Canada’s growth engine has long been small businesses, but the country is all in on large firms. BMO Capital Markets warns that while large firms make up only a small share of total employment, they’ve accounted for virtually all job gains in 2025. The bank cautions that this imbalance is amplifying downturn risks and could slow the next recovery.
Canadian Job Growth Driven Entirely By Just 20% of Firms
Canada’s job growth is increasingly concentrated in large firms (500+ employees). Canadian firms added 292,000 jobs in 2025, with large firms posting a net gain of 592,000. That’s not a typo—small firms lost 300,000 jobs over the same period. The silent contraction of small businesses is going largely unnoticed, and BMO warns that ignoring it can be a costly mistake.
Canadian Policymakers Are Gambling On A Structural Shift
Source: BMO Capital Markets; StatCan.
The gains at large firms were broad-based, led by education and public administration—signalling the shift isn’t just a result of one high-growth sector. Historically, small firms have driven hiring, but job growth has been increasingly concentrated in large employers.
“The difference in hiring trends may reflect the greater ability of large firms to adjust to tariffs and an uncertain policy environment,” explains BMO senior economist Sal Guatieri.
The trend is being amplified by recent trade shocks. It’s unclear whether this reflects targeted policy support for large firms or disproportionate exposure among small businesses. Either way, this isn’t new—it’s an existing structural shift that’s accelerating.
Canada Is Amplifying Risk By Dismissing Small Businesses
The trend may have flown under the radar for policymakers, but BMO warns it poses a growing risk to the economy. Guatieri notes that large firms are doing more than 100% of the hiring but make up just 20% of total employment. That imbalance creates a concentration risk—if large firms become overextended, job growth could collapse abruptly.
Policymakers often sideline small businesses, favouring a powerful minority of large firms. Some justify this by pointing to small firms leading layoffs in downturns, ignoring that this is an early signal—the canary in the coal mine. Their response effectively blames the warning and reallocates the canary budget to hiring more miners.
Further complicating this risk is the fact that small firms are the first to hire when the economy expands. Not only does this amplify downturn risks, it also undermines the recovery. The problem here isn’t just a lack of diversification—it’s a failure to grasp how the labour market rebounds.
“This divergence by firm size raises a downside risk,” he warns. “So, unless they keep punching above their weight—or smaller companies ramp up hiring—overall job growth could weaken.”