Economic Conditions of Indigenous Peoples in Canada

Discussions about the economic conditions of Indigenous peoples often suggest similar experiences and outcomes. However, there is great historical and contemporary diversity in the economic activities of people in Indigenous communities. Moreover, these economic 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 Indigenous communities across Canada.

Discussions about the economic conditions of Indigenous peoples often suggest similar experiences and outcomes. However, there is great historical and contemporary diversity in the economic activities of people in Indigenous communities. Moreover, these economic 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 Indigenous communities across Canada.


Traditional Indigenous Economies

Historically, Indigenous 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 Indigenous 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 Indigenous 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.

Did you know?
In many Northwest Coast Indigenous nations, the potlatch is a sacred ceremony used to redistribute wealth. It also functions to confer status and rank upon individuals, kin groups and clans, and to establish claims to names, powers and rights to hunting and fishing territories. As part of a policy of assimilation, the federal government banned the potlatch from 1884 to 1951 in an amendment to the Indian Act. The government and its supporters failed to understand the potlatch’s symbolic importance as well as its communal economic exchange value.


Impact of Colonization on Indigenous Economies

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 Indigenous 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 Indigenous 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 Indigenous lands and resources. As the settler economy advanced and the fur trade declined, many communities found themselves economically disrupted and vulnerable. Indigenous participation in the labour market was frequently marginalized and tenuous.

The Indian Act of 1876, which was created to force the assimilation of Indigenous people, had long-lasting consequences for Indigenous economies, as well as for Indigenous cultures, societies, and political systems. The Act was often used in conjunction with other assimilative policies. During the late 19th and early 20th centuries, the Indian Act was used to support the pass system, which restricted the movement of First Nations peoples off reserves. In terms of economics, restrictions on mobility limited what types of goods Indigenous farmers could sell at the market, and where they could sell their food. Sellers of produce required not only a pass to leave their reserve, but also a permit to sell that food. While the pass system regulated the mobility of people, the permit system — also used in the 1880s (until it was removed from the Indian Act in 1995) — regulated the sale of goods off reserves. Delays in getting passes and permits could result in the spoiling of produce and, therefore, a loss of income. The Indian Act, together with the pass and permit systems and other policies of assimilation, damaged Indigenous economies. The legacy of colonization continues to impact the economic conditions of Indigenous people today.

Complexity of Modern Indigenous Economies

Factors that have been particularly important in modern Indigenous economies include 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 Indigenous economies. The economic contributions of Indigenous 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 Indigenous people for which no payment is received. For example, official statistics or discussions of Indigenous 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 Indigenous 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. Whether in addition to, or in place of, traditional activities, the majority of Indigenous people in Canada participate in the formal labour market.

Rates of Employment and Income

In general, the employment rate for Indigenous people is lower than for the general population of Canada. According to the 2016 census, the employment rate for non-Indigenous people aged 25 to 64 was 76 per cent. Their Indigenous counterparts had lower rates. First Nations people on reserve had an employment rate of 46.9 per cent; the rate off reserve was 60.2 per cent. Non-Status people had a combined employment rate of 66.1 per cent, while Métis had a rate of 70.4 per cent and Inuit, 57.4 per cent. As the data shows, employment rates vary considerably among Indigenous groups and among those living on and off reserve. Employment rates also vary across the provinces and territories. The regions with the largest gaps between non-Indigenous and First Nations populations in Canada in 2016 were Manitoba, Saskatchewan, and Northwest Territories.

Employment rates vary further by gender. The 2016 census showed that the employment rate gap between Indigenous and non-Indigenous people was larger among men than among women. For example, the gap between non-Indigenous women and First Nations women living on reserve was 23.9 percentage points. However, the gap between non-Indigenous men and First Nations men living on reserve was 34.5 percentage points. Within the Indigenous population itself, employment rates among men and women vary depending on their group classification and whether they live on reserve. In 2016, Indigenous men living off reserve had an employment rate of 63.8 per cent, while their female counterparts had a rate of 57.3 per cent. Métis men similarly had a higher employment rate (72.6 per cent) than Métis women (68.4 per cent). However, men had lower rates on reserve (45.5 per cent) compared to women (48.2 percent). Inuit women also had a slightly higher employment rate in 2016 (57.8 per cent) compared to Inuit men (56.9 per cent).

In terms of income, Indigenous workers make less on average than the general population, although the amount varies. According to 2016 census data, the median income of Indigenous people living on reserve ($20,357) was considerably less than that of non-Indigenous people ($42,930). Métis had the highest median income among Indigenous people with $40,814, followed by Non-Status people ($34,458), Status people living off reserve ($32,553), and Inuit ($33,135). 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-Indigenous 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 Indigenous 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 Indigenous people who hunt, trap and fish, work in many communities is seasonal.

