The coronavirus has exacted an enormous human and economic toll across the world, including in Canada.
Here in B.C., health officials put a hold on many kinds of economic and social activity in a bid — so far successful — to contain the spread of the virus. Large parts of the economy essentially were shuttered from mid-March until last week. Some sectors will remain offline for at least several more weeks.
The long-term effects of these extraordinary measures depend on how quickly the provincial economy re-opens, whether the virus surges later in the year, and how deep and long-lasting the current global recession turns out to be.
The imposition of unusual restrictions on normal business and social life has had devastating consequences for the economy, triggering a stunning 400,000 decline in employment in March and April. For some perspective, during the 2008-09 recession, the province shed roughly 70,000 jobs over nine months. So the labour market impact of the coronavirus-induced slump is orders of magnitude greater than anything B.C. has experienced in the past, with the greatest burden borne by younger workers.
The good news is that the provincial government is moving, carefully and in our view appropriately, to re-open the economy, with new health and safety protocols in place. While further job losses may be recorded in May, subsequent months should see a rebound in employment.
Unfortunately, some laid-off workers won’t have jobs to go back to, because a significant number of small and mid-sized B.C. businesses will have disappeared by the summer. In addition, many businesses that do re-open will have less need for labour — for example, restaurants required to slash their seating capacity by 50 per cent, retail stores that can only accommodate a handful of customers at a time, and resorts and lodges that cater to international visitors.
We also expect some large B.C. companies to be very cautious about hiring due to a weak global economy, fragile corporate balance sheets, and continued uncertainty in a world where COVID-19 is likely to persist.
Against this backdrop, what steps should the B.C. government take to rebuild the economy and position the province for success in the post-crisis context?
First, policy-makers must avoid doing harm. This means steering clear of tax, regulatory and other policy changes that would further increase costs for struggling businesses and impede job restoration/job creation. A do-no-harm approach would represent something of a shift for the NDP government, which has steadily increased tax and regulatory costs for most B.C. businesses over the past three years.
Second, the government can accelerate the economic rebound by speedily advancing public sector capital projects that strengthen the foundations for a productive economy and clear away obstacles to private sector investments that can proceed in the near term. The latter include both residential and non-residential construction projects that are “shovel-ready” but face delays due to provincial and municipal red tape and chronically slow-moving permitting and approval rules.
The province should set explicit time-lines for regulatory decisions and commit to becoming a top-tier jurisdiction for new investment. Especially at a time when the government’s fiscal position is deteriorating, it makes no sense to be throwing sand into the gears of private sector capital spending.
Third, Premier John Horgan and his ministers need to turn their attention to improving the overall climate for private-sector job creation and business expansion, notably in the export-oriented sectors that underpin B.C.’s prosperity — manufacturing, advanced technology, energy and mining, forestry, construction, transportation, and other tradable services. Without strong and competitive traded industries that generate tens of billions of dollars of annual export earnings, the province cannot expect to return to economic health.
Fourth, in an era when technological change is refashioning business models and operations across the economy, the province should be looking to support the take-up and diffusion within the business sector of the digital and other information and communications technologies that increasingly are driving growth in all innovative, high-wage economies. It is particularly important to incentivize faster technology adoption in core industries like manufacturing, natural resources, transportation, tourism, retail/wholesale trade and construction as one element of a larger strategy to fuel the productivity growth on which workers’ wages ultimately depend.
Greg D’Avignon is president and Jock Finlayson is executive vice-president of the Business Council of B.C.
As published by the Vancouver Sun.