RBC Economics presents 21 charts
reshaping Canadian life in a post-COVID
world
TORONTO, Dec. 9, 2020 /CNW/ - Canadians are entering
a new year, and in many cases, a very different world, in 2021.
We are shopping online like never before and spending more time
in our gardens and less time on the road. Many have packed up their
bags, and moved to the country given that remote work is loosening
ties to more expensive city life.
Troubling trends have also emerged. Long-term unemployment in
Canada surged 250 per cent during
the health and economic crisis, which makes it a lot harder for
those impacted to get back into the workforce. The pandemic has
been especially hard for those at the bottom end of the wage scale,
earning less than $800 a week. Women
have also been disproportionally impacted.
A new era of decentralization
Many of the
forces reshaping Canadian life are underpinned by an increasingly
decentralized economy.
"Just as the 20th century was built on the backs of
centralization, through office towers, shopping malls and
hospitals, the 2020s is starting to look like a new era of
decentralization, built on the backs of digital platforms. The
convenience is extraordinary. So too may be the consequences,"
according to John Stackhouse, Senior
Vice-President at RBC.
A new report from RBC Economics explores this transformation and
how it may influence consumers, business and policy makers in the
coming year. Some sectors are already accelerating into a new
period of growth and innovation; others are discovering their
legacy models may not get another chance.
Fork in the road
The same diversions are also
happening in the labour market. Those able to seize on the
redistribution of economic activity are thriving. Others will need
new skills, new sectors or new kinds of government support.
For instance, the COVID crisis has triggered some of the most
unequal consequences for Canadian workers of any recession. Those
at the bottom end of the wage scale, earning less than $800 a week, have absorbed sizeable job cuts.
Higher earners have seen their employment opportunities improve
during the downturn.
"Some of those who have lost their jobs will opt to go back to
school or retrain, but those who could benefit most from upskilling
have historically been the least likely to do so. Without a
strategy to get lower-wage workers back on the job, the uneven
damage of the recession could turn into an uneven recovery," said
Stackhouse.
Provinces are also on diverging paths according to RBC
Economics. They were already carrying debt-to-GDP ratios at levels
not seen since the 1990s. The pandemic added ballooning healthcare
costs to their burdens.
"2021 will be a high-water mark in terms of deficits across
provinces, and some of the increase in health expenditures will be
temporary. Provinces in better financial shape will regain
breathing room as the pandemic subsides. But those in the most
precarious fiscal shape will face greater challenges. Expect calls
for greater permanent fiscal transfers from the federal
government," said Craig Wright,
Chief Economist, RBC.
The needle and the damage done
Broad
availability of a COVID-19 vaccine would provide a shot in the arm
to Canadian growth in 2021. But even then, GDP won't bounce back to
previously forecasted levels until at least 2022.
"Given that we're in for a period of extended economic pain,
continuing fiscal and monetary stimulus remain essential. By
extending income supports, Ottawa
can help the hardest-hit workers get through the crisis, and create
a supportive environment for business owners upended by
virus-control measures. For all policymakers, limiting the
pandemic's potentially lasting damage—to labour markets, Canadian
living standards, and potential growth—will be imperative," said
Wright.
Areas of focus cited by RBC Economics include the need to:
- Address long-term unemployment in sectors reliant on the close
proximity of people.
- Transform skills programs so less-educated service workers are
ready for a digitally-driven economy.
- Assist businesses and communities to build the digital
infrastructure and skills needed to thrive in a platform-based
economy.
- Redesign cities, towns and communities to absorb and support a
redistributed workforce.
"The pandemic has accelerated us toward a future RBC long
anticipated. But it has also exacerbated many of the challenges
facing our society," said Stackhouse. "A key aim of this report is
to provide Canadians with insights about our collective future, and
how they may successfully navigate the year ahead."
About RBC
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SOURCE RBC