How are B.C.’s large employers faring through COVID-19? Part III

Part I of this blog series looked at the impacts of the COVID-19 pandemic in a survey of B.C.’s large employers. Part II explored how these large employers are viewing the effectiveness of federal and provincial government responses. In this blog, we look at their expectations for the post-pandemic economic recovery.

As shown in Figure 3.1, most large employers expect the post-pandemic recovery will be slow. Note that this weakness will likely be reinforced by the fact that many large employers have already deferred or cancelled capital projects, marketing projects and contracts or tenders, or are planning to do so. This underscores a current gap in federal and provincial fiscal packages, which so far have included little to no support for capital investment or to assist hard-hit industries or regions. Meanwhile, more than one-quarter of large B.C. firms surveyed are unsure about the speed of recovery, suggesting heightened uncertainty, while only 16% expect a fast recovery.

Figure 3.1: B.C.'s large employers expect the post-pandemic economic recovery to be slow

Of the firms expecting a slow economic recovery, most attribute this to a sustained downturn in global demand and to permanent damage to their customers’ ability to pay (Figure 3.2). Almost a third of firms view business insolvencies, lack of financial capacity to restart businesses, and atrophy due to workplace hiatuses (in other words, loss of human and organizational capital) as key reasons for an expected slow economic recovery.

Figure 3.2: Firms expecting a slow recovery anticipate lasting damange to customers, firms and workers

Conclusion

Part I of our survey found that B.C.’s large employers are seeing widespread and significant declines in sales volumes, as well as increases in operating costs. The other most commonly cited impacts were were deferrals and cancellations of capital projects, marketing projects, and contracts and tenders . More than half of large firms say they had ramped up their digital-based or e-commerce activities. This appears to be mostly a defensive strategy, however, since few firms have introduced new products and services, or issued new contracts or tenders.

Part II found the most effective responses by governments to the pandemic have been around guidance for safe workplace practices, measures for laid-off employees, and keeping supply chains functional. Seen as less effective are governments’ efforts to provide bridging cash flow to businesses, prevent redundancies, and provide new opportunities for businesses to assist in the COVID-19 response.

For B.C.’s large employers, the top federalpolicy priorities are to support the functioning of supply chains and financial and credit markets, and to reduce federal tax rates and regulatory burdens facing businesses. Top priorities for the provincial government are to reduce provincial tax rates on B.C. businesses and households, defer or cancel planned legislative or regulatory changes affecting businesses, and to provide direct fiscal support for B.C.’s hard-hit industries.

Part III of our series found that most B.C. large employers expect the post-pandemic economic recovery will be slow. These expectations were attributed to sustained weakness in global demand, permanent damage to customers and companies’ financial positions, and atrophy in their company’s human and organizational capital caused by workplace hiatuses.