Launching the home studio for the CBC News Network Weekend Business Panel in times of COVID19, alongside Elmer Kim and John Northcott. Our segment was devoted to business as COVID19 unfolds, including record unemployment levels, government support programs, and the struggling oil sector.
- Unprecedented unemployment levels. Expect to see unemployment levels continue to increase, offset by programs that provide the opportunity for employers to retain staff (such as the Canadian Emergency Wage Subsidy). Having said that, the bottom line is that a significant portion of Canada’s workforce isn’t working and may not be for some time, including those who are unemployed, being retained through government programs, or are underemployed due to working less. Maintaining connection to the workforce is critical for employers, employees, and self-employed people.
- Self-employment support shortfalls. Under the current income support programs, it appears that self-employed people only qualify for the Canadian Emergency Response Benefit (maximum of $2,000 per month). Many self-employed people who work on a full time basis earn far in excess of $2,000 monthly, representing a significant and urgent support gap. Those who are working, but earning less due to customer and client circumstances, should be compensated in a manner that brings income up to at least the support level, as opposed to having to cease work in order to collect.
- A loan is a loan. Although there is certainly a place for loan programs as part of COVID19 support, it is important to remember that loans must be repaid, even if the interest rate is zero and a portion could be forgiven. Loan repayment is dependent upon cash flow, something that companies may or may not have in the future. It is important to remember that loan programs should not be a substitute for supports that address current income and cashflow needs, such as a wage replacement.
- Upping the banks’ ante. Thus far, the Federal government and banks have indicated that processes have been put in place to help customers “on a case by case basis”, in terms of areas such as loan payment deferrals. Feedback has been reported as mixed at best, and given the risk averse nature of financial institutions generally, more needs to be done to provide broad-based relief, which could be achieved through a government mandate or similar measures. The bottom line: financial institutions are living in a COVID19 world, whether they like it or not, and if sufficient actions are not taken now to assist people and businesses with their immediate cashflow needs, expect future default levels to be widespread.
On a lighter note, this was my first opportunity to be part of CBC News Network’s world-wide streaming from my home studio. My director was watching every moment of it; how fortunate am I? See you again very soon, CBC!