May 7, 2020

Re-opening the economy will be a long, complex process; how do we make it work? Social & Economic Considerations

As business owners rush to understand and put in place new safety measures and stock up on PPE – in addition to all of the usual things needed to run a business, style hair, or serve meals – one thing is clear: re-opening isn’t going to be easy.

We mentioned in our previous commentary that many health and safety questions need to be answered before we can safely consider re-opening. But that’s just the beginning – there are several economic and social issues we foresee that will also need to be resolved as we begin the re-launch.

Customer-facing businesses who re-open to limited demand

Many businesses will see lower-than-normal demand due to constraints on the number of customers they will be allowed to serve and/or a lack of consumer confidence. As a result, their revenue will be a fraction of what it was a year ago, yet they will have to pay for rent and utilities along with workers’ wages and inputs once they re-open, in addition to covering new expenses for health and safety measures. At the same time, some major government support programs will reach their endpoint in early June, magnifying the struggle for businesses looking to pick up the pieces – they may lose the government assistance that helped them stay afloat during the shutdown, but will have limited real demand to replace it when they re-open.

The solution to this problem is for governments to extend business support programs – in reduced form like a dimmer switch – beyond their current expiry date. To be sure, government assistance cannot continue indefinitely. We will have to pay the bill at some point and the longer we wait, the worse it will get. However, the economy cannot recover quickly if large numbers of businesses choose to close their doors permanently because they do not see a viable path forward in the transition period.

Businesses facing an expense tsunami as payments come due

Many businesses will face an “expense tsunami” in the coming months as they come to terms with all the money they owe. Much of what has kept companies alive is not expense forgiveness but deferral. Deferred payments such as income taxes, education property taxes, utilities and corporate taxes will all be due at some point. Meanwhile, businesses have been racking up significant debt as they have taken out loans to make ends meet during the shutdown.

Many businesses have been earning zero, or greatly-reduced, revenues during the crisis. Faced with looming bills and potentially limited customer demand, many businesses may initially re-open but could close down right as economic recovery begins due to an inability to cover deferred expenses.
In addition to extending support programs as described above, the provincial government should work with the federal government to explore a combination of abatement, forgiveness, and extended deferral options for tax and loan payments to protect businesses as they get back on their feet. At the very least, businesses should have the option of stretching out these payments over multiple years.

The safety of public transportation as people get back to work

Guidelines for trains and buses such as capacity limits and requirements for masks, should be set by transit authorities and operators as more people will be going into work soon. Masks that meet standards need to be easily accessible. In France, for example, appropriate masks are sold in post offices. Additional bus and train service or alternatives such as e-scooters and bikes may be necessary to limit overcrowding in addition to added sanitization practices. Those with other options such as driving or walking to work should be encouraged to do so. All of this should be extensively communicated so Albertans know what to expect and can plan to get back to work safely.

Parents who need childcare    

Due to school and daycare closings, many parents have been left juggling childcare and working from home or have had to quit work entirely. Daycares reopening will be crucial for parents who will no longer be working remotely or will be called back to their jobs.

Daycares are included in Phase 1 of Alberta’s relaunch plan, which could begin as early as May 14th. The provincial government can help ease parents’ minds by providing important details:

  • Is it safe for all children whose parents work to go back to daycare?
  • What safeguards will be in place to prevent outbreaks like the ones in long-term care facilities?
  • Will there be enough spaces?
  • What PPE will be required for staff and children?

To the extent possible, businesses will need to accommodate workers who are unable to find childcare during the early phases of re-opening. We recommend that the provincial government should establish clear guidelines and protocols for daycares and look for ways to return daycare capacity to pre-crisis levels while also preserving physical distancing and other health and safety requirements.

At-risk groups who need additional protection

Any economic re-opening must take into account the continued need to protect those most vulnerable to COVID-19 – individuals over 60, those with a compromised immune system, or those without stable housing. Those who work closely with vulnerable individuals need access to regular and frequent testing. This group includes long-term care workers, physical therapists, childcare workers, hair stylists and other occupations with exposure to vulnerable populations and where physical distancing is not feasible.

Additionally, the provincial government could provide PPE to anyone in an identified at-risk group with the option to regularly exchange old for new if individuals are unable to wash and disinfect PPE themselves.

Finally, Stage 1 of the government’s re-launch strategy advises vulnerable Albertans not living in a care facility to “stay home as much as possible.” Clarity should be provided on what this means and how necessary social interaction is to be managed:

  • What types of activities and locations should be avoided?
  • Are there adequate supports across Alberta to deliver groceries, medication or other essential goods?
  • What precautions are recommended for vulnerable individuals who are currently working or will be soon?

Support for individuals who must quarantine or care for the sick

When the Canadian Emergency Response Benefit (CERB) ends on October 3rd, Canadians impacted by COVID-19 will lose access to their primary crisis-related income support program. While CERB should be phased out as the economy re-opens, individuals who contract the virus, or must support infected dependents, will continue to need income support.

Regular Employment Insurance (EI) payments will help most Albertans in such a situation. However, those without access to EI or who are otherwise ineligible will still require assistance. Without it, not only will those individuals suffer undue financial hardship, but they may feel compelled to continue working and risk infecting others.

CERB should be extended beyond October 3rd on a limited-eligibility basis for those who must quarantine or care for others and do not have other income support. Additionally, measures need to be in place to safeguard the jobs of those who must self-isolate to protect the broader population.

A lack of job opportunities

As businesses are limited by capacity and/or weak consumer demand, job opportunities might be slow to come back. This could mean an extended period of unemployment for many, especially those who were in the industries which have been hardest hit, like hospitality and retail.

There will, however, be a greater need for certain other jobs; Alberta will need more contact tracers, more people to administer COVID-19 tests, cleaners, people to ensure compliance with new regulations, teachers’ aids if class sizes are restricted, etc. If the government can provide expedited training in these areas, individuals without work could be connected to these opportunities, helping contain future spread and supporting economic growth at the same time.

With little time before reopening is tentatively set to begin, we encourage the government to work with business, operators, and appropriate professional bodies to create the clarity and confidence needed for a successful re-launch. In future reopening commentaries, we’ll take a closer look into these specific challenges and explore further how they could be resolved in such a way as to protect both Albertans and Alberta businesses.

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