Introduction

The COVID-19 pandemic will be written down in history for all the damage it has done. Countries across the world raced to minimize the damage and recover their economies. The measures needed to slow the spread of the virus strangled the economies of the world. As consumers stayed at home and businesses closed, it should be expected that the impacts of this pandemic will affect many. Canada isn’t an exception in this scenario, they too saw their economy suffer. This virus has caused businesses in Canada to suffer large losses, massive layoffs, and closures.

Large losses

Businesses have hemorrhaged large amounts of revenue during this pandemic. The World Trade Organization expected global trade to fall 32%.1 Businesses have suffered from this fall in trade as well. The source of this fall might be because of the social distancing and self-quarantining during this pandemic. Many businesses are losing customers such as airlines, cruise lines, casinos, and hotels who had seen a 90% reduction in activity recently.2 This drop in activity had caused Air Canada to report a loss of $1.75 billion in its latest quarter.3 The Toronto Transit Commission saw more than 80% drop in ridership during the pandemic and reported a loss of $92 million in monthly revenues.4 It isn’t only the travel industry that has been affected by this pandemic, the oil, gas, and coal industries had seen negatives returns of 50%.5 Other businesses across the nation have seen their revenues drop massively this year as well. Approximately 26.2% of businesses had seen a decrease in revenue of 50% or more in the first quarter of this year.6 However, some industries had seen a harsher change in revenue such as accommodation and food services, arts, entertainment and recreation, and educational services where over 35% of businesses reported losses of over 50% in their first quarter.7 Smaller businesses had it especially rough this year. Of businesses that had over 500 employees 15.8% deferred on their rent, while those with 5-19 employees and 20-99 employees, 22% and 22.7% deferred their rent respectively.8 There were also immense differences in revenue losses between large and small businesses as well. 32% of Businesses with over 500 employees reported losses of revenue of over 20% while small businesses with 1-19 employees had over 55% report the same revenue drop.9 Small restaurants asked for additional assistance as they operate on thin margins and the safety precautions limit revenue and increase costs.10 The slashing of revenue from this virus is hurting many businesses severely.

Massive layoffs

The COVID-19 pandemic has also caused many businesses to lay off employees. Businesses with less activity may not be able to cover the salaries of all their employees. The Canadian government is attempting to help businesses by providing a 10% wage subsidy to small businesses which would allow them to reduce the remittance they send to the Canada Revenue Agency for their employees’ income.11 This may have helped some businesses, but this only applied to small businesses and hasn’t prevented all layoffs. Nationally 40.5% of businesses reported laying off their staff.12 However, the difference between large and small businesses was considerable here as well. Of businesses with 1-4, 4-19, and 20-99 employees, 58%, 47.2%, and 35.7% reported laying off over 80% of their workforce respectively.13 Larger businesses with over 500 employees had 18.4% lay off over 80% of their workforce.14 These layoffs helped contribute to the rise in unemployment. In March and April, 5.5 million Canadians, which is around 30% of the workforce had seen their work hours cut significantly or lost their jobs.15 Major companies have laid off massive amounts of employees. Air Canada who saw a loss of $1.7 billion, had laid off a total of 21,649 employees in March, and in May, revealed that they would lay off 50-60% of their workforce.16 17 Cineplex Inc. who closed all of their theatres had laid off thousands of employees as well.18 The retail industry has also seen layoffs including from clothing retailer Reitmans Canada Ltd. who temporarily laid off 7,230 of their employees.19 Financial companies such as RBC and BMO said that there would be no layoffs because of this pandemic.20 Meridian Credit Union temporarily laid off 84 of their employees and cut 25 jobs permanently.21 The Toronto Transit Commission laid off 1,000 transit operators and 200 of their non-union employees.22 This pandemic has caused massive layoffs and in May caused the national unemployment rate to skyrocket to 13.7% which was the highest in four decades.23 High unemployment usually hurts growth in gross domestic product and labour productivity.24 It has also been linked to poverty, income equality, and crime.25 As the Canadian unemployment reached its peak in May, the Canadian gross domestic product dropped approximately 14.5% from January of the same year.26

Closures

There have been many closures across the world during this time. In Ontario, stores in shopping malls weren’t allowed to open unless they had a separate street front entrance.27 Bars and restaurants in the province had to remain closed unless they offered takeout and delivery.28 Public services such as The Toronto Public Library were also told to close their branches on March 13 by the government of Ontario.29 Businesses may have had trouble operating if they don’t have an alternate means of selling their good or service. Places that rely on quantity of customers may have face also faced difficulty such as Canada Cineplex Inc. and Landmark who closed all their theatres.30 31 As businesses closed there would be less spending. Gyms such as Goodlife Fitness and Fit4Less closed their locations.32 Unlike other businesses such as retail, gyms may face difficulty getting customers when their locations are closed. Many restaurants have closed their stores such as Keg Steakhouse Bar and DavidsTea while others such as Starbucks and McDonald’s Canada are offering services such as drive-thru, delivery, curbside pickup, and take-out.33 Some retailers had opted closed their physical stores entirely such as IKEA Canada, Indigo, Nordstorm, Nike, and Apple.34 The impact on some businesses may be larger than others. Though many of these closures are temporary some smaller businesses permanently closed their doors because of this pandemic.35 It will likely burden businesses and the industries for years to come. The closure of businesses also reduces the variety of services provided which may lead to a less competition in the market. Overall, the closure of businesses across the country will severely hurt the Canadian economy.

Conclusion

This pandemic has changed the Canadian economy and will have long lasting effects. Businesses impacted will need time to recover while some will remain closed indefinity. Some had seen larger losses than ever before. Their losses in revenue hurt the economy and caused the gross domestic product to drop massively. Revenue was not the only thing lost as many were left with less employees or jobless. The unemployment rate jumped to the highest it’s even been recorded. All of these factors have led to the Canadian economy falling into a recession. The effects of this pandemic have hurt businesses and has critically affected the Canadian economy.


Works Cited

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