JustResearch Edition no. 9

Research in Profile (cont'd)


By Trevor Sanders, Research Analyst, Research and Statistics Division, Department of Justice Canada


The size of the security industry in Canada has been an unanswered question for a number of years. "Even rudimentary descriptive information on the number of establishments and the number of employees, or basic economic information on revenue and expenditures are difficult to find" (Law Commission of Canada, 2002). There is substantial anecdotal evidence to suggest that the private security industry in Canada has grown rapidly over the past few decades. However, as noted above, there is a lack of empirical evidence to support or document the extent of this growth. This profile will address the gap in available data by using a variety of data sources collected by Statistics Canada. It is important that a clear picture of the size and nature of the industry is developed to inform the policy decision-making process.

This profile presents an analysis of the security industry from 1991[4] to 2001. Data will profile the industry at the national and provincial levels. Included in the analysis are the number of employees and establishments, rates of pay, and estimated contribution to the Canadian economy.

This study aims to serve as a basis for future research into the composition and dynamics of the private security sector in Canada. The numbers produced will provide policy makers and observers with data to guide future decisions on regulation and other issues.

Data Sources

The primary data source for this analysis was the Survey of Employment, Payrolls and Hours (SEPH). Data in the SPEH survey is based on the North American Industry Classification System (NAICS) and will be used to define the private security field for the purpose of this paper. It provides a broader definition of private security than just security guards for hire. Included under the NAICS classification "Investigation and Security Services" are investigation services, security guard and patrol services, armoured car services, security systems services and locksmiths. All of the sub-industries included in the classification are in the business of providing physical security. Additional data sources include the Labour Force Survey (LFS) and custom tabulations prepared by the Industrial Organization and Finance Division (IOFD), Statistics Canada.

Employment Growth

Growth in employment in the security industry has followed a general upward trend during the study period. The employment numbers clearly reflect the effect of recession in the early 1990s with a year-over-year decrease in employment from 1991-1992. After 1992, there were several years of steady growth, with a slight dip in employment from 1995-1996 that could be attributed to an economic slowdown experienced during that time. After 1996, employment in the industry grew at a very strong pace. Double digit year over year increases were seen in 1999 and 2000. Growth in 2001 was slightly slower at approximately 7%. Overall, employment growth in the security industry between 1991 and 2001 was 69%. In 1991, SEPH reported 46,651 employees working in security and investigation services. By 2001, the number had reached 78,919.

Job Growth in Security Outpaced Economy as a Whole

The 69% growth in employment for investigation and security services was over four times the growth in employment for all Canadian industries during the same period. The industrial aggregate[5] grew by 15% between 1991 and 2001.

Further context is provided to the growth in the security industry when the numbers are compared with changes in the crime rate and number of public police. The 69% increase in private security jobs is contrasted with an increase of less than 1% in the number of police officers over the same period. The population of Canada grew by about 10% during this time. Accounting for population growth, there were fewer public police, but more private security and related personnel in Canada per capita in 2001 than in 1991.

The police reported crime rate in Canada over the period 1991 to 2001 decreased by more than 22%.[6] The drop in the crime rate is interesting when the number of police was virtually the same over this period compared to the strong growth in private security employment. The relationship between the growth of private security and the drop in the crime rate is an area worthy of future examination.

Provincial Level Growth

Provincial[7] growth rates (where data were available) in the security sector fluctuated somewhat from the national trend. Only in 1998 and 1999 were gains recorded in every province, though the general trend for each province was upwards over the study period. British Columbia experienced the greatest increase in security employees during the study period. Employment grew by 141% in British Columbia. Ontario had the next highest growth at 74%. Although Quebec experienced the slowest growth at 25%, this is still strong.

Concentration of security personnel varied. For provinces where data were available, variation in the number of private security personnel relative to the population exists. Nationally, the number of security and investigation services employees increased from 171 per 100,000 Canadians in 1991 to 263 in 2001. This represents a per capita increase of more than 50%.

Employment Profile

This section is primarily based on SEPH data supplemented with information from the LFS also conducted monthly by Statistics Canada. The LFS is a household-based survey compared to SEPH which is enterprise based. LFS is considered more useful by Statistics Canada for demographic information than SEPH, while SEPH is better suited to producing indicators of change over detailed industry group levels.

Employment by Gender

The security and investigation field employs a much higher percentage of men than women. Over the period 1991-2000, 20% of security employees were female according to LFS. The number of female employees has fluctuated during the study period; for example in 1994, a low of 16% were female, compared to a high of 23% in 1992.

Data from LFS indicates that work in the security industry is concentrated in full-time[8] employment. For the period 1991-2000, 83% of employees were classified as full-time. The percentage of full-time employees has ranged from a low of 78% in 1994 to a high of 86% in 1997. Women were more likely than men to fill part-time positions in the industry. Overall, for the period 1991-2000, women accounted for 20% of employees but 26% of part-time workers. In other words, a greater percentage of men than women held full-time jobs in the industry.

Earnings Growth

Average hourly earnings for security workers in Canada were 33% higher in 2001 than they were in 1991 as reported by SEPH. However, workers paid by the hour in 2001 averaged $11.08 in security jobs compared to the average rate of $16.79 for the economy as a whole.

Enterprise Level Estimates

Estimates of incorporated firms based on combined tax and administrative data sources compiled by Statistics Canada were also consulted to develop a picture of the security industry.

Industrial Organization and Finance Division (IOFD) produced custom runs of this data for the years 1993 through 2000 for firms included in the NAICS Investigation and Security Services classification. This industry level data provides annual estimates of the number of incorporated firms, and the revenue and profits of the industry. The figures for 1993 to 1998 are not directly comparable to the figures obtained post-1998 due to changes in data collection and industry classification by Statistics Canada.

The annual estimates produced by IOFD suggest strong annual growth in the number of incorporated enterprises providing security and investigation services. In 2000, it is estimated that there were 2,629 incorporated security firms operating in Canada. This is 3% greater than the number of firms operating in 1999. Strong annual growth was also reported in the numbers of firms during the period 1993 through 1998. From 1993 to 1998 the number of firms in operation increased by more than 49%. Revenue growth has been very strong in the most recent years for which data are available; growth from 1999 to 2000 was 22%.

The security industry as a whole has, with the exception of 1996, recorded profits. Profits vary from year to year but from a general economic perspective are considered weak. For the year 2000, revenue was estimated at more than $2.7 billion with profits of more than $60 million. This suggests a profit margin of approximately 2.2% for the industry. Although this is generally considered a low margin, it is the highest margin recorded by the industry during the 1993 to 2000 period.

The chronically low profit margin suggests that this is a highly competitive and potentially volatile sector. These numbers suggest that some companies in the industry may be targets for mergers and take-overs. The volatility suggested by these numbers has been playing out in recent years.

There have been a number of consolidations within the industry, and multi-national companies are beginning to represent significant portions of the Canadian market.


Although this paper adds to knowledge about industry size, many research questions remain unanswered. Information on security employees is limited. How frequent is job turnover in this high growth industry? What levels of education and training do employees have? What sector of the industry is the largest or the fastest growing? This paper provides a starting point for measuring the size of the Canadian industry.

Effects of the growth in the Canadian security industry need to be examined. Is there a relationship between industry growth and declining levels of crime and public fear? How has the growth in security changed the way the public police do their job? One can expect that as it increases in size, the security industry will become subject to greater pressure for increased regulation. This may include training requirements or economic concerns such as foreign ownership or ownership concentration. The rise of the 'rent-a-cop' will, in all probability, not go unnoticed.