As provinces, countries and the world as a whole struggle to re-start economies, some policymakers are pitching a four-day work week as a way to help generate tourism spending.
New Zealand’s prime minister is recommending a compressed work week as a way to encourage more weekend travel within the country, where about 60 per cent of tourism is domestic.
The theory is that more flexible working arrangements will help promote more staycations that are generally conducive to long-weekend travel.
With Canada’s border still closed to international tourists, longer weekends could spur more regional travel and kick-start stalled economies. And it’s being welcomed by some politicians in B.C.
“It’s a very interesting idea that should be considered,” said Cowichan Valley MLA Sonia Furstenau. “It’s one example of the kind of nimbleness that we need to think about when we approach this COVID-19 recovery.”
Furstenau has long been a supporter of a shorter work week, even highlighting it in her campaign platform to become the next leader of the B.C. Green Party.
In the past, she has praised the benefits of productivity and work-life balance, and says the current pandemic could be the impetus to trigger healthier long-term habits.
A mandatory four-day work week…would increase costs and add regulatory complexity for employers in every sector.– Jock Finlayson, Business Council of British Columbia
“In a suite of possible approaches, this seems to be one that would be well-suited to British Columbia — particularly given our domestic tourism as an important part of our local recovery,” she told CBC News.
Furstenau believes it’s not a policy that should be mandatory, and therefore would not require legislative changes, but rather suggests it be led by employers. Still, she believes government can play a role.
“You don’t want to impose a top-down approach to this, but rather encourage businesses to consider it,” she said. “There could be incentives provided by federal or provincial governments.”
So is a four-day work week something the current NDP government would endorse for British Columbians?
“I think I will leave that up to the entrepreneurial spirit of British Columbian businesses and the workers,” said Labour Minister Harry Bains when asked about it a news conference Thursday.
“Many already have different work schedules; some work four days on, four days off; others have staggered hours,” he said. “At the end of the day, we as a government want to make sure we support those businesses and their initiatives.”
‘B.C. is not New Zealand’
Some in the province’s business community are not welcoming the idea so warmly — especially if a compressed work week was required, rather than simply encouraged.
“In the current pandemic-driven economic crisis, business does not support government-imposed measures that would further increase operating and labour costs, and thus make it harder for companies to hire back employees,” said Jock Finlayson, chief policy officer of the Business Council of British Columbia.
He said the approach makes no sense for firms that have seen revenues drop significantly or collapse altogether, adding there is no need at this point for the province to consider ‘drastic steps.’
“B.C. is not New Zealand… A mandatory four-day work week, especially if not accompanied by proportionate pay reductions, would increases costs and add regulatory complexity for employers in every sector,” Finlayson said in a statement.
‘A number of ideas — and that’s a good one’
B.C.’s tourism industry has all but come to a halt since the pandemic hit in March and is looking at its options.
“There’s a number of ideas — and that’s a good one,” said Walt Judas, CEO of the Tourism Industry Association of B.C., who calls it a novel concept.
He believes extending weekends would encourage people to hop in their car and go further afield than a two-day weekend, so it could benefit some communities as people travel between regions.
“Any initiatives like this we would certainly want to look at to see if it is, in fact, a motivation for people to travel. We’d like to think it is, but on the other hand people may still choose to stay closer to home,” he said in an interview Thursday.
However, even if B.C. does benefit from a bump in domestic travellers, many of the most popular outdoor activities in the province are free.
“Having people travel to other jurisdictions is great, but if they’re only on a hiking trail and not spending money at a restaurant or going to an attraction or staying at a hotel — that doesn’t help businesses that are desperate for visitors.”
Judas also wonders whether tourist facilities will be ready to accept an influx in visitors in time to cash in on the peak summer tourism season from May-September.
“It’s the nearby, short-haul travel market that is your bread and butter,” he said, adding the bulk of tourism dollars in the province are generated from residents of British Columbia.
Swiss Economy Slumps the Most in Decades – Yahoo Canada Finance
(Bloomberg) — Switzerland’s economy slumped the most in at least four decades as a result of the coronavirus pandemic, with private consumption and investment plummeting.
First-quarter gross domestic product plunged 2.6%, data from the State Secretariat for Economic Affairs showed. That’s worse than the 2.1% hit forecast by economists in a Bloomberg survey and the biggest three-month contraction since the start of the time series in 1980.
Like neighboring France, Italy and Germany, Switzerland responded to the pandemic by winding down much of public life. The hotel and restaurant sector experienced a 23.4% drop in output, according to the data on Wednesday.
Although the Swiss economy fared slightly worse than Germany’s in the first quarter, the contractions in France and Italy were far more severe.
Swiss government subsidies have kept a lid on unemployment and helped companies avoid a cash crunch, but the SECO still expects the economy to shrink 6.7% this year before staging a slow recovery in 2021.
Machine industry group Swissmem said that 80% of its member companies were forced to apply for short-time work, and that the full impact of the pandemic wouldn’t be felt by the sector until the second or third quarter of this year.
To prevent the rallying haven franc from hurting the economy still further, the Swiss National Bank has stepped up the pace of its currency interventions. Its deposit rate is already at a record low of -0.75%.
