As provinces continue their process of gradually opening up after the COVID-19 lockdown, businesses are struggling to grapple with the reality of how to stay afloat in the contracting economy.
It will be an uphill battle for many of them, experts say, particularly retail stores, restaurants, movie theatres, and hotels, as well as small businesses. In addition, these businesses will need to ensure their employees are safe from becoming infected, which could incur extra costs.
Philip Cross, an economist at the Macdonald-Laurier Institute, says one of the problems is that details about what reopening the economy will look like have been scant.
“For recovery, I don’t see how we can think in those terms when there is no clear roadmap on how we will reopen large sectors of the economy,” Cross said in an interview.
Business owners are struggling to make their rent, he notes, and the problem is compounded by the fact that the pandemic risks have prevented there being a clear plan for keeping these businesses going.
In terms of what government could do to help small business, Cross says GST tax deferrals and property tax deferrals could work, as well as tax credits instead of loans since “firms have enough debt already.” In addition, to instill some confidence, the government should give these essential workers verbal recognition to demonstrate to them that they’re considered just as important as the public servants who are constantly lauded.
Last week, Prime Minister Justin Trudeau responded to questions on the economic recovery post-COVID-19, particularly the concern over how to revitalize work and businesses. One of the things he was asked about was a four-day work week, which he did not rule out.
Jason Clemons, the executive vice-president of the Fraser Institute, said policy-intervention such as a four-day work week could exacerbate the situation for some businesses.
“Government regulation could easily make things worse since it would almost inevitably treat all firms the same when the reality is that many firms are in sectors where a four-day work week simply won’t make sense,” he said.
“Firms are free to reorganize their work schedules now as witnessed by telecommuting, job sharing, and flex time. In other words, firms where such arrangements make sense are already free to pursue such workplace innovations. That said, some deregulation regarding, for instance, dependent contracting and liability for home-based work might help.”
Cross says it should be up to those running the businesses to decide what they should do.
“If a four-day work week is so obviously beneficial to employers and employees, I would expect them to adopt one on their own without the government’s direction,” he said. “If they are resisting, it is for a reason and the government should not be imposing another layer of regulation and cost on people already struggling to manage in a chaotic time.”
As businesses adapt to the changing economy, Steve Globerman, a senior fellow at the Fraser Institute, said one important area to put more focus on is supply.
“With the changing technology and how the crisis is affecting things, one thing we could use more of is better allocation of resources, which should focus on supply,” he said.
“For instance, we shouldn’t be allocating more money towards building more movie theatres, we should be allocating it more towards warehouses and physical infrastructure that will help build up supply, as more and more people will want to get their things delivered at home.”
“Private ventures, charity organizations, etc., should also be empowered to play their valuable role during this period,” he adds. “We should also reconsider some of the regulatory burdens and the zoning policies, since it often takes a very long time for people to get their projects approved.”
A new report by Statistics Canada released May 28 assesses the potential for people to work from home, not only as society tries to get through the pandemic distancing measures but also after the recovery period.
Judging the “telework capacity” of a variety of jobs and industries, the report concludes that only four in ten jobs can be reasonably done from home. It also found that jobs with the most telework capacity are those in education, finance and insurance, and the professional, scientific, and technical services, while jobs in food/accommodation services and industries such as agriculture, hunting, and fishing have “almost no telework capacity.”
Groups that are most financially vulnerable, such as those under 25 years and with a high school diploma or less, have the “lowest telework capacity,” the report said.
Cross said recent graduates will be entering an almost non-existent job market with little opportunity. And those who can’t work online because of the nature of their business must be helped somehow as their skillset limits what they could do in an economy that might emphasize remote work.
“Waitresses or hairstylists, they can’t work online, and if they lose their jobs because their business folds, they don’t have a lot of skills to transfer elsewhere,” he said. “So the focus should be on resuscitating these industries before writing them off and saying everything is going online.”