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COVID-19 roundup: The jobless tally mounts

Deputy Prime Minister Chrystia Freeland speaks during a press conference on COVID-19 in West Block on Parliament Hill in Ottawa, on Thursday, March 19, 2020. The Canadian Press/Justin Tang
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It’s day 10 since Canada’s 100th coronavirus case. The number of cases is now 945, as of publication time. On their respective 10th day, the U.K. had 1,140 cases, the U.S. had 1,697 and Italy 2,502.* 

The World Health Organization (WHO) has warned that the number of COVID-19 tests available worldwide will soon need to increase by up to 100 times. Executive director Dr. Mike Ryan said the WHO has shipped around 1.5 million lab tests so far. 

On the job line: Out-of-work Canadians filed 500,000 applications for employment insurance and financial assistance this week alone, up from 27,000 the same week last year. The surge reflects what economists say is just the first wave of layoffs sweeping the Canadian economy. Air Canada is letting go of over 5,000 flight attendants—roughly 60 per cent of the department—and most of Porter Airlines’ 1,500 employees will be out of work as that airline halts all services. Fiat Chrysler is laying off 8,900 workers in Canada, as auto manufacturers across the country temporarily close shop. Irving Shipbuilding halted production at the Halifax Shipyard, putting 1,373 of its 1,800 workers out of a job. Cirque du Soleil has laid off more than 4,000, about 95 per cent of its workforce, amid show cancellations. And 200,000-plus jobs in the hotel industry are at risk as closures sweep the country. Many employers are calling the layoffs temporary; that workers will get their jobs back once the crisis subsidies. But that may be little consolation to the unemployed, as scientists warn the pandemic could last many months still.

“A long, rough road”: Small-business groups and some startup executives say the federal wage subsidy announced Thursday isn’t enough to stem job losses. Tammy Schirle, economics professor at Wilfrid Laurier University, told The Logic managing the public health crisis came first. The measures for individuals announced this week “were key in making sure people would make the choice to stay home when they are sick,” she said. Business assistance is the next step. “For many employers there is simply no business to be found, or they [have] been forced to close, so layoffs are inevitable,” she said, acknowledging the wage subsidy won’t have much effect on its own. “Employers should [prepare] employees to find the income supports, make it clear the layoffs are temporary when possible, and work at keeping the business viable in the long run.” Schirle expects more government action: “It’s going to be a long, rough road, and businesses aren’t going to walk away without scars.” The current economic crisis is “a government-mandated contraction,” asking industries to shut down for public health reasons, said Sheila Block, senior economist with the Canadian Centre for Policy Alternatives. As a consequence, Canada should expect the pace of layoffs “to be faster than we have seen in any other recession in modern times.”

Record U.S. numbers: The U.S. Labor Department reported a 30 per cent increase in unemployment claims last week with 281,000 new applications. Goldman Sachs predicts that number could hit 2.25 million for the March 15 to 20 period, “the largest increase in initial jobless claims and the highest level on record.” Some states are now scouting unemployment applicants for jobs to help process the rush of claims at employment offices that have been running on skeleton crews for years. Netflix has created a US$100-million fund to support “the hardest hit workers” who are out of work due to cancelled productions. In China, companies are considering using robots to fill the glut of jobs left vacant in industries like food delivery and health care, as workers are urged to stay home. 

Stock-market seesaw: Markets were up and down Friday on a mix of good and bad news, ultimately wrapping the week as the worst since the 2008 financial crisis The S&P/TSX was down 2.59 per cent, while the S&P 500, Dow Jones and Nasdaq declined 4.35, 4.55 and 3.79 per cent, respectively. Asian markets ended the week having regained some losses, after China reported it had contained the spread of the virus and Japan talks about reopening schools. Stocks in Paris and Frankfurt were up more than three per cent on Friday, and London’s FTSE 100 closed with 0.76 per cent gains, after the European Commission lifted tight spending rules to let countries run deficits and debt loads to deal with the crisis. The Canadian dollar held at about 69 cents against the U.S. 

“We can all poop for 10 years”: That’s how Dutch Prime Minister Mark Rutte reassured a shopper while visiting a supermarket on Thursday. The country’s grocery stores have refilled their shelves after a stockpiling fervour last week. Asked about his own supply, Rutte said, “Yes, I have enough.” 

7,500: Applications for the Business Development Bank of Canada’s $10-billion COVID-19 credit-relief program have surpassed that number, an eightfold increase in requests the bank would normally receive, according to Shawn Salewski, assistant vice-president for communications.

“A big fat zero for startups”: That’s how Andy Mauro, co-founder and CEO of Montreal-based AI startup Automat views this week’s federal relief package. The company will have to “trim our expenses radically” to survive the crisis, he told The Logic. “Over the last few years, Canada has made great strides in terms of being a place where startups can thrive, especially in the AI sector, and it’s imperative that—unless we want to see those gains fall prey to the coronavirus— we don’t make the mistake of lumping startups into the same bucket as other types of small businesses,” he said. “If I ran a corner store this might help, but it’s not going to do anything for a venture-backed startup.” But there is a silver lining, he said: “The new normal will be more online after the coronavirus, and that will be a good thing for many startups.” 

