The pandemic won’t last forever. Senior Deputy Governor Carolyn A. Wilkins talks about what the economy will need once we’re past the COVID‑19 crisis.
The economy has less potential to grow than before
Businesses are investing less because of the pandemic, and that puts a lid on how much potential the economy has to grow. The pandemic will also lead to big shifts in the economy, and some kinds of jobs may disappear completely. This can cause “scarring”—that’s when people are out of the workforce for a long time because they can’t find a suitable job or don’t have the right skills.
The hardest-hit sectors include recreation and hospitality, which employ many young people, recent immigrants and women. These groups are particularly at risk of being left on the sidelines for an extended period.”
Boosting productivity is now more important than ever
We need more growth in the economy to raise living standards for everyone. Economic growth can help create jobs, which will reduce the damage from scarring in the workforce. An important way to boost the potential for growth is to increase productivity.
The good news is that Canadians are showing they can innovate. Think about how quickly companies organized office staff to work remotely during the pandemic, or how quickly supply chains were restructured to provide medical equipment. Canada needs to take advantage of these kinds of innovations to raise productivity.
We need unconventional approaches to help the economy recover
The pandemic is hitting some groups particularly hard. So we also need to make sure the recovery isn’t leaving people behind.
- Some workers have lost jobs because of technological change. We must help them by investing in education and continuous learning.
- Programs that helped workers stay connected to their employers during the pandemic have been important. We should also look for ways to help more women return to the workforce and stay employed.
- Governments and businesses will need to work together more. The pandemic gave us many examples of the private sector pitching in.
Many financial institutions stepped up to allow deferrals in loan and mortgage payments. This complemented public sector actions to help families weather income loss and also allowed banks to avoid some loan losses.”
The Bank of Canada will do its part
The Bank helps keep the financial system stable so the economy can function. We also help keep the economy stable by making sure inflation remains under control, as set out in an agreement with the Government of Canada.
We are reviewing that inflation-control agreement now to make sure we’re doing the best job possible. You can be sure that when we settle on an agreement with the federal government next year, it will clearly be one that is in the best interest of Canadians.