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

Dep. Fire Chiefs Rich Piché (left) and Stephane Dionne said they were disappointed that only one person showed up at the George Evans fire hall’s recruitment drive Tuesday evening, May. 11. Photo: Laurie Tritschler
Grand Forks Fire/Rescue says rural fire hall at risk of closing

Home insurance could spike across North Fork if George Evans fire hall loses fire protection status

Adam Hamdan has been living in Christina Lake since November 2020. Photo: Laurie Tritschler
Christina Lake man given temporary residence in Canada

Adam Hamdan had been facing deportation to Jordan, where he holds citizenship through his Palestinian parents

Ted Invictus (left) pulls a piano through the crosswalk between Market Avenue and 2nd Street as Nathan Vogel plays a few notes Monday morning, May 10. Photo: Laurie Tritschler
Music-lovers deliver street piano in Grand Forks

Musician gives one-handed performance as volunteers rolled the Heintzman through the city’s main street

Dep. Fire Chief Rich Piché said he hopes to raise money to buy 100 cups of coffee for frontline workers. Photo: Laurie Tritschler
Grand Forks Fire/Rescue to host coffee fundraiser

Lucky donors to receive free smoke detectors

Thursday, Feb. 4: RDKB Chief Engineer Darryl Funk hoists a banner commemorating last year’s championship season by the Bantam House Bruins. Photo: Laurie Tritschler
Bantam Bruins honoured at hair-raising banner ceremony at Grand Forks’ Jack Goddard Arena

Asst. coach Mike Tollis said he reluctantly gave in to the team’s victory wish that he cut his pony tale

BC Housing minister David Eby. (THE CANADIAN PRESS/Chad Hipolito)
Eby jabs back against Penticton mayor’s ad urging BC Premier to intervene in shelter dispute

Eby writes that Penticton’s ‘serious’ social issues won’t improve under leadership of the mayor

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

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, April 29, 2021. (B.C. government)
B.C.’s COVID-19 rate creeps up again, 600 new cases Wednesday

One more death, 423 people in hospital with virus

B.C. Agriculture Minister Lana Popham takes questions in the B.C. legislature in 2017. (Hansard TV)
UPDATE: B.C. will fund another year of fresh fruit, vegetables, milk in schools

John Horgan government working on school meal program

Surrey RCMP is releasing sketches of a suspect in an “indecent act” at the Coyote Creek Elementary playground on April 30, 2021. Police said the suspect was clean-shaven “during some interactions” and on “other occasions had stubble outlining a goatee and mustache.” (Images: Surrey RCMP handout)
Vancouver mayor-elect Kennedy Stewart addresses supporters in Vancouver on Sunday, Oct. 21, 2018. THE CANADIAN PRESS/Darryl Dyck
Vancouver mayor says there’s no time to redo details of drug decriminalization plan

Kennedy Stewart says a federal election could see the small window of opportunity close on the city’s bid for an exemption from criminal provisions on simple possession of small amounts of drugs

Premier Mike Horgan received his first dose of a COVID-19 vaccine. (Facebook/John Horgan)
More than 50% of people eligible in B.C. have received 1st vaccine dose

‘We’ve made extraordinary progress together over the past few weeks,’ says Premier Horgan

Most Read