Over 5,800: That’s how many submissions the federal government has received from companies offering their products and services to combat the COVID-19 outbreak, Procurement Minister Anita Anand said Friday. On Friday, Prime Minister Justin Trudeau said the government is in discussions with auto-parts manufacturers to re-tool to make medical supplies. 

Mobilizing businesses: “This country’s industrial policy will be refocused for the time being to prioritize the fight against COVID-19,” Innovation Minister Navdeep Bains said at a Friday press conference in Ottawa. Among programs typically used by startups and scale-ups, Innovative Solutions Canada (ISC)—a $100-million-plus annual program that backs small firms developing new products and services in response to government challenges—will focus on health-care needs and process proposals faster. The National Research Council’s Industrial Research Assistance Program (IRAP) will solicit existing clients to work on items like equipment for personal protection, sanitization, diagnosis and testing; therapeutic products; and disease-tracking technology. The Strategic Innovation Fund (SIF) will provide money for “large-scale and later-stage” R&D projects, including vaccines and medical supplies, and has already identified “key projects.” According to The Logic’s ongoing analysis, of the $2.06 billion allocated to date, SIF has awarded $164.5 million to bio- and health-technology companies. “Applications for SIF and ISC have typically taken months to finalize. “Funds will be deployed on an accelerated basis with wider flexibility to be able to tackle COVID-19 related problems through shortened applications and faster approvals,” Véronique Simard, Bains’s press secretary, told The Logic in response to follow-up questions. The programs will also continue to accept and process applications that aren’t virus-focused. Another startup-focused scheme, the defence department’s Innovation for Defence Excellence and Security program, sent out an email Thursday saying it would not be funding any new projects. Jessica Lamirande, a Defence spokesperson, told The Logic it “will begin launching new challenges as soon as feasible.”

Dear Prime Minister: The CEOs of over 60 companies headquartered in Western Canada wrote to Trudeau on Thursday evening asking for “a coordinated, unified, large-scale national response” that ensures “no Canadian, household, business or organization is left worse off than where they were when this crisis began.” According to a spokesperson for the Business Council of Alberta, “this may be the first time a group of cross-sectoral Alberta CEOs has put their names to this sort of letter, but these are extraordinary times.” The CEOs made several requests, including the temporary suspension of all income and property taxes, an employee-retention tax credit and initiatives for businesses to “develop online/digital models to deliver products and services in an era of increased business interruption.”

Cross-country checkup: Canadians are struggling to get their mortgage deferrals as promised by big banks. Nunavut and Newfoundland and Labrador are the latest to enforce strict public health emergency measures. Ivanhoé Cambridge, which operates 22 malls across the country, is deferring rent for its Quebec retailers. The province’s government unveiled a $2.5-billion emergency aid program for struggling businesses, offering a minimum of $50,000 per eligible company in need of liquidity. It’s also turning to influencers and celebrities to spread the public health messages and make its chief medical officer go viral (although he really doesn’t need any help, as evidenced by this video of him explaining why wearing a mask is ineffective).

Buyer wanted: Waterloo-based North is reportedly seeking a buyer, as the wearables company burns through cash. The firm, whose investors include Amazon and Intel, laid off a third of its staff last year—about 150 employees—and slashed the price of its smart glasses. Sources told Bloomberg that the company has been meeting with buyers since last summer, with new urgency to land a deal amid supply chain pressure from the pandemic. 

Briefly:

  • Shopify is allocating $200 million for loans and cash advances to merchants. 
  • Walmart Canada is hiring 10,000 new workers for its stores and distribution centres.
  • Twelve of Canada’s largest banks and insurance firms are court-ordered to conduct their upcoming annual general meetings at least partially online. 
  • Canada’s airline industry is looking for relief as it anticipates losing at least $1.3 billion in 2020. 
  • Sobeys is installing plexiglass screens between checkout clerks and shoppers. 
  • Telus is donating $10 million for medical supplies and services.
  • The Canadian Securities Administrators is warning of fraudsters soliciting investments for what they claim are COVID-19 treatments. 
  • The Competition Bureau said it will continue cracking down on antitrust activity during the pandemic, including deceptive marketing related to the virus, price-fixing and other collusion between competing companies. 
  • Sunwing has brought home 44,000 Canadians so far.
  • Staff at the Kraft Dinner production plant in Montreal remain onsite as Canadians stock up for isolation; sales of the staple spiked 35 per cent last week. 

