Every sector of our economy is hurting today, in Alberta, Canada and around the world. The scale and breadth of the expected job losses due to the pandemic is staggering.
Nearly 1.3 million Canadians have filed for employment insurance as the novel coronavirus outbreak ravages Canada's economy, while in the U.S., the week of March 28 set a record with over six million claims for unemployment benefits.
Recently, Premier Jason Kenney warned that unemployment in Alberta could reach 25 per cent.
These staggering numbers highlight that over and above the economic headlines and statistics, the most significant harm, and potential for long-lasting damage, is the impact on individuals and families. This explains and justifies the calls for quick and significant support for individuals in order to keep them healthy and safe. At an extraordinary time like this, health includes mental health and financial security; employment is critical in this regard.
The scale and scope of the societal challenges are unprecedented, and at a time like this, we cannot demonize any one sector of the economy or suggest that workers in any sector be hung out to dry. Some have suggested that the energy sector not receive government support. I strongly disagree. Workers in the energy sector are just as deserving, just as important and just as valued as any other sector of our economy. To deny support for these workers in the name of scoring policy points is to ignore the reality of their lives.
And as we all look to governments, federal and provincial, for the critical short-term actions in health, education and employment, we must also recognize the need to look forward to the economic recovery. One way to support the recovery, be it three, six or 12 months away, is certainly to provide firms with the lifeline associated with maintaining employment. The federal government's 75 per cent Canada Emergency Wage Subsidy will go a long way to supporting many businesses.
Maintaining employment clearly accomplishes two goals: taking care of individuals and families, and supporting firms and the economy.
For many firms, returning to profitability post-pandemic will be difficult; for some, it will be impossible. While the loss of firms and jobs is unavoidable and in many cases tragic, we recognize that even in normal economic times, turnover is a regular occurrence and the public rightfully balks at the use of taxpayer dollars to support private sector firms. However, these are not normal economic times. That is why governments around the world are taking extraordinary steps with individuals-supporting salaries and basic income-and why the same needs to be true for businesses.
Supporting firms, however, is likely more complex than supporting individuals. But it is critical that we think and act now as our economic recovery and long-term economic health depend on actions that we will take in the near term.
For Canada and for Alberta, economic support must include the energy, resource and agricultural sectors, among others. The longer-term impact of abandoning key drivers of the Canadian economy should not be underestimated.
Now is not the time to close the door on economic sectors that have been and can continue to be drivers of investment, jobs and government revenues.
Canada's energy sector, in particular, faces unprecedented challenges while continuing to offer prospects for economic recovery and future benefits. Faced with the double whammy of COVID-19 (significant demand drop) and the Saudi Arabia-Russia supply war (supply increase), prices have sunk to levels that would not have been imagined a short time ago. However, global demand for energy, and for the goods and services provided by energy, will not disappear.
Some would have us use the current pandemic as an excuse to kick the Canadian energy sector when it is down. I suggest that we need to ensure that the Canadian energy sector can survive this global crisis and come out with sufficient strength to operate profitably and continue to provide jobs, investments and revenues to governments for many years to come.
Governments worldwide are looking at ways to support firms and economic activity, including supporting balance sheets through loans and aiding supply chains through procurement. The federal government's announcement for aid to clean up orphan wells is a step in the right direction, but we need to continue to be imaginative, bold and forward-looking. We need to support our economic assets and look toward how we will recover.
Joseph Doucet is the Stanley A. Milner Professor and dean of the Alberta School of Business.
This opinion-editorial originally appeared April 18 in the Calgary Herald.