Small businesses are Canada’s job creation engine, accounting for more than 80% of new jobs in this country. Collectively, they are responsible for roughly half of our GDP growth. When they are healthy and strong, the country is growing, and when they catch cold, Canada is laid up.
What’s less understood is what happens when small businesses catch something more serious. While there has been much conversation about the personal and economic effects of “long COVID” on the health of Canadians, it is time to discuss the massive impact financial long COVID has had on Canadian businesses. It’s an ailment that could have serious long-term implications for Canada’s economic recovery.
We all likely know a small business owner within our social circles. Think about how hard it is to run a successful small business on a good day. Now think about that small business owner taking on an extra $170,000 in debt to stay afloat during the pandemic and – if they made it through five waves of COVID restrictions – continuing to operate at a reduced capacity amid labour shortages, supply chain disruptions and consumer anxiety.
These are the symptoms of financial long COVID that businesses are facing, and just like its medical counterpart, there is no short-term answer or looming relief. According to a recent Canadian Survey on Business Conditions, many small businesses believe these issues will continue for the foreseeable future.
The lethargic, if not pessimistic outlook is the result of a clear-eyed understanding that these symptoms are due to underlying conditions in the global and Canadian economies. This includes a global “just-in-time” supply chain that is now battered from consecutive waves of COVID emerging at different times in different parts of the world. Take Shanghai for example, the world’s busiest port of container trade. Currently significantly impacted by the city’s broader COVID shutdown, and despite isolating workers and running 24 hours a day, delays are piling up and container shipments are falling further behind. Supply chains around the world are set to experience more chaos. For Canadian businesses this means higher input costs and erratic availability of products on the shelves.
At the same time, Canada has nearly one million job vacancies that are proving very difficult to fill. Simply put, Canada does not have enough workers to keep up with demand and this structural deficit has no short term fix at hand.
Layered on top of these underlying conditions are direct impacts from COVID: record amounts of national debt, record inflation, sick Canadians unable to go into work, and in some cases, ongoing public health restrictions. Taken all together, it’s a bizarre economic environment that does not support real growth, competitiveness, or investment.
With the impacts of financial long COVID, small businesses in particular will take longer to recover. They are still under the weather. Just as Canadians with long COVID cannot operate at the same speed or with the same energy as they did when they were healthy, businesses need support to lessen their load while they get back on their feet.
With a number of simple moves, governments can allow long COVID businesses to rest and recuperate. Governments should start by introducing business-friendly measures such as write-offs for cyber security investment, waiving interest on all government-backed pandemic loans (including CEBA, BCAP, and HASCAP) and encouraging domestic travel through new tax incentives on domestic tourism, travel and hospitality activities.
The second part of helping businesses recover is building a strong labour force that works for the Canadian economy. This has to include elements such as reskilling and upskilling, but can also include more immediate solutions like a streamlined temporary foreign workers program, a decrease in our refugee and immigration processing times and making it easier for internationally trained professionals to have their credentials recognized in Canada.
As much as we all want to bounce back as easily and with as much effort as it takes to remove one’s mask, the road to recovery is a long one – and made even longer by the lingering impacts of financial long COVID on businesses. Helping our small businesses is about more than support programs, it’s about good policy. After all, there’s no healthy economy for Canada without our small businesses in fine form – to do that, they need some time to catch their breath.
Alla Drigola Birk, Senior Director, SME Policy and Parliamentary Affair, Canadian Chamber of Commerce