Despite Covid-19 vaccine shipments arriving in Canada, the virus continues to devastate intensive care units of hospitals across the country. With the healthcare system on the brink of collapse, Canadian provincial governments are implementing various emergency measures. Notably, the province of Ontario has entered its second lockdown, lasting until February 19 and including a mandatory stay-at-home order with legal consequences if breached.
Canadians have already witnessed how the first wave of Covid-19 slowed Canada’s economy to a standstill. As businesses closed their doors, citizens responsibly stayed at home—sense of responsibility that may have faltered after the end of the first wave. Now, the second wave of the pandemic is rippling through Canada, extending the effect of Covid-19 on the economy.
The effect of the pandemic on Canada’s economy varies across each economic sector. Certain sectors have been greeted with opportunity. Albeit, the business sector has been significantly altered. As the lockdown reduced in-person opportunities, e-commerce has become a popular medium for the delivery of goods and services. The pandemic offered newfound opportunities to certain businesses as well. Online food ordering services, such as Door Dash and UberEATS, gained prominence due to the pandemic, benefiting from increased sales.
Yet, some sectors are facing severe repercussions due to the nature of their industry. The tourism industry, along with the closely related hospitality industry, is among the most affected. Travel restrictions imposed by the Canadian government dramatically reduced the number of international tourists. The resulting decrease in tourists has slashed tourism profits and resulted in vacant hotel rooms. Simply put, if there are no tourists, there will be no tourism income. Traditionally, tourism contributes two per cent of the Canadian Gross Domestic Product (GDP) and employs a significant number of workers. After the first wave of the pandemic, the tourism industry suffered a sharp decrease in employment, losing around 800,000 employees, the most out of all sectors.
In recent days, British Columbia’s provincial government is contemplating imposing interprovincial travel restrictions, resulting in an outcry from the tourism industry. With the pandemic’s one-year anniversary coming up, the tourism industry is already in a crippled state. It is feared that the interprovincial travel ban would seal the industry’s fate, resulting in significant economic damage from losses in the tourism sector, and subsequently longer time needed for the industry to recuperate and grow. With the second wave of Covid-19, travel restrictions are unlikely to be eased any time soon, rendering the outlook on the tourism industry’s immediate future to be uncertain and grim.
Across all sectors of the economy, small businesses are hit especially hard. Unlike well-established and large enterprises, small businesses do not have the luxury of “waiting out the storm.” The lower profits of small businesses result in limited funds available for contingencies and unexpected disasters. For large enterprises, the pandemic could result in losses of earnings and financial reserves, but it is a matter of survival for small businesses. The first lockdown left small businesses gasping for air, and it is now feared that the second wave could deal the last blow on these businesses, who are already financially weakened.
One of the most urgent concerns of the Covid-19 pandemic is the subsequent unemployment rate in Canada. The lockdown imposed in provinces has forced many businesses to lay off employees to cut costs. As witnessed in March and April 2020, unemployment rates soared as an immediate effect of the first lockdown, peaking at 13.7 per cent in May 2020.
While the unemployment rate has declined since its peak in May, the second wave of Covid-19 threatens this improvement in the immediate future. It is uncertain if some small businesses can withstand the second wave’s economic consequences, adding yet another stressor to this already fragile concoction. The most alarming aspect of this issue is that small businesses collectively employ most of the population, statistically employing 97.9 per cent of all Canadian workers or roughly 1.2 million people. With increasing files for bankruptcy among small businesses, the employment rate in Canada is foreshadowed to deteriorate, sending people home without an income source.
In response to the adversities of the Covid-19 pandemic, the federal government has laid out plans for the eventual economic recovery of Canada. Moreover, for individuals, the existing Employment Insurance program has also been modified, increasing the available financial benefits to the unemployed. There are also numerous other benefits available, including ones for individuals who contracted Covid-19.
The federal government also recognises the challenges faced by businesses. Small businesses are offered theCanada Emergency Wage Subsidy to reduce employee layoffs, the Canada Business Emergency Account interest-free loans, the Canada Emergency Rent Subsidy to reduce rent burden, and many other benefits and programs. Larger businesses are also offered various financial support options. Finally, to hasten the process of restarting the Canadian economy, the federal government will be devoting around $14 billion CAD to provincial support when the economy reopens.
On January 19, Pfizer confirmed that the Pfizer-BioNTech vaccine deliveries to Canada in the upcoming weeks would be greatly reduced, with no shipments arriving on the week of January 25. Although the Moderna vaccine is expected to arrive on time, we can expect slower vaccination to take place due to the reduction of vaccine availability. As a result, the pandemic measures in Canada will linger longer than expected, prolonging Covid-19’s threat to not only Canada’s economy but the global economy as well. Although support offered by the government will alleviate certain stressors, it is evident that some damage cannot be undone and has left many Canadians jobless. Yet, we have historically seen the economy bounce back from unexpected adversity and must do our part in the meantime by supporting local businesses and staying home to contain the pandemic.