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

FILE – Wet’suwet’en hereditary chiefs have agreed to sign a memorandum on rights and title with B.C. and Ottawa, but elected chiefs are demanding it be called off over lack of consultation. (Thom Barker photo)
Wet’suwet’en hereditary chiefs, Lake Babine Nation get provincial funding for land, title rights

Government says it’s a new, flexible model for future agreements between Canada, B.C. and First Nations.

The property on which a residential school (pictured) that was torn down years ago in Lower Post is to be the location of a cultural centre. (Indian Residential School History and Dialogue Centre photo)
Lower Post residential school building to be demolished, replaced with cultural centre

Project to be funded by federal and provincial governments, Daylu Dena Council

Photo collage of loved ones lost to substance use and overdose. (Photo courtesy Moms Stop The Harm)
B.C. overdose deaths still rising 5 years after public health emergency declared

Moms Stop the Harm calls on B.C. to provide safe supply in response to deadly illicit drug use

Restaurant patrons enjoy the weather on a patio in Vancouver, B.C., Monday, April 5, 2021. The province has suspended indoor dining at restaurants and pubs until at least April 19 in B.C. due to a spike in COVID-19 numbers. THE CANADIAN PRESS/Jonathan Hayward
B.C. sets new COVID-19 daily record with 1,293 cases Thursday

New order allows workplace closures when infections found

The new 3,500 hectare conservancy in Tahltan territory is located next to Mount Edziza Provincial Park. (BC Parks Photo)
New conservancy protects sacred Tahltan land near Mount Edziza Provincial Park

Project is a collaboration between Skeena Resources, conservation groups and the TCG

Vancouver resident Beryl Pye was witness to a “concerning,” spontaneous dance party that spread throughout social groups at Kitsilano Beach on April 16. (Screen grab/Beryl Pye)
VIDEO: Dance party erupts at Vancouver’s Kitsilano Beach to the dismay of onlookers

‘It was a complete disregard for current COVID-19 public health orders,’ says Vancouver resident Beryl Pye

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. The stage is set for arguably the most important federal budget in recent memory, as the Liberal government prepares to unveil its plan for Canada’s post-pandemic recovery even as a third wave of COVID-19 rages across the country. THE CANADIAN PRESS/Adrian Wyld
Election reticence expected to temper political battle over federal budget

Opposition parties have laid out their own demands in the weeks leading up to the budget

A syringe is loaded with COVID-19 vaccine at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS/Jonathan Hayward
B.C. to open up COVID vaccine registration to all B.C. residents 18+ in April

Registration does not equate to being able to book an appointment

(Black Press file photo).
Multiple stabbings at Vancouver Island bush party

Three youths hospitalized after an assault in Comox

Selina Robinson is shown in Coquitlam, B.C., on Friday November 17, 2017. British Columbia’s finance minister says her professional training as a family therapist helped her develop the New Democrat government’s first budget during the COVID-19 pandemic, which she will table Tuesday. THE CANADIAN PRESS/Darryl Dyck
B.C. finance minister to table historic pandemic-challenged deficit budget

Budget aims to take care of people during pandemic while preparing for post-COVID-19 recovery, Robinson said

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Lord Tweedsmuir’s Tremmel States-Jones jumps a player and the goal line to score a touchdown against the Kelowna Owls in 2019. The face of high school football, along with a majority of other high school sports, could significantly change if a new governance proposal is passed at the B.C. School Sports AGM May 1. (Malin Jordan)
Power struggle: New governance model proposed for B.C. high school sports

Most commissions are against the new model, but B.C. School Sports (BCSS) and its board is in favour

Pall Bearers carrying the coffin of the Duke of Edinburgh, followed by the Prince of Wales, left and Princess Anne, right, into St George’s Chapel for his funeral, at Windsor Castle, in Windsor, England, Saturday April 17, 2021. (Danny Lawson/Pool via AP)
Trudeau announces $200K donation to Duke of Edinburgh award as Prince Philip laid to rest

A tribute to the late prince’s ‘remarkable life and his selfless service,’ the Prime Minister said Saturday

Most Read