All economic downturns are unfair. Some people inevitably get hit harder than others. But almost a year into the COVID-19 catastrophe, the data makes it abundantly clear: the impact of this crisis is uniquely unequal.
More than a million Canadians remain under- or unemployed while millions more simply adjusted to working from home.
The second wave of COVID-19 cases and increased restrictions in many parts of the country have clobbered the most vulnerable workers who were already struggling. But many Canadians who were lucky enough to keep their jobs have been able to cut expenses on travel, commuting and child care. In doing so, they’ve saved more than $170 billion, collectively.
Stock markets have soared to all-time highs even while the global economy collapsed. Since bottoming out last April, both the Dow and the S&P are up more than 60 per cent.
Djenaba Dayle lost her job as a server at events in Toronto when the pandemic hit last March.
“You watch the news and you see people who are privileged and fortunate enough to be in a position to save money right now,” she said. “And I know that, for myself, it’s just debt.”
Djenaba Dayle, a server from Toronto, says social programs need to be redesigned to protect workers and renters. (Erika Christou)
When COVID-19 began spreading last year, Dayle knew tough times were coming. She applied for the Canada emergency response benefit (CERB) and eventually the new extended employment insurance programs. But it’s still not enough, she said.
“It’s either pay my full rent and not eat or eat and get behind in my rent.”
On the other side of the country, Cole Westersund has experienced both sides of the pandemic’s economic divide. Last March, he was terrified that his work as a real estate agent in Vancouver would grind to a halt along with the rest of the economy.
“It was incredibly difficult to face the fact that you might not be able to put food on the table,” he said.
Then, about a month into the pandemic, some restrictions began to lift. And suddenly his phone started ringing, he said. Clients were looking for properties out of town.
“Coming out of the lockdown, they figured, ‘Hey, we have this money saved up,'” said Westersund. “If people were fortunate to keep their jobs, [they figured] let’s change our lifestyle. You know, if you’re a skier, if you’re a hiker, a biker or a fisherman.”
The sale of recreational properties has soared this year as Canadians with means look to buy properties with more space and privacy. (Gabe Rivett-Carnac)
He said people were looking for more space and privacy or even just a break from being cooped up because of public health restrictions.
And business has been booming ever since, he said. He’s been struggling to keep up with demand. The sale of recreational real estate, such as cottages, has soared 11.5 per cent in the first nine months of 2020.
But Westersund said it’s important to remember every purchase is also a sale. And many of the clients selling their properties were listing because times were so tough.
“Stepping into a client’s house, knowing full well that the reason that they’re selling is because they need the money, it’s a difficult conversation to have,” he said.
It is the definition of a K-shaped recovery. People on the lower branch have seen their fortunes fall and have not yet recovered while those on the upper branch have prospered.
Vancouver real estate agent Cole Westersund says he’s experienced both sides of the economic impact of the pandemic. (Cole Westersund)
Experts worry the increased division between those two branches may outlast the pandemic.
“Some of these effects could end up being permanent, and the bottom part of the K could persist for quite a while,” said former Bank of Canada governor Stephen Poloz, speaking at an online event on Jan. 13 hosted by Western University’s Ivey Business School.
The concern is that the worsening inequality of the economic downturn will lead to what economists call scarring: long-term job losses that result in lower growth and drag the whole economy down.
Poloz said the key right now is to support Canadians who are still reeling financially. He pointed out that interest rates remain at historic lows.
“The main thing is for us to focus on boosting growth,” he said. “I’m hopeful that, in this context that we find ourselves, we can have more federal and provincial collaboration that allows us to do some things that will boost growth forever.”
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Djenaba Dayle, the server from Toronto, takes umbrage with the term scarring.
“They’re deep, festering, open wounds,” she said. “It’s not a scar. Things have not healed over.”
In order to heal, she said, Canadians need to rethink how social programs work. Dayle said the COVID-19 crisis is a glaring reminder that the support system wasn’t adequate before the pandemic hit.
“[We need] changes to EI, changes to how we approach people who are renters, changes to how we support folks who are down on their luck,” she said.
Dayle said the minimum wage needs to rise, and that rent control is crucial — and not just during a crisis. Several economists have proposed introducing automatic triggers that would restart more intensive support programs such as CERB when major trouble hits.
Closed stores in downtown Toronto during the initial COVID-19 outbreak last March. (Paul Smith/CBC)
On the upside, most experts agree the recovery is nearly here. Daily COVID-19 case numbers are finally starting to decrease. Vaccines are beginning to roll out, albeit slowly. Economic forecasts from the major Canadian banks suggest blockbuster growth in April, May and June. Even once you factor in a negative quarter of growth to start the year, economists are predicting GDP will come in around 4.5-5 per cent for 2021 and at a similar level in 2022.
“It’s a massive acceleration of growth that we’re expecting over the next couple of years or so,” said Derek Holt, vice-president and head of capital markets economics with the Bank of Nova Scotia.
It’s been decades since Canada has seen that level of growth. Growth like that means investment and building — and that means jobs will be created. It means everyone benefits.
But will Canadians remember how much people needed government assistance during the worst of the pandemic? Will they remember how insufficient it was for many?
Dayle isn’t sure
“Let’s say I have very little faith,” she said. “But [I have] a great deal of hope.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
