Economic Conditions of Indigenous Peoples in Canada

Discussions surrounding the economic conditions of Indigenous peoples often insinuate homogenous experiences and outcomes.
Discussions surrounding the economic conditions of Indigenous peoples often insinuate homogenous experiences and outcomes.

Norman Wells
Oil and gas fields in the area produce over a million barrels of crude oil per year (photo by J. Goddard/courtesy Govt of the NWT).

Discussions surrounding the economic conditions of Aboriginal peoples often insinuate homogenous experiences and outcomes. However, a closer look reveals great historical and contemporary diversity in the economic activities of people in Aboriginal communities as well as how the economic conditions differ within these communities. Moreover, these conditions have occurred, and continue to occur, within the context of colonization, social exclusion and political and economic marginalization. Understanding this context is essential for developing policy and programs that are appropriate to lived realities of Aboriginal communities across Canada.

Historical Overview

Historically, Aboriginal economies were subsistence oriented, organized around activities like fishing, hunting and gathering. Economic activities depended on geographical availability and seasonal patterns of major food sources. These factors influenced the organization of Aboriginal groups, including settlement size and duration, the division of labour between genders and interaction with other groups. Surplus of particular resources enabled possibilities for trade among different Aboriginal communities. These activities not only provided material benefits for communities’ economies, but also provided opportunities to build prestige, establish or strengthen alliances, or resolve disputes.

While the initial presence of Europeans provided little disruption to traditional patterns of economic activity and expanded opportunities (and items) for trade, the formalization of the fur trade was more impactful for many Aboriginal communities. However, conflict based on resource availability and territory developed when trapping and hunting pursuits shifted from subsistence to market needs. Dependence on external markets also exposed Aboriginal societies to the destructive consequences of ‘boom and bust cycles.’ This contact with European settlers and dependence on formal economy was soon accompanied by European claims to Aboriginal lands and resources. As the settler economy advanced and the fur trade declined, many communities found themselves economically disrupted and vulnerable. Aboriginal participation in the labour market was frequently marginalized and tenuous. The legacy of colonization continues to impact the economic conditions of Aboriginal people today.

The Complexity of Aboriginal Economies

Three factors have been particularly important in modern Aboriginal economies: the specific evolutionary heritage of each community; the extent to which individuals were drawn into the money market and wage economy; and the federal government's role in the support and administration of Aboriginal economies. The economic contributions of Aboriginal peoples in Canada are multifaceted. Although labour force participation comprises a significant portion of these contributions, data that only includes paid labour ignore the contributions of Aboriginal people for which no payment is received. For example, official statistics or discussions of Aboriginal economic contributions based only on labour force participation neglect activities undertaken for subsistence or as a form of ‘payment’ for goods and services such as fishing, hunting, trapping, sewing and childcare. Economies may also benefit from the ‘mixing’ of traditional subsistence and more formal economic activities, such as when hunters sell a portion of their catch on the market while retaining the rest for consumption or trade within the community. The frequency and importance of traditional activities such as fishing or sewing to Aboriginal economies varies and is dependent upon factors like geographical location, urban or rural status, presence of industry, regulatory restrictions on land or resource base and whether one lives on or off a reserve.

Aboriginal Economies

Whether in addition to, or in place of, traditional activities, the majority of Aboriginal people in Canada participate in the formal labour market. It can be difficult to gain an accurate picture of the labour force participation of Aboriginal peoples due to inconsistencies in data collection. Statistical data regarding Aboriginal people, as well as the Canadian population in general, often exclude individuals living in the territories, as well as those living on reserves. This can result in an incomplete picture of the economic conditions of Aboriginal people.

