Businesses Skating on Thin Ice
Despite some positive economic news being reported for BC, many Greater Vancouver businesses are on thin ice and worried about how they will cope without government supports. A survey conducted by Mustel Group among Greater Vancouver Board of Trade members shows that 62% are still experiencing decreased sales volumes because of the pandemic, and about half (48%) expect their revenues to still be lower in 3-6 months compared to pre-COVID times.
Besides the bottom line, which is also being impacted by increased operating costs, staff are largely taking the brunt of it. Employment levels are not as low as they were last spring, but about one-third of Vancouver businesses are still operating at reduced staffing levels due to layoffs, and an equal number have reduced staff hours of those they have retained. And these are not just hospitality or tourism related businesses, but many others including professional and personal services, construction, retail, arts, and culture.
Need for Continued Government Support
Government supports, particularly CEWs, the Emergency Business Loan and the Emergency Rent Subsidy have been helpful and are keeping many businesses afloat, but the worry is, what will they do when the subsidies and supports end? Half of businesses do not expect to carry on as usual. Instead, they anticipate more layoffs, reducing staff hours further and/or taking on additional debt. One-in-ten expect to close either temporarily or permanently.
Yes, there is great concern about federal government spending and the debt piling up (67% concerned), but businesses know that without continued support, many will not survive or certainly will not be operating at pre-pandemic levels. In a recently up-dated mandate letter to Finance Minister Chrystia Freeland, the Prime Minister said the minister should use “whatever fiscal firepower” is needed until the economy recovers. Hopefully, this indicates supports like CEWs will continue past March when they are due to expire.
The Good News
On a positive note, some businesses have thrived through the pandemic, expanding their online operations, introducing new products and services, and increasing their revenues. This is a small group compared to those who are still struggling but the research does find that about four-in-ten businesses are optimistic about their prospects in 2021 (more optimistic than they are about the Canadian and BC economies overall). They have found a way to pivot their businesses to survive in this new environment.
When Will We Move from Our Kitchen Table to the Office?
The majority of businesses (69%) that work in an office setting do not anticipate bringing their employees back to the workplace until the summer of ’21 or later. About one-in-ten do not expect the majority to ever return. What this will mean for downtown office space is anyone’s guess. Will less space be needed due to remote working or more space due to physical distancing? Any predictions are likely to be as accurate as those made about our housing market at the beginning of the pandemic. It is a whole new world with a lot of unknowns.