that were being built as part of the preparations for the 2010 Olympics. Many of these projects have now been completed, and with the economy currently experiencing a downturn, it is likely that the demand for construction workers will be more limited in the future.

Goods production accounts for a declining share of total GDP and employment


Goods production accounts for a declining share of total GDP and employment.

Data Source: Statistics Canada

The economy is becoming less dependent on goods production

BC's economy isn't just less resource-dependent than it used to be. It is also becoming increasingly less dependent on goods industries as a source of employment and economic growth. For every person employed in the goods sector (both resource and non-resource-based), there are four British Columbians who have jobs in service industries.

This represents quite a significant change from the past when the goods sector played a much larger role in the economy. In the mid-1970s, nearly a third of all BC workers were employed in goods industries. By 1990, one in four workers was employed in goods production. The ratio had dropped to about one in five by 2001, and has remained at that level since then.

Service industries generate the lion's share of the province's GDP

GDP, or value added, is the measure most often used to describe the economy. The goods sector's share of total GDP has also fallen, dropping from about 29% in 1990 to less than 24% in 2008. This phenomenon is not recent: the relative size of the goods sector has been shrinking steadily since 1961, the first year for which provincial estimates of GDP are available.

With just over three-quarters of its GDP originating in the service sector, BC has one of the most service-oriented economies in Canada. This is partly because the province is Canada's gateway to the Pacific.

Many industries and activities have developed in BC because it is a transportation hub for goods and people entering or leaving the country from the west coast. However, the rising importance of service industries also reflects the increased role that many different types of consumer and business services are playing in the economy.

GDP per worker is usually higher in goods industries

The goods sector's share of total GDP has consistently been higher than its share of employment. This might seem puzzling. How can just over a fifth of the workforce produce nearly a quarter of the economy's GDP? One reason for this is that most goods industries use a lot of machinery and other specialized equipment to make their products. They can increase their output by using existing equipment more efficiently, by investing in new types of equipment, by hiring more workers, or by making more efficient use of their existing workforce.

An industry's GDP reflects the value added by both the labour and the capital equipment used in production so on a per worker basis it is often higher in the goods sector than in many service industries, where labour is the main input used in production. This is reflected in the difference between GDP and employment shares in the goods and service sectors.

There are other factors involved as well. In the goods sector, jobs may be physically demanding or involve a certain degree of risk for workers, so wage rates tend to be a little higher in these industries. Since GDP includes the value of labour, these workers make a larger hourly contribution to total value added9 than those in industries where pay scales are lower.

Employment isn't the same as hours worked

Employment figures are simple job counts. They don't differentiate between full-time and part-time work. Some industries, especially those in the service sector, rely heavily on part-time or seasonal workers, and this affects job counts. Depending on the number of hours spent on the job, it could take two (or more) part-time workers to do the same amount of work as a person who is employed full-time.

  1. You'll find more information on how industries are classified in Appendix 1. 

  2. In 2008, construction became the largest employer in the goods sector, marking the first time that there have been more BC jobs in construction than in manufacturing. 

  3. A definition of resource-based industries can be found here

  4. Employment by industry is not available on a consistent basis prior to 1987. 

  5. In fact, labour income is usually one of the biggest components of an industry's GDP. An explanation of what is included in GDP and how it is measured, as well as a discussion about labour productivity measurements, can be found in Chapter 1. 

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