COVID-19's Impact on Indigenous Employment
The COVID-19 pandemic slowed or halted employment in various industries around the world. In Canada, the pandemic caused the employment rates of both Indigenous and non-Indigenous people to decline. However, Indigenous employment rates are recovering more slowly than their non-Indigenous counterparts. In the summer of 2020, the employment rate of Indigenous people was down 6.9 percentage points compared to 5 per centage points for non-Indigenous people. The employment declines reflect the fact that many Indigenous people work in occupations hit hardest by the pandemic, such as transport, trade, retail, and services.

Employment levels among Indigenous women particularly suffered during the pandemic. Compared to 2019, the employment rate among Indigenous women in the summer of 2020 was 7.5 percentage points lower. The rate was 6.2 percentage points lower among men. These trends reflect the pandemic’s impact on home life, as many parents, and particularly women, took on jobs of unpaid labour in the home, including childcare.


Indigenous Participation in Industries and Professions

The economic activities of Indigenous peoples are diverse and span many industries and professions. In 2016, the largest employer of Indigenous people living in the provinces and off reserves was health care and social assistance (13 per cent), followed by retail (12 per cent), and public administration (10 per cent). Indigenous people are generally underrepresented in management positions and in natural and applied sciences. While Indigenous peoples participate in all sectors of employment, historical, social and economic conditions have shaped representations of different Indigenous groups in the labour market.

Barriers to Employment

The 1996 Royal Commission on Aboriginal People recognized that discrimination continues to constitute a barrier to employment for Indigenous people. Poverty, quality of and access to education, geographic isolation, and housing conditions also represent barriers to employment and impact the well being of Indigenous communities. (See also Social Conditions of Indigenous Peoples in Canada.)

Indigenous people are twice as likely to spend more of their incomes on the basic necessities of food, shelter and clothing than the average Canadian. (See also Food Insecurity in Canada.) 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 Indigenous people classified as “low income” is actually higher. (See also Country Food (Inuit Food) in Canada.) Low-income status impacts economic wellbeing by restricting homeownership capabilities, educational opportunities and overall wealth.

Living conditions vary considerably amongst Indigenous peoples depending on their geographical location, rural or urban setting and whether they live on or off reserve. Under colonial administration, Indigenous 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 Indigenous communities. In the 1960s, less than half of on reserve houses had electricity, and few had piped water or sewage systems. By 2004, the federal government reported that approximately 96 per cent of Indigenous residences had sewage disposal systems and about 98 per cent had water delivery systems. 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 Indigenous peoples living in rural and northern areas and on reserves has improved, problems remain. In general, Indigenous people live in poorer housing conditions, including overcrowding and homes needing major repair, than non-Indigenous people. This is particularly true for First Nations people living on reserves and Inuit living in the North. Mould, poor quality building materials and inadequate plumbing and potable water are some of the factors in need of repair. Many also live in a household with more than one family, which is the result of a combination of tradition and housing shortages.

Education is another determinant of economic well-being. Almost all Indigenous people complete elementary school; most have secondary education and a small but growing percentage complete college or university. (See also Education of Indigenous Peoples in Canada.) 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-Indigenous population at all education levels.

Federal Government Support

Although most Indigenous people engage in paid work, and earnings constitute a significant majority percentage of total income received by Indigenous people, a complex relationship with government dependence exists for many communities. As pointed out in the 1996 report of the Royal Commission on Aboriginal Peoples, this dependence is rooted in the dislocation and dispossession of Indigenous communities as a result of the settler economy, which rendered Indigenous people increasingly marginal and economically vulnerable.

Initially, there was reluctance from the various levels of government to accept responsibility for assisting Indigenous 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 and 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 Indigenous communities. Between 1981 and 2016, federal expenditures directed toward Indigenous people more than quadrupled. However, the socio-economic gap between Indigenous and non-Indigenous peoples living in Canada remains, indicating that federal funding alone may not be effective or adequate.

National, provincial and territorial Indigenous 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 the federal government.

Did you know?
As an attempt to bring closure to the legacy of residential schools, the federal government implemented the Indian Residential Schools Settlement Agreement in 2007 that included a “Common Experience Payment” for eligible former students. The federal government allotted funds for Indigenous entrepreneurship as well as for education, social development, residential schools resolution, community development and infrastructure.


Self-Government and Indigenous Economies

Under colonial administration, Indigenous 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 recognizes Indigenous people’s right to self-government under section 35 of the Constitution Act, but a complicated relationship between Indigenous-federal governance exists. Self-government agreements give Indigenous groups greater control and law-making ability over their internal affairs, and greater responsibility and autonomy over the decision-making that affects their communities. However, self-government agreements are not inherent or unbounded. The Canadian government still has authority over approval of self-government agreements and their contents.