(Updates detail on hospitality sector in 3rd paragraph)
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Australia Economy Contracts as End to Recession-Free Run Looms – BNNBloomberg.ca
(Bloomberg) — Australia’s economy contracted in the first three months of the year, setting up an end to the nearly 29-year run without a recession as an even deeper slowdown looms for the current quarter.
Gross domestic product fell 0.3% from the final three months of 2019, the first quarterly drop since 2011, compared with a forecast 0.4% decline, statistics bureau data showed in Sydney Wednesday. From a year earlier, it expanded 1.4%, matching estimate
The result sets up an end to Australia’s record run of avoiding two consecutive quarters of negative GDP, having dodged recessions during the 1997 Asian Financial Crisis, the Dot Com Bubble and the 2008 global financial crisis. The current quarter will see a deep contraction, with almost 600,000 jobs lost in April alone and much of the economy in lockdown to contain the coronavirus.
Fiscal and monetary policy are working in tandem to rebuild the economy. The Reserve Bank of Australia has taken the cash rate near zero and lowering the cost of borrowing with its 0.25% bond yield target. The government has injected tens of billions of dollars into the economy to help tide businesses and households through the lockdown.
With the containment of the health crisis allowing activity to resume, how quickly businesses can get back on their feet, workers regain employment and households resume spending is the critical question.
“The rate of new infections has declined significantly and some restrictions have been eased earlier than was previously thought likely,” RBA Governor Philip Lowe said Tuesday after keeping borrowing costs unchanged.
“However, the outlook, including the nature and speed of the expected recovery, remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy,” he said. “In the period immediately ahead, much will depend on the confidence that people and businesses have about the health situation and their own finances.”
©2020 Bloomberg L.P.
Australia’s Economy Contracts, Ending Three-Decade Expansion – Yahoo Canada Finance
(Bloomberg) — Australia’s economy contracted in the first three months of the year, setting up an end to a nearly 29-year run without a recession as an even deeper slowdown looms for the current quarter.
Gross domestic product fell 0.3% from the final three months of 2019, the first quarterly drop since 2011, brought down by a collapse in household spending, statistics bureau data showed in Sydney Wednesday. Economists had forecast a 0.4% drop. From a year earlier, the economy expanded 1.4%, matching estimates.
The Australian dollar edged a little lower after the release, and traded at 69.32 U.S. cents at 1:06 p.m. in Sydney.
The result sets up an end to Australia’s record run of avoiding two consecutive quarters of shrinking GDP, having dodged recessions during the 1997 Asian Financial Crisis, the Dot Com Bubble and the 2008 global financial crisis. The current quarter will see a deep contraction, with almost 600,000 jobs lost in April alone and much of the economy in lockdown to contain the coronavirus.
Treasurer Josh Frydenberg, speaking after the release, accepted this fate when asked directly whether the economy is now in recession.
“The answer to that is yes,” he told reporters. “That is on the basis of the advice that I have from the Treasury Department about where the June quarter is expected to be.”
Fiscal and monetary policy are working in tandem to rebuild the economy. The Reserve Bank of Australia has taken the cash rate near zero and lowered the cost of borrowing with its 0.25% bond yield target. The government has injected tens of billions of dollars into the economy to help tide businesses and households through the lockdown.
With the containment of the health crisis allowing activity to resume, the critical question is how quickly businesses can get back on their feet, workers regain employment and households resume spending.
“Growth should resume in the September quarter, but the impact of COVID-19 will surely cast a long and lingering shadow over the global economy and Australia’s recovery,” said Callam Pickering, an economist at global jobs website Indeed Inc. who previously worked at the central bank. “Continued support from fiscal and monetary policy will be necessary throughout 2020 and beyond.”
Today’s report showed:
Household spending tumbled 1.1%, shaving 0.6 percentage point off GDP, driven by a 2.4% drop in services expenditure. Restrictions particularity impacted spending on travel, hotels, cafes and restaurantsGovernment spending jumped 1.8%, adding 0.3 percentage point. Payments to provide support during the pandemic are expected to rise in the current quarterThe savings ratio advanced to 5.5% from a downwardly revised 3.5% in the fourth quarterDwelling construction fell 1.7%, reflecting continued weakness in approvalsNon-mining business investment fell 1.7%, while mining investment rose 3.6% as miners invest in new technologies and automation
Rising commodity prices are boosting miners’ profitability, with the terms of trade 2.9% higher in the first three months of 2020, pushing the current account surplus to a record A$8.4 billion ($5.8 billion). Yet, miners will be keeping a watchful eye on the nation’s currency, which has surged almost 20% in the past two-and-a-half months.
What Bloomberg’s Economists Say
“Typically backward looking national accounts releases contain an array of hidden trends that are often overlooked. Mining investment has climbed to a 7-year high, Australia’s terms of trade have risen and exploration intentions are elevated. This bodes well for the recovery.”
James McIntyre, economist
The economic outlook is improving as the restrictions are lifted, but will continue to be constrained by closed borders that are hitting tourism and education exports. The government is discussing a fresh round of fiscal stimulus to try to put residential construction back on its feet.
(Updates with Treasurer and economist comments)
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