A study of Canada’s underground economy names the residential construction sector as the main culprit.

The underground economy is defined as market-based economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature.

A new study by Statistics Canada looked at data from 1992-2016 and found that this activity amounted to $51.6 billion in 2016, equivalent to 2.5% of GDP. It was a rise of 3.5% compared to 2015, exceeding the 2.0% growth of the total economy GDP.

The residential construction sector was responsible for 26.6% of the underground activity, far exceeding second placed retail trade (13.5%).

The largest share of underground activity across all sectors was labour compensation (46.8%) with a total of $24.2 billion in undeclared wages – equivalent to $1,669 for every job in the business sector in 2016.

The total value of underground economic activity in 2016 was highest in the four largest economies: Ontario ($19.7 billion), Quebec ($11.9 billion), British Columbia ($7.6 billion) and Alberta ($5.8 billion).

However, as a share of total GDP, PEI had the highest level of underground activity, representing 3.1% of the province’s total economy GDP.


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