Still, self-government arrangements and treaties protect Indigenous rights to hunting, fishing and resource development that can provide employment for Indigenous people. For example, with the passing of the Inuvialuit Final Agreement in 1984, the Inuvialuit gained control of their land including subsurface rights to oil, gas and minerals, and the right to hunt and harvest anywhere in the claim area. The Inuvialuit Regional Corporation 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.

Indigenous Tourism Industry

Indigenous tourism is as a tourism activity that is controlled and operated by Indigenous people. Indigenous tourism aims to respectfully incorporate Indigenous culture as part of the tourism experience. Some examples include learning about the art of Cowichan sewing by Cowichan people, purchasing Inuit carvings and prints from the Inuit, eating bannock at an Indigenous restaurant, or visiting a heritage site. These activities provide a steady source of income to numerous communities.

The Indigenous tourism sector in Canada is diverse. More than 1,800 Indigenous businesses participate in this sector, employing over 39,000 people. Indigenous tourism is also a growing sector. According to the Indigenous Tourism Association of Canada, Indigenous tourism brought in an estimated $1.86 billion in direct Gross Domestic Product, prior to the COVID-19 pandemic.

Indigenous Business Development Organizations

There are a number of programs and organizations that support Indigenous businesses in Canada. For example, the Canadian Council for Aboriginal Business, a national non-profit nonpartisan organization, was established in 1984 to support Indigenous business development. It also provided mentorship in addition to business funding. The National Indigenous Economic Development Board (NIEDB), established in 1990, was created to provide advice to government on strategies and programs to promote economic development for Indigenous people in Canada. The NIEDB is the only national, non-political organization that advises and promotes Indigenous business in Canada.

In 1996, the National Aboriginal Capital Corporations Association was created by a collective group of Indigenous financial institutions to develop financial products and services for Indigenous communities. Community Economic Development Organizations managed by First Nations communities also provide various economic development incentives through business, employment and resource development initiatives. The Canadian Northern Economic Development Agency (CanNor) was established in 2009 to increase the number of northern and Indigenous businesses and to increase access to funds for entrepreneurs.

Spotlight on Indigenous Businesses
There are thousands of Indigenous-owned and operated businesses in Canada. This brief section highlights some successful enterprises that have come first in their fields and that support Indigenous communities. Aboriginal Peoples Television Network (APTN), the first and only national Indigenous broadcaster in the world. APTN offers programming by, for and about Indigenous peoples. More than 75 per cent of APTN employees identify as Indigenous peoples. Nk'Mip Cellars is the first Indigenous-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 Indigenous-owned and controlled financial institution focused on providing financial services to the Indigenous marketplace in Canada. Branches and community banking centres for FNBC exist across Canada. Manitoba Mukluks is an Indigenous-owned company that sells its footwear worldwide. Many of its signature products are produced at an Indigenous-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.


Indigenous Enterprise

Indigenous enterprise is growing. In 2016, the rate of self-employment among Indigenous people was higher than that of the Canadian average at 8.3 per cent. Métis had the highest rate at 14 per cent, followed by First Nations people living off reserve at 11 per cent. Inuit reported a self-employment rate of six per cent.

Indigenous businesses are diverse and span industry sectors and markets, including construction; primary sectors such as agriculture, forestry, fishing and hunting; mining; oil and gas; and service sectors such as education, scientific and technical services, and health and social services. The majority of Indigenous-owned businesses centre on local communities and/or home provinces and territories.

Most Indigenous companies are small businesses, with less than 100 employees. Indigenous-owned businesses constitute an important source of employment for Indigenous people. On average, Indigenous people comprise approximately two-thirds of the employees for Indigenous-owned businesses.

In 2015, more than 1,800 businesses were listed in the Indigenous Business Directory, an initiative of the federal government. Registration in this directory is not mandatory and therefore does not capture all Indigenous-owned and run businesses in Canada; however, it does demonstrate the volume and variety of Indigenous businesses.


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Further Reading

  • Carol Anne Hilton, Indigenomics: Taking a Seat at the Economic Table (2021).

  • David Newhouse and Katherine Graham, eds., Sharing the Land, Sharing a Future: The Legacy of the Royal Commission on Aboriginal Peoples (2021).

  • Brent Mainprize, John Borrows, Joshua Ben David Nichols, Robert Hamilton, and Ryan Beaton, eds., Wise Practices: Exploring Indigenous Economic Justice and Self-Determination (2021).

External Links