Changes in data collection methods also impact population measurement. This is particularly true when comparing 2011 data to data previously obtained from the long-form Census questionnaire. The long-form Census questionnaire, which was mandatory for 20 per cent of the Canadian population, was cancelled in 2010 and replaced in 2011 by a voluntary National Household Survey (NHS) mailed to over 30 per cent of private dwellings in Canada. In addition to the voluntary nature of the NHS, differences exist in wording and format of questions relating to Aboriginal peoples in Canada and the definitions of reserves

Employment and Income

In general, the employment rate for Aboriginal people is much lower than for the general population of Canada, while the unemployment rate for Aboriginal people is much higher than their non-Aboriginal counterparts. According to the 1991 Aboriginal People's Survey, which looked at the labour force activity of Aboriginal people aged 15 (and over living both on and off reserves), only 43 per cent of Aboriginal people were working for a monetary income, compared to 61 per cent of the total Canadian population over 15. Fifteen years later, data from the 2006 Census shows the employment rate for Aboriginal people of core working age (25 to 54) increased to 65.8 per cent. Despite this increase, the employment rate for Aboriginal people is still far less than the general population (81.6 per cent). In addition, Aboriginal people are twice as likely to be unemployed than non-Aboriginal people.

Employment rates vary considerably among Aboriginal groups, reaching close to 75 per cent for Métis compared to approximately 61 per cent for Inuit and First Nation peoples. Amongst First Nation people, those living off reserve (66.3 per cent) have a higher employment rate than those living on reserves (51.9 per cent) and an unemployment rate that is half the rate of their counterparts living on reserve. Similarly, persons with registered Indian status living off reserve (64.8 per cent) experience higher levels of employment than those living on reserve (51.9 per cent). Employment rates vary further by gender. Aboriginal women (51.1 per cent) are less likely to be part of the paid work force than both the general female population (57.7 per cent) and Aboriginal men (56.5 per cent). Métis women (60 per cent) are more likely to be employed than Inuit (49.1 per cent) and First Nations (46.1 per cent) women. Although the unemployment rate for Aboriginal women (13.5 per cent) is twice as high as non-Aboriginal women (6.4 per cent), it is 2.6 percentage points lower than the unemployment rate for Aboriginal men (16.1 per cent). This data excludes Aboriginal people living in the territories and on reserves, but estimates from the 2008, 2009 and 2010 Labour Force Surveys indicate dramatic decreases in employment for Aboriginal people following the labour market downturn. Aboriginal people faced sharper employment declines than non-Aboriginal people, and the employment gap between Aboriginal and non-Aboriginal people continues to grow.

In terms of income, Aboriginal workers make considerably less on average than the general population, although the amount varies. According to 2006 Census data, the median income of Aboriginal people ($18,962) was considerably less than that of non-Aboriginal people ($27,097). First Nations people had the lowest median income amongst Aboriginal groups with $17,007, while Métis had the highest ($21,498) followed by Inuit ($17,268). It is important to note that some people living on reserve or in rural communities may have non-monetary sources of income, such as food from farming, hunting, etc., that is not captured in census data. The lower median income of Inuit, as compared to non-Aboriginal people, is also significant when one considers the higher costs of living in the north.

Lower levels of participation in the labour force partially reflect structural constraints. As previously mentioned, some Aboriginal people participate in activities that are not recognized as employment because they do not take place in the formal labour market. Others may experience difficulty integrating these traditional economies with the general Canadian economy. In part because of the dependence on resource availability for Aboriginal people who hunt, trap and fish, work in many communities is seasonal. Aboriginal people are more likely to be in temporary employment than non-Aboriginal people. Fourteen per cent of Aboriginal people (excluding those living in the territories or on reserves) were employed in seasonal, contract or term work in 2010 compared to 9.8 per cent of non-Aboriginal people. In addition, as recognized in the Royal Commission on Aboriginal People, discrimination continues to constitute a barrier to employment for Aboriginal people. Inadequate and crowded housing, geographical isolation, lack of transportation and poor health and education also represent barriers to employment.