The social-distancing economy: Toronto e-sports firm Enthusiast Gaming has seen a 40 per cent traffic surge in the wake of COVID-19. “The early signals we’re getting from our user base is that they’re locking themselves up at home and playing more online,” Enthusiast president Menashe Kestenbaum told The Logic. “Now that kids are home there’s going to be a lot of extra downtime for them to play using their screens.” The company is keen to capitalize on a potential new audience for e-sports in fans of pro basketball and hockey with nothing to watch.

Empty seats: Ridership on Montreal’s Métro is down by about 70 per cent, with roughly 300,000 fewer trips on the system since the beginning of the week. Vancouver’s TransLink saw 684,000 boardings on March 17, a 52 per cent decrease compared to the same day last year. The Toronto Transit Commission—the country’s busiest transit agency—told The Globe and Mail that ridership has been down in recent weeks, but that it doesn’t yet have reliable figures. A report based on location data shared anonymously by users of Moovit, a trip-planning app, found Toronto’s transit ridership fell by 28 per cent over the last 10 days. The Greater Toronto Area transit agency Metrolinx told The Logic that since last Wednesday, ridership—across Go buses and trains and the UP Express, which services Pearson International Airport—has declined by 80 per cent. Via Rail, which reported “a significant reduction in passenger volumes,” has made significant changes to its services, including a dramatic reduction in its services in the Quebec City-Windsor, Ont. corridor, effective March 23, part of the cancellation of 61 of its trains until further notice. 

Who’s raising: Airbnb, which had planned to go public this year, is seeing “significant” interest from investors and is in “listen mode” on fundraising opportunities, despite the pandemic’s devastating impact on the global travel and hospitality industry. According to an early investor in the short-term-rental company—which The Wall Street Journal reports is seeing hundreds of millions of dollars in losses this year—investors believe companies like Airbnb will emerge from this crisis as “huge huge market performers.” For others who are seeking to earn private equity deals—which, in Silicon Valley, are on hold for the short term and having new valuation guidelines considered—McKinsey & Company has some advice: adjust quickly to the “new reality” of the coronavirus and set up a “cash war room” to manage financial and liquidity risk. 

Postcard from the sky: How have things changed for workers in the reeling airline industry? “I consider myself lucky if I get two flights in one week now,” said a Canadian pilot for an Asia-based airline, who spoke to The Logic confidentially for fear of professional repercussions. The decrease in flying hours directly impacts the pilot’s pay. In December 2019, he was flying four to five times a week; Now, when he does fly, he expects planes to be half empty, “which is good and bad”—though it means flights can depart earlier due to reduced boarding and cargo times, it also means the company’s bottom line continues to take a hit. The last plane he piloted was only 30 per cent full. “The aircraft is naturally lighter now, so we have to take that into consideration when manually flying, as the controls are more sensitive,” he said. There’s less traffic in the air, too; the radio is quieter. Little has changed procedurally. The cockpit protects him from potentially sick passengers, and he wears a mask and sanitizes like everyone else. The announcements he makes as a pilot haven’t changed—he’d rather not address the coronavirus in case he says something incorrect, or a passenger misconstrues his message. 

“We’re taking it day by day. As countries close their borders, we will also lose the flights,” he said. “I consider myself quite fortunate, honestly, because we’re still operating flights—meaning I still have a job, for now.” 

Around the world: New York state, which has 7,102 positive cases—2,950 of which are new—has ordered all non-essential workers to stay home. So have California and the U.K. Australia has delayed its federal budget by five months. “The idea that you can actually put together any sort of forecast around the economy at this time is simply not sensible,” said Treasurer Josh Frydenberg, who has promised a second stimulus package that will be “significantly bigger” than last week’s A$17.6-billion injection. Syrian doctors believe the coronavirus has already hit camps hosting one million people who have fled the civil war. “You want us to wash our hands?” said one relief worker. “Some people can’t wash their kids for a week.”

Briefly: 

  • The California Public Employees’ Retirement System, the largest U.S. pension, lost approximately US$67 billion in market value since January.  
  • It could cost the U.S. government up to US$2 billion to make it safe for voters to participate in the November general election. 
  • The British government has pledged to pay 80 per cent of wages for employees unable to work due to the pandemic. It is also planning to exempt the children of telecom engineers from school closures so workers can maintain broadband networks in the wake of record internet usage.  
  • Germany is considering a half-trillion-euro rescue fund for companies.
  • You can now message the World Health Organization on WhatsApp: +41 79 893 18 92. 
  • Police in Chula Vista, Calif. are using drones carrying speakers and night-vision cameras to broadcast orders for crowds to disperse.
  • Hong Kong is giving new overseas arrivals wristbands that alert the authorities if wearers leave their geofenced homes. Meanwhile, used facemasks are washing up on its beaches.

Stuck in 1941: The economic impacts of the coronavirus may prove greater than any crisis since World War II, but one block of a Paris neighbourhood has actually been thrown back to that time period after quarantine shut down a film production.

* Numbers aren’t adjusted for population because the virus spreads at roughly the same pace regardless of country size.

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