Service Industry | The Canadian Encyclopedia


Service Industry

As Canada's population has grown and its economy has expanded, and as the goods-producing sector has increased its efficiency and productivity, there has been a steady growth in the share of the working population employed in the service sector.
Labour Force, Changing Jobs

Service Industry

 Service Industry The Canadian ECONOMY has 2 main components, the goods-producing sector and the service sector. The former includes agriculture, forestry, mining, fishing, construction and manufacturing (see also ECONOMICS). The latter includes noncommercial activities, such as health and welfare, EDUCATION, religion and charity; commercial services, such as restaurants, recreation, amusement, personal care, etc; trade, including wholesale and retail; TRANSPORTATION, COMMUNICATIONS and utilities; and financial and legal, including INSURANCE, REAL ESTATE, BANKING and investment.

As Canada's population has grown and its economy has expanded, and as the goods-producing sector has increased its efficiency and productivity, there has been a steady growth in the share of the working population employed in the service sector.

In 1911 about 66% of the working population were employed directly in the goods-producing sector and 33% in the service sector; by 1987 these ratios had been reversed. As the farm population has declined the number of people employed in service activities has increased. At Confederation, 50% of the workforce was employed in agriculture, but by 1987 this had dropped to less than 4%.

From Confederation, 1867, to WWII there was steady but slow growth in the service sector; but after WWII, as Canada exported more of its resource products and manufactured goods, more services could be afforded and employment in this area (particularly in education and health and welfare) mushroomed.

In addition to expansion of such personal services there has been significant growth in services provided to the goods-producing sector. This growth has resulted from increased output of that sector as well from new services that have become available through new technology. As the output of the goods sector increased, it expanded the work of providing services for transporting goods, warehousing, ACCOUNTING, communications and other supporting activities. Certain service industries now provide functions which were previously performed internally by companies themselves, such as data processing and other computer services, professional consulting, industrial design and maintenance.

Commencing with the first industrial computer installation in Canada in 1957, new technology has vastly expanded the activities of the service sector by creating new functions, eg, the provision of "on-line" information to subscribers for financial and stock market data, weather reports and general news, or by increasing the efficiency of conducting existing functions, eg, automatic tellers in banking, vastly improved productivity in worldwide transactions through the use of computers and communication satellites. In the medical field new technologies have made it possible to provide new and better services for detection, prevention and correction of ailments.

Many organizations in the service sector are owned or regulated by governments, although in the 1970s and 1980s there was some movement toward freer competition and less regulation arising to some extent from competitive pressures from the US, where a policy of deregulation was pursued during the early 1980s. During the 1970s and early 1980s, Canadian industry faced increased competition from many countries. Initially, this had little direct effect on the service sector, but with the increasing intensity of the worldwide competition in the 1980s, the service industries have felt the pressure of foreign competition not only directly in activities such as data processing, banking and tourism, but also indirectly in activities such as communications and utilities.

The bilateral trade agreement (see FREE TRADE) between the US and Canada, signed by Prime Minister Mulroney and President Reagan in Jan 1988 but not yet ratified, may affect Canada's service industry as trade barriers between the 2 countries are relaxed.

In the 1960s and 1970s it was predicted by many that computers and other technological advancements would replace people and destroy jobs, but new products and services have also created jobs that were not available previously. The fastest-growing occupations since the advent of computers have been the secretarial, clerical, sales and other service-industry occupations. It is expected they will continue to be the fastest-growing occupations through the remainder of the 20th century.

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