Economic Activities

The economic activities of Aboriginal peoples are diverse and span many industries and professions. In 2010, the largest employer of Aboriginal people living in the provinces and off reserves was health care and social assistance, followed by retail and trade, public administration and construction. Aboriginal people were underrepresented in management positions and in natural and applied sciences. While Aboriginal peoples participate in all sectors of employment, historical, social and economic conditions have shaped representations of different Aboriginal groups in the labour market.

First Nations

According to INAC, there are 617 First Nations in Canada, representing more than 50 nations or cultural groups. Accordingly, their economic activities are vast and varied. Industries with the largest representation of First Nations people include public administration, retail, construction and accommodation/food services. First Nations people and communities have developed treaty agreements with governments around the protection of hunting and fishing rights and sharing of lands and resources. In 2005, the First Nations Implementation Plan was established to close the gap in the quality of life that exists between Aboriginal peoples and other Canadians. The goal of the 10-year plan is to ensure that all Aboriginal people benefit from, and contribute to, Canada's prosperity.


Historically, governments in Canada argued that Métis had no existing Aboriginal rights protected by section 35 of the Constitution Act and refused to negotiate with the Métis people. In 2003, the Supreme Court of Canada recognized the distinct existence of Métis and their Aboriginal rights. With the exception of settlements in Alberta, Métis do not have reserve lands. Some Métis communities in Alberta live on provincially established settlements and are involved in fishing, farming and logging. In some provinces the Métis have separate rights and regulations from other Aboriginal people.

In 2006, the employment rate for Métis is the highest amongst Aboriginal people, at 74.6 per cent. This represents an over 13 percentage point advantage over Inuit and First Nations people, and an increase of 4.2 percentage points from Métis employment rates for 2001. Métis are highest represented in the retail, health care and social assistance, construction and manufacturing industries.


In 1984, the federal government and the Inuvialuit (Western Inuit) signed the first land claim settlement in Canada's three northern territories, the Inuvialuit Final Agreement, as part of the Western Arctic Claims Settlement Act. In addition to control of their land, the Inuvialuit have subsurface rights to oil, gas and minerals, and the right to hunt and harvest anywhere in the claim area. The Inuvialuit Regional Corporation (IRC) and its subsidiaries, including the Inuvialuit Development Corporation, were established to administer the rights and benefits in the agreement. Inuit peoples also participate in the oil and gas industry and related enterprises, mining and resource development. Hunting, fishing and trapping still provide many Inuit with their nutritional food and supplement many incomes.

The Inuit's economic base has become far more diversified, with an increase in tourism and in the demand for cultural development such as carvings and prints, which are generally sold through Inuit Co-operatives. These provide a steady source of income to numerous communities. The Canadian Northern Economic Development Agency (CanNor) was established in 2009 to increase the number of northern and Aboriginal businesses and to increase access to funds for entrepreneurs

Employment rates increased amongst the Inuit population from 2001 to 2006, reaching 61.1 per cent. Inuit enjoy the highest representation in public administration, healthcare and social assistance, and retail. This is followed by construction, transportation, education and accommodation/food services.

Government Support

Although the majority of Aboriginal people engage in paid work and earnings constitute a significant majority percentage of total income received by Aboriginal people, a complex relationship with government dependence exists for many communities. As pointed out in the report of the Royal Commission on Aboriginal Peoples, this dependence is rooted in the dislocation and dispossession of Aboriginal communities as a result of the settler economy, which rendered Aboriginal people increasingly marginal and economically vulnerable. Initially, there was reluctance from the various levels of government to accept responsibility for assisting Aboriginal peoples, particularly those living on reserves. Federal programs often neglected Métis and Inuit. First Nations people living in urban centres found themselves caught in provincial/federal disputes over responsibility and resources. After the Second World War, and especially in the 1960s, the federal government began to play a more active role in the delivery of social, educational and economic development services to Aboriginal communities (see Aboriginal People, Government Programs).

