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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

With the help of a $110,000 federal grant, Saanich will be adding 22 new EV chargers for its municipal fleet to reduce emissions from district operations. (Black Press Media file photo)
Saanich adds 22 new EV chargers for municipal fleet to reduce corporate emissions

Federal grant adds $110,000 jolt to project, installation to be completed fall 2022

Andrew Swanson was arrested Wednesday after he was wanted for an alleged choking assault and for obstructing police. (Black Press Media File Photo)
Victoria police arrest Andrew Swanson on warrants for alleged choking assault, obstruction

A member of the public spotted Swanson and called 911 before police came and made the arrest

(Black Press Media file photo)
Youth sustains minor injuries in stabbing at Saanich Plaza

Suspect under age of 16 taken into custody, no risk to the public, police say

A B.C. Centre for Disease Control map showing new COVID-19 cases by local health area for the week of April 25-May 1. (BCCDC image)
Vancouver Island’s COVID-19 case counts continue to trend down

Fewer than 200 active cases on the Island, down from highs of 500-plus earlier this spring

Al Kowalko shows off the province’s first electric school bus, running kids to three elementary and two secondary schools on the West Shore. (Zoe Ducklow/News Staff)
West Shore proud owners of B.C.’s first electric school bus

No emissions, no fuel costs and less maintenance will offset the $750K upfront expense

Protesters attempt to stop clear-cutting of old-growth trees in Fairy Creek near Port Renfrew. (Will O’Connell photo)
VIDEO: Workers, activists clash at site of Vancouver Island logging operation

Forest license holders asking for independent investigation into incident

Anyone with information on any of these individuals is asked to call 1-800-222-TIPS (8477) or visit the website victoriacrimestoppers.ca for more information.
Greater Victoria Crime Stoppers wanted list for the week of May 4

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

(Black Press Media file photo)
POLL: Do you plan to travel on the Victoria Day long weekend?

It’s the unofficial start to the summer season. A time of barbecues,… Continue reading

Starting Tuesday, May 11, B.C. adults born in 1981 and earlier will be able to register for a vaccine dose. (Haley Ritchie/Black Press Media)
BC adults 40+ eligible to book COVID-19 vaccinations next week

Starting Tuesday, people born in 1981 and earlier will be able to schedule their inoculation against the virus

Parks Canada and Tla-o-qui-aht Tribal Parks dig the washed up Princess M out from sand along the south shore of the Pacific Rim National Park Reserve. (Nora O’Malley photo)
Rescue attempt costs man his boat off Pacific Rim National Park Reserve

Coast Guard response questioned after volunteer responder’s speedboat capsizes in heavy swells

Road sign on Highway 1 west of Hope warns drivers of COVID-19 essential travel road checks on the highways into the B.C. Interior. (Jessica Peters/Chilliwack Progress)
B.C. residents want travel checks at Alberta border, MLA says

Police road checks in place at highways out of Vancouver area

People line up for COVID-19 vaccination at a drop-in clinic at Cloverdale Recreation Centre on Wednesday, April 27, 2021. Public health officials have focused efforts on the Fraser Health region. (Aaron Hinks/Peace Arch News)
B.C. reports 1st vaccine-induced blood clot; 684 new COVID cases Thursday

Two million vaccine doses reached, hospital cases down

More than 6,000 camping reservations in British Columbia were cancelled as a result of a provincial order limiting travel between health regions. (Unsplash)
1 in 4 camping reservations cancelled in B.C. amid COVID-19 travel restrictions

More than 6,500 BC Parks campsite reservations for between April 19 and May 25 have been revoked

Most Read