Underground Economy Shows Slight Decrease

The estimated gross domestic product (GDP) at market prices for underground economic activity in Canada reached $61.2 billion, or 2.7 per cent of total GDP, in 2018, says Statistics Canada. It decreased 0.8 per cent in real terms in 2018 on a year-over-year basis, compared with a year-over-year growth of 1.9 per cent in 2017. The underground economy is defined as consisting of market-based economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal, or informal nature. In 2018, four industries accounted for more than half of underground economic activity: residential construction (26.2 per cent); retail trade (12.3 per cent); finance, insurance, real estate, rental and leasing, and holding companies (10.3 per cent); and accommodation and food services (9.1 per cent). These industries have been the main contributors to underground economic activity in Canada since this study began in 1992. Of the $61.2 billion in unreported income in 2018, the largest share went to employees (42.4 per cent) in the form of labour compensation. Wages that are not accounted for in payroll records and tips on undeclared transactions were $26 billion, equivalent to 2.3 per cent of official compensation of employees. The remaining portion of underground income went to unincorporated business owners (28.6 per cent) and incorporated business owners (26.1 per cent).