From the early 1980s to mid-1990s, federal expenditures directed toward Aboriginal peoples more than tripled, growing from $1.4 billion in 1980–81 to $5.6 billion in 1995–96. Indigenous and Northern Affairs Canada (INAC) is the federal body responsible for meeting the Government of Canada's obligations and commitments to First Nations, Inuit and Métis. For example, INAC provides an Income Assistance Program for individuals and families living on reserves to assist people with meeting basic needs and provide pre-employment support. It estimates the on-reserve income assistance dependency rate in 2012–13 at 33.6 per cent. National, provincial and territorial Aboriginal representative organizations such as the Assembly of First Nations, Métis National Council, Congress of Aboriginal Peoples and the Inuit Tapiriit Kanatami often have mandates that include the improvement of social conditions, both on and off reserves, and represent or advocate for the interests of their members. Many of these organizations receive funding from INAC. Furthermore, as an attempt to bring closure to the legacy of residential schools, the government implemented the Indian Residential Schools Settlement Agreement in 2007 that included a “Common Experience Payment” for eligible former students. The federal government forecast in 2014–15 was $8 billion to INAC for budgetary expenditures, with approximately 70 per cent allotted for education, social development, residential schools resolution, Aboriginal entrepreneurship, community development and infrastructure. Aboriginal people also have access to other benefits accessible to the general population, such as the Child Tax Benefit, Old Age Security and Employment Insurance.

Additional Support: Economic Development

In 1989 the Canadian Aboriginal Economic Development Strategy (CAEDS) was designed to provide long-term employment and business opportunities for First Nations and Inuit communities and to assist communities to manage resource development, Aboriginal business activity and community economic planning. The CAEDS focused on economic activity: labour market development, business development and community development. Contemporary support for Aboriginal economic development falls under the responsibility of Indigenous and Northern Affairs Canada (INAC). Aboriginal Business and Entrepreneurship Development is an INAC program that provides funding to Aboriginal-owned businesses for business development activities in order to build a competitive, sustainable Aboriginal economy. In 2009, the federal government implemented a "Federal Framework for Aboriginal Economic Development" to focus the government's actions on increasing the participation of Aboriginal peoples in the Canadian economy and improve economic actions for Aboriginal peoples in all parts of Canada. Strategic priorities include strengthening Aboriginal entrepreneurship, developing Aboriginal human capital, enhancing the value of Aboriginal assets and forging new and effective partnerships with provinces and territories, and the private sector. An investment of $200 million over four years was made to realize the Framework.

Support for Aboriginal-owned businesses also exists outside of government. The Canadian Council for Aboriginal Business (CCAB), a national non-profit nonpartisan organization, was established in 1984 to support Aboriginal business development and provided mentorship in addition to business funding. CCAB is entirely supported through corporate funding and member dues. Services offered include the Progressive Aboriginal Relations program, which helps Canadian businesses improve progressive relationships with Aboriginal communities, and the Certified Aboriginal Business program, which seeks to increase business opportunities for Aboriginal business members in the public and private sectors. In 1990, the National Aboriginal Economic Development Board (NAEDB) was established to provide advice to government on strategies and programs to promote economic development for Canada's Aboriginal people. The NAEDB is the only national, non-political organization that advises and promotes Aboriginal business in Canada. A current strategic priority for NAEDB is addressing barriers to economic development on reserves. In 1996, the National Aboriginal Capital Corporation Association (NACCA) was created by a collective group of Aboriginal financial institutions to develop financial products and services for Aboriginal communities. Community Economic Development Organizations (CEDOs) managed by First Nations communities also provide various economic development incentives through business, employment and resource development initiatives.

