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

A horse and driver cruise around the track at Fraser Downs in Cloverdale Sept. 14, 2020 amid smoke from U.S. forest fires. Harness Racing B.C. announced it’s halting the spring season two weeks early because of a lack of money and says racing won’t continue in September without and influx of cash. (Photo: Malin Jordan)
Harness racing suspended at Fraser Downs

Spring season ends early, 135 workers out of jobs

An agreement between the City and the Langley Lions Housing Society would set out income and age requirements for the new Birch replacement building (Langley City image)
Langley Lions housing project gets go-ahead from City council

An eight-storey structure will replace the fire-gutted original Birch building

B.C.’s Court of Appeal in Vancouver. (Black Press Media files)
‘Stereotypes’ not an issue in Langley sex assault ruling, Court of Appeal says

The Court of Appeal upheld a conviction in two attacks on a 17-year-old

The Langley School District issues COVID-19 notifications when cases are discovered at local public school. Fraser Health handles contact tracing and all medical aspects for all local schools. (Langley Schools)
Two Langley schools added to COVID list

Fraser Health posts the names of public and private schools online when there’s been exposure

Florence Song (left), Amy Saya, and Chanhee Park participated in sustainability week at TWU by selling clothes to benefit charities. (TWU’s Winnie Lui/Special to Langley Advance Times)
TWU students turning used clothes and goods into cash

During sustainability week the university fundraises to benefit young entrepreneurs and charities

Rainbow trouts thrashing with life as they’re about to be transferred to the largest lake of their lives, even though it’s pretty small. These rainbows have a blue tinge because they matched the blue of their hatchery pen, but soon they’ll take on the green-browns of their new home at Lookout Lake. (Zoe Ducklow/News Staff)
VIDEO: B.C. lake stocked with hatchery trout to delight of a seniors fishing club

The Cherish Trout Scouts made plans to come back fishing soon

Photo by Metro Creative Connection
New campgrounds coming to B.C. parks as part of $82M provincial boost

This season alone, 185 campsites are being added to provincial parks, says Minister of Environment and Climate Change

Paper Excellence took over Catalyst Paper operations in B.C. in 2018. (Paper Excellence photo)
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

Archibald bowl near Chilliwack. (Submitted)
Cheam First Nation ‘shocked’ over all-season mountain resort proposal near Chilliwack

For five years the band has been working on a gondola project of their own

The plane blasted through an airport fence and down a hill, before stopping before a cement barrier on Highway 5A, right in front of a school bus. Photo submitted.
Student pilot crashes plane onto Highway 5A almost hitting school bus

Aircraft hit pavement right in front of school bus

A driver stopped by Saanich police following a road rage incident on April 15 was found to be impaired, in violation of a license restriction and in a damaged vehicle. They received a 90-day driving prohibition and a 30-day vehicle impound. (Saanich Police Traffic Safety Unit/Twitter)
Road rager fails breathalyzer on busy B.C. highway in vehicle he shouldn’t be driving

Saanich police say man was operating vehicle without required ignition lock

B.C. Premier John Horgan wears a protective face mask to help prevent the spread of COVID-19. THE CANADIAN PRESS/Jonathan Hayward
B.C. Premier John Horgan booked to get AstraZeneca shot Friday

‘Let’s show all British Columbians that the best vaccine is the one that’s available to you now,’ he said

Most Read