Jock Finlayson, Executive Vice President and Chief Policy Officer of the Business Council of British Columbia (submitted)

FINLAYSON: The long economic tail of COVID-19

‘Fast forward to late 2020 and the situation has partially stabilized’

As excitement builds over the imminent arrival of one or more vaccines against the virus that causes COVID-19, it is worth reflecting on some of the longer-lasting economic consequences that are likely to follow from the 2020 pandemic.

For most people, it’s a safe bet that 2020 will rank as a year like no other. In B.C., we saw the sudden disappearance of more than 400,000 jobs from late February though mid-April.

Multiple tens of thousands of businesses were temporarily shuttered and hundreds of thousands of employees – and students — across the province were advised to work or study from home.

Travel and tourism came to a screeching halt. And in short order, governments arrived on the scene with giant checkbooks, deploying unheard of sums of money to support displaced workers, struggling businesses and many others whose lives were being affected by the fast-spreading virus.

Fast forward to late 2020 and the situation has partially stabilized. The dreaded “second wave” is fully upon us, but the economy hasn’t shut down and business conditions have improved across most sectors. Remarkably, employment has rebounded sharply since April, with the number of jobs in B.C. down “just” 37,000 (1.5 per cent) compared to February.

In some industries, including manufacturing, natural resources and professional, scientific and technical services, employment has actually risen above the levels reported before COVID-19 crashed onto our shores in early 2020.

At the same time, global trade has revived after a dramatic drop in the spring, providing some welcome support to B.C. exporters. Housing markets have turned red hot in most regions of the province, while retail sales have fully recovered from earlier, virus-related declines.

Equity markets are at record highs and interest rates and borrowing costs are hovering near record lows. The aggregate household savings rate in Canada has surged, in part due to massive government fiscal injections, but also because many households are spending less on travel, restaurants and some other services.

Overall, then, the state of the economy is considerably better than several months ago, even though the virus itself has not disappeared. But the economic ramifications of the pandemic will be with us for many months and probably years to come, even if vaccines succeed in eradicating COVID-19.

For one thing, some sectors are expected to face a notably slow recovery process. This is especially true of tourism and travel-related businesses, where it will take a long time to return to 2019 levels of activity. Some segments of the retail sector are likely to shrink as household spending increasingly shifts to on-line channels and many stores and shopping malls adjust to fundamental changes in technology and consumer preferences. The restaurant and foodservices industry – a big employer in B.C. — may be pinched by a greater propensity for in-home dining in the wake of the virus.

The public sector will also experience lasting effects. Most importantly, governments carrying much larger debt burdens will find they have less scope to contend with future economic downturns. They will also be under pressure to ratchet down discretionary expenditures and/or to hike taxes and fees in the medium term, in order to help service ballooning debts. Many educational institutions and health care providers will make more use of the digital tools and platforms that became indispensable in 2020. .

Finally, the spatial organization of many kinds of work – especially “white collar” jobs – is expected to move away from offices and other central locations, as large numbers of people and organizations have become comfortable with working from home. This trend is apt to persist. Three major Canadian banks recently announced that they plan to keep most of their staff working remotely well into next year.

Many large and mid-sized businesses are actively re-evaluating their need for (expensive) downtown office space in a world where a sizable fraction of their workforces can be productive while staying home much or all of the time.

Certainly, some of the mostly empty offices that dominate the downtown cores of Vancouver and Victoria will spring partly back to life once COVID-19 is gone. But less vibrant downtown business and office districts may end up being one of the most visible economic legacies of the global pandemic.

Jock Finlayson is executive vice president and chief policy officer of the Business Council of British Columbia

Just Posted

A Nova Scotia court has overturned the conviction of a man with ties to Maple Ridge. (Canadian Press/Darryl Dyck)
Conviction thrown out for supposed leader of Maple Ridge cannabis smuggling conspiracy

A Nova Scotia appeals court found there wasn’t enough evidence and quashed a four-year sentence

FILE – Perry Bellegarde, National Chief of the Assembly of First Nations, takes part in an event on Parliament Hill in Ottawa on Tuesday, July 7, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Indigenous Peoples Day must be a ‘call to action’, says Assembly of First Nations chief

Discovery of children at Kamloops residential school site must lead to change, Perry Bellegarde says

Darryl Mazor share a photo of his 78-year-old mother, Rena Mazor, singing to her 45-year-old cockatoo, Sassie. (Special to The News)
PHOTOS: Only one Fab Senior could win…

But there were more than a dozen worthy seniors who were entered in the photo contest

During a recent late afternoon, with a nice breeze blowing through her Maple Ridge backyard, Zoe Bell caught pictures of a hummingbird visiting her garden, then about 30 minutes later a “beautiful butterfly” arrived to help the boths, bees, and other insects pollinate. (Special to The News)
SHARE: Searching blooms for sweet nectar

Send us your photo showing how you view Maple Ridge or Pitt Meadows, and it could be featured soon

Fraser Health registered nurse Kai Kayibadi draws a dose of the Pfizer COVID-19 vaccine into a syringe at a walk-up vaccination clinic at Bear Creek Park, in Surrey, B.C., on Monday, May 17, 2021. (THE CANADIAN PRESS/Darryl Dyck)
LETTER: Writer questions spread of variant and timing of vaccinations

Will there ever be a return to normal, or will people need to invest in respirators?

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

The Coquihalla Lakes washroom is getting upgrades. (Submitted)
Coquihalla to get upgrades to aging washrooms

The Ministry of Transportation is providing $1 million in funding to upgrade 3 rest areas

The Sacred Hearts church on PIB land burned Monday morning. (Theresa May Jack/Facebook)
Two churches on First Nation land in South Okanagan burn to the ground

Sacred Hearts church on Penticton Indian Band land was reduced to rubble

Tl’etinqox-lead ceremony at the site of the former St. Joseph’s Mission in Williams Lake, B.C., June 18, 2021. (Angie Mindus photo - Williams Lake Tribune)
‘We are all one people’: Honouring residential school victims and survivors

Love, support and curiousity: Canadians urged to learn about residential schools and their impact

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Indigenous rights and climate activists gathered outside Liberty Mutual’s office in Vancouver to pressure the insurance giant to stop covering Trans Mountain. (Photo by Andrew Larigakis)
Activists work to ensure Trans Mountain won’t get insurance

Global campaign urging insurance providers to stay away from Canadian pipeline project

In the first election with public money replacing corporate or union donations, B.C. Liberal leader Andrew Wilkinson, B.C. Greens leader Sonia Furstenau and B.C. NDP leader John Horgan take part in election debate at the University of B.C., Oct. 13, 2020. (THE CANADIAN PRESS)
B.C. MLAs ponder 2022 ‘sunset’ of subsidy for political parties

NDP, B.C. Fed call for increase, B.C. Liberals have no comment

Emergency crews shut down White Rock’s Five Corners district on Feb. 19, 2020 following an assault. (File photo)
Trial underway in February 2020 death of White Rock senior

Ross Banner charged with manslaughter following Five Corners altercation

Most Read