Aboriginal Enterprise

Aboriginal enterprise is growing. From 2001 to 2006 there was a 38 per cent increase of self-employed Aboriginal people in Canada to 6.6 per cent, which was five times the increase of self-employed Canadians overall. Métis (49.3 per cent) and First Nations people (45 per cent) were much more likely to be self-employed than Inuit people (1.9 per cent). Aboriginal peoples experienced an increase in self-employment from 2006 to 2010 as well, reaching 11 per cent. The Aboriginal Business Survey conducted in 2010 found that more than half of Aboriginal businesses reported profits for 2010 and more than a third increased their revenues from 2009–10. Aboriginal businesses are diverse and span industry sectors and markets, including construction (18 per cent), primary sectors such as agriculture, forestry, fishing and hunting, mining and oil and gas (13 per cent), and service sectors such as education, scientific and technical services, and health and social services (28 per cent). The majority of Aboriginal-owned businesses (85 per cent) centre on local communities and/or home provinces/territories (73 per cent). Aboriginal-owned businesses constitute an important source of employment for Aboriginal people. On average, Aboriginal people comprise approximately two-thirds of the employees for Aboriginal-owned businesses.

In 2015, more than 1,800 businesses were listed in the Aboriginal Business Directory, an initiative of the Procurement Strategy for Aboriginal Businesses run by INAC in collaboration with Industry Canada. Registration in this directory is not mandatory and thus does not capture all Aboriginal-owned/run businesses in Canada; however, it does demonstrate the volume and variety of Aboriginal businesses. Examples of Aboriginal-owned businesses include the Aboriginal Peoples Television Network (APTN), the first and only national Aboriginal broadcaster in the world. APTN offers programming by, for and about Aboriginal peoples. More than 75 per cent of APTN employees identify as Aboriginal peoples. Nk'Mip Cellars is the first Aboriginal owned and operated winery in North America. It operates out of Osoyoos in the Okanagan Valley of British Columbia. First Nations Bank of Canada (FNBC) is a majority (80 per cent) Aboriginal-owned and -controlled financial institution focused on providing financial services to the Aboriginal marketplace in Canada. Branches and community banking centres for FNBC exist across Canada. Manitoba Mukluks is an Aboriginal-owned company that sells its footwear worldwide. Twenty per cent of its products are produced at an Aboriginal-owned production facility in Winnipeg. The Kitikmeot Inuit Association — which is 100 per cent Inuit-owned — partners with Advanced Medical Solutions to operate Medic North Nunavut Inc. The corporation provides medical personnel, equipment, supplies and emergency vehicles to remote sites.

Socio-Economic Conditions

Poverty, housing conditions, quality/quantity of education and political autonomy all impact the well being of Aboriginal peoples and their communities. (see Social Conditions of Aboriginal People)


Although calculations of the low income (before tax) cut offs (LICO) do not include people living on reserves or in the territories, they do provide a picture of the income threshold below which Aboriginal families devote a larger share of income towards necessities than the average family. According the 2011 Survey of Labour and Income Dynamics, 17.3 per cent of Aboriginal people (approximately one in six) experienced low incomes, twice the rate of the general Canadian population. This means that Aboriginal people are twice as likely to spend more of their incomes on the basic necessities of food, shelter and clothing than the average Canadian. When one considers the higher cost of living in northern communities, and increased operating and utility costs for rural communities, it is fair to assume the number of Aboriginal people classified as ‘low income’ would increase if the calculations were to include those living on reserves and in the territories. Low-income status impacts economic wellbeing by restricting homeownership capabilities, educational opportunities and overall wealth.


Living conditions vary considerable amongst Aboriginal peoples depending on their geographical location, rural or urban setting and whether they live on or off-reserve. Under colonial administration, Aboriginal communities endured inadequate housing conditions and infrastructures, particularly in rural communities, communities in the north and on reserves. Government centralization and relocation programs had a dramatic impact on housing conditions and quality of life in Aboriginal communities. In the 1960s less than half of on-reserve houses had electricity, and few had piped water or sewage systems. By 1996, the INAC reported that approximately 90 per cent of Aboriginal residences had sewage disposal systems and about 96 per cent had water delivery systems. This number increased to 96 per cent sewage disposal and 98 per cent water delivery by 2004. Electricity had also been installed to nearly 100 per cent of the communities. Housing and infrastructure quality in northern communities were similarly poor. In the 1960s, housing for Inuit families was often financially inaccessible and construction materials were typically inadequate for the northern climate. Due to the high costs of transportation, construction and operation in the north, many Inuit people were unable to secure or maintain utility service like electricity and heat. Inuit families faced overcrowding and unsanitary conditions.

