There is an enormous bill coming for pandemic relief, and the economy may never be the same.

So let’s make sure it helps

Governments are going all-in when it comes to tackling the economic aftershocks of the COVID-19 pandemic. Adding up all of the support announced by the PMO, our federal government is estimated to run a $252 billion deficit this year — its biggest in history, even surpassing that of the Second World War.

To say this is a very unusual time is an understatement. More than 7.1 million Canadians have applied for the $2,000 monthly CERB payment since April 6 as the pandemic has wiped out all of the job gains made since October 1986. Given the circumstances and the ultralow interest rate environment, leveraging ourselves to help those unable to make ends meet makes sense.

However, we find it concerning that few are asking what happens if it doesn’t go back to normal, and the economy morphs into something different? More so, how does this risk align with how relief money is currently being spent.

We think we’re going to see long-lasting changes in all kinds sectors of the economy from entertainment to tourism to real estate that could shift a number of jobs to new industries or worse, result in many not coming back depending on the length of the shutdown and how things restart.

For example, a recent Reuters poll showed that only 40 per cent of Americans will return to movies, concerts, sports events, amusement parks and other live events until there is a proven vaccine — even if it takes more than a year to develop one.

Think of the number of jobs this will affect and then ask how many of them will be able to shift to industries that service at-home entertainment such as streaming, gaming and the associated telecommunications infrastructure? Are any of the current government spending programs designed to help with this transition?

Then there is the workfrom-home model that has seen more than 40 per cent of Americans leave the traditional office environment. Interestingly, studies are showing that work productivity has actually increased and when adding this to the significant costs savings it isn’t a surprise that companies are already starting to turn this into a more permanent solution.

In the U.S., Nationwide Insurance just announced that it plans to close most of its smaller offices by November and transition more than 4,000 employees to a permanent work-from-home set up. For added perspective, the company already had 5,000 employees working at home before the virus lockdown.

Here in Canada, OpenText announced last week that it is permanently closing half of its offices while cutting up to five per cent of its workforce. This will affect about 2,000 employees who will now stay in their home office, while 750 jobs will be reduced.

Scotiabank also recently told employees not to expect a return to the “old normal” in regards to how and where they work. With a huge shift to online banking, it wouldn’t surprise us to see this spell the demise of the traditional bank branch. Even capital markets divisions could change with 95 per cent of traders currently operating from home instead of trading desks.

Now imagine all of the associated support jobs servicing those smaller branch and offices that will now be closed. This means they too will have to transition into another sector or industry, perhaps one catered to stay at home workers? Again, have governments given much thought to this?

We need to stop trying to reinvigorate old industries and instead start building bridges to the future. While it won’t be easy in the shortterm, at least it will attempt to provide a long-term solution for the millions of people affected during this profound economic transformation.

WE THINK WE’RE GOING TO SEE LONG-LASTING CHANGES IN ALL KINDS SECTORS.

Martin Pelletier, CFA, is a Portfolio Manager at Wellington-Altus Private Counsel Inc. (formerly TriVest Wealth Counsel Ltd.) a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/ oversight and advanced tax and estate planning.

GETTY IMAGES /ISTOCKPHOTO Lockdowns during the coronavirus pandemic have resulted in thousands and thousands of people leaving the traditional office environment to work from home.