With each day that passes with no word from Ottawa on a wide-ranging wage-subsidy program, our economy is slipping into perilous shock.
We can buttress employment insurance programs with greater durations and more reach, but is there a point to this if there are far fewer businesses to return to when the COVID-19 crisis abates?
The Justin Trudeau government has incrementally approached the pandemic’s menace. Trouble is, the pandemic isn’t incrementally approaching the economy; it has swallowed it and is digesting it.
The chief economist of the Conference Board of Canada, Pedro Antunes, told me Thursday that his harrowing projections – a 1.1% contraction of the economy in 2020, a “deeper and longer-lasting hit” than expected only weeks ago, a consumer recession in the U.S., social distancing in North America until the end of August – will likely undergo another revision in the weeks ahead. He has created forecasts for three decades and he has seen nothing like it. (Our conversation can be found at biv.com/audio.)
McKinsey Global Institute is pronouncing the effort to cope with the pandemic as the biggest shock to the system in a century. It worries about social cohesion amid the rise of nationalism and it points to the need for the economy to be stabilized so it can develop some resilience.
Consumer demand has been sapped out of the system. We are sitting on our cash, if we have it. Businesses aren’t getting business. Double-digit declines are hitting an array of sectors, not just an array of operations.
Closer to home, the principal focus of the provincial and municipal governments has been society’s most vulnerable. There is a safe supply of free drugs into Vancouver’s Downtown Eastside for those addled by addiction, there is renter protection and support for those who might face harsh eviction, among other things.
Fair enough, and predictable enough from these governments. They are programmed to program for who they have helped. They lack any particular business focus, in part owing to their ideological origins and negligible experience in managing operations, and they aren’t learning the language on the fly in the crisis. The city’s effort on economic recovery has been profoundly invisible and inaudible.
But at a federal level, you’d expect more alacrity at the alarm being sounded by the country’s most serious business groups about the macro-mess. The groups aren’t fibbing or playing; their memberships are collapsing with liquidity and solvency issues in this acute setback. It is fine to help families, but they will need a place to come back to work.
But is Ottawa learning from what it is hearing? Trudeau continues to say the wage-subsidy concept hasn’t been ruled out. But if it’s going to be ruled in, it’s time.
It is inconceivable that many more days will pass in which our senior government seemingly sees more benefit in idling people with employment insurance than in supporting their employers to keep them on a payroll. Yes, by all means, impose social distancing to keep Canadians at home – but employed from home, helping from home, creating the plan to restore the business from home. Our swiftest recovery depends on it.
Today below the border, businesses are beginning to set their sights on a portion of the $2-trillion in federal support designated to staunch the bleeding in the American economy, in part to backstop their efforts to retain employees. While America is in an unconscionable mess in how its administration is handling the pandemic, its businesses will soon have yet another advantage over their Canadian counterparts if our federal government doesn’t act.
Ottawa has the wherewithal to do much better, and there is no time like now.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.