While the situation for Aboriginal peoples living in rural and northern areas and on reserves has improved, problems remain. The 2006 Census indicated that one in five Aboriginal people were in need of core housing compared to 12.7 per cent of other Canadians. In general, Aboriginal people also live in poorer housing conditions, including overcrowding and homes needing major repair, than non-Aboriginal people. This is particularly true for First Nations people living on reserves and Inuit living in the North. Almost one half (44 per cent) of First Nations people on reserves and more than one quarter (28 per cent) of Inuit people lived in households in need of major repairs in 2006, as compared to 7 per cent of the non-Aboriginal population. Mould, poor quality building materials and inadequate plumbing and potable water are some of the factors in need of repair. Twenty-six per cent of First Nations people on reserves and 31 per cent of Inuit live in crowded dwellings (more than one person per room), far exceeding the 3 per cent average of the non-Aboriginal population. The Inuit population (18 per cent) is also five times more likely to live in a household with more than one family than the non-Aboriginal population (4 per cent), which is the result of a combination of tradition and housing shortages in the north.


Almost all Aboriginal people complete elementary school, most have secondary education and a small but growing percentage complete college or university (see Aboriginal People, Education). Almost half (48 per cent) of Aboriginal people had post-secondary qualifications (trades certificate, college diploma, university degree) in 2011, while 22.8 per cent had a high school diploma or equivalent as their highest level of educational attainment. Although the formal education of Aboriginal adults is below the national average (64.7 per cent of the non-Aboriginal population had post-secondary qualifications), the gap is closing and differs by gender and Aboriginal identity. Aboriginal women are slightly more likely to have a university degree than Aboriginal men. Approximately half of the Métis population, 42 per cent of First Nations people and more than one third of the Inuit population possessed post-secondary qualifications in 2006. Moreover, Aboriginal peoples are experiencing lower rates of incomplete secondary studies, although their rates still exceed that of the Canadian population as a whole. Completion levels are lower amongst the Inuit. This reflects a cultural history of ‘informal’ education, as well as curricula that lack cultural relevance. Cultural relevance and curriculum relatability is also an issue for Aboriginal peoples living on reserves. Elementary and secondary education is provided by public schools, band-operated schools or schools under provisional education authorities. Quality and quantity of education impact employment qualifications and opportunities. While employment rates increase with higher levels of education, they remain lower than the non-Aboriginal population at all education levels.

Political Autonomy

Under colonial administration, Aboriginal communities did not control their own economic and social development destinies, particularly those with registered Indian status who were considered wards of the state. This lack of autonomy restricted economic development and decision-making abilities. The Canadian government now believes that Aboriginal peoples have the inherent right to self-governmentunder section 35 of the Constitution Act, but a complicated relationship between Aboriginal/federal governance exists. Self-government agreements give Aboriginal groups greater control and law-making ability over their internal affairs, and greater responsibility and autonomy over the decision-making that affects their communities. As of April 2015, Canada has signed 22 self-government agreements involving 36 Aboriginal communities across Canada. Of those, 18 are part of a comprehensive land claim agreement (or modern treaty). There are currently 90 self-government negotiation tables across the country. It is important to note that self-government agreements are not inherent or unbounded. The Canadian government still has authority over approval of self-government agreements and their contents.

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Further Reading

  • Statistics Canada, 2006 Aboriginal People's Survey (2006); Census of Canada, The Nation: Labour Force Activity (2006); Census of Canada, The Nation: Selected Income Statistics (2006); Census of Canada, Aboriginal Affairs and Northern Development, Basic Departmental Data (2004); Daniel Wilson and David Macdonald, "The Income Gap Between Aboriginal Peoples and the Rest of Canada" (2010).