How a hair-care company went from salon supplier to sanitizer powerhouse

AG Hair could have waited out the pandemic but instead decided to lean into its entrepreneurial culture and make a sharp pivot

When AG Hair moved into its new, 70,000-sq.-foot, state-of-the-art manufacturing facility in Coquitlam, B.C., two years ago, it was part of a plan to supercharge expansion of its hair care product line to salons in international markets. Europe was next on its list. Then COVID-19 hit.

Not only was the European expansion put on hold, but salons in major markets across Canada and the United States were temporarily closed. Very few were purchasing hair products, so manufacturing was halted in mid-March, leaving most of the company’s 82 employees out of work.

AG Hair could have waited out the pandemic but instead decided to lean into its entrepreneurial culture and make a sharp pivot. It began providing hand-sanitizing products for front-line health-care workers, addressing a global shortage.

“We realized there was this massive need for health-care professionals, and we wanted to make a difference and be able to provide them with the products they needed,” says AG Hair CEO Graham Fraser.

AG Hair received Canadian and U.S. approvals a week after applying for the licences needed to make sanitizer, and produced samples to show local authorities within 48 hours.

AG Hair's Coquitlam facility has pivoted to making hand sanitizer (Photograph by Alana Paterson)

AG Hair’s Coquitlam facility has pivoted to making hand sanitizer (Photograph by Alana Paterson)

“That rapid response time, and the fact that we had gone through all of the Health Canada regulatory hurdles, showed [the local health authorities] that we were a partner they could trust and someone they could look to, to deliver the products they needed,” Fraser says.

Within a month, the company started pumping out the products, first for the health-care industry, then for consumers on its own website and on Amazon. About 10 per cent of AG Hair’s hand-sanitizer production also went to people in need, as identified by organizations such as United Way.

Parallel 49 Brewing Company is also using AG Hair’s Coquitlam manufacturing facility to produce its own blend of liquid hand sanitizer for front-line health and emergency workers, in partnership with the B.C. government.

Fraser credits his team for its energy and creativity in making the hand-sanitizer production happen, and helping put AG Hair staff back to work.

“We realized we had an opportunity . . . and then it became this incredible, almost war-room mentality and collaboration with our owners, our executive team and our people to say, ‘How are we going to get through this?’ ” Fraser recalls. “I think our success speaks to the type of people we have and the entrepreneurial spirit of pursuing every avenue we have, understanding how we can produce the products and making it happen.”

AG Hair’s commitment to investing in future growth is a big part of what makes it a Best Managed company, says Nicole Coleman, a partner at Deloitte and co-lead of its Best Managed Program in B.C.

“Capability and innovation come through quite strongly with this company,” says Coleman, who is also AG Hair’s coach at Deloitte. “I don’t think they would be able to pivot as quickly if they weren’t so strategic and had the internal capabilities to do it.”

The manufacturing facility was a big investment, but one Coleman says has already paid dividends.

“They were looking forward with a strategic plan in mind about future growth and how they could expand, rather than just focusing on the day to day,” she says. “Best Managed companies are always pushing the envelope and are conscious about planning for the future.”

AG Hair was founded in Vancouver in 1989 by hairstylist John Davis and graphic artist Lotte Davis. The husband-and-wife team began bottling hair products in their basement and selling them direct to salons from the back of a station wagon.

The company eventually moved its manufacturing off-site, to a third party. One day, John went to watch the operations and was surprised to see salt being poured into the mixture. Although he was told salt is commonly used as a thickener, he didn’t like the potential side effects of dry hair and skin.

It was at that moment John decided the company would oversee its own manufacturing. “Through that experience, John also became an expert in product development,” says Fraser, who came to the company in 2000 as director of sales.

After having worked for more than two decades at PepsiCo and Kraft Foods, Fraser was eager to work at a smaller, more agile company where he felt he could help make a difference.

“It was perfect because I got to bring a lot of structure and process that I learned in those organizations, but I also learned an awful lot about being an entrepreneur from John and Lotte: that sense of urgency, the decision-making process, the need to get things done and drive things forward and pursue opportunities,” he says.

Fraser has helped drive AG Hair’s expansion into the U.S. and internationally, including Australia, Taiwan, and Central and South America. A portion of its sales go to One Girl Can, a charity founded by Lotte that provides schooling, education and mentoring for girls in sub-Saharan Africa.

Fraser also oversees the development of new, trending products, including a new deep-conditioning hair mask made with 98 per cent plant-based and natural ingredients. Hand-sanitizing spray and gel will be the latest addition to the company’s product lineup.

“We don’t see the demand [for hand-sanitizing products] going away,” he says. “As the isolation policies start to get lifted, people are going to need forms of security and protocols as they get back into regular life and work. We see there’s going to be a need for these types of products long-term.”

This article appears in print in the June 2020 issue of Maclean’s magazine with the headline, “Working out the kinks.” Subscribe to the monthly print magazine here.


Furloughed workers with COVID-19 fears can't just stay home and collect CERB

If you have been temporarily laid off and your boss asks you to go back to work and you say no, then you’re essentially quitting your job

Over the last couple of weeks, cities across the country have started to reopen. In Winnipeg you can now get a haircut or social distance with a martini on a restaurant patio. In Toronto, golfers can hit the greens, while the retail-deprived can once again get the in-store shopping experience. In Vancouver, it’s A-OK to get tattoos.

But while plenty of Canadians are looking forward to re-entering society, many of the staff who are getting called back to work are concerned for their safety. According to a U.S.-based survey conducted by Eagle Hill Consulting, 54 per cent of employees are worried about being exposed to COVID-19 as the economy reopens. While no one’s polled Canadian workers yet, it’s not hard to imagine that the numbers would be similar.

With many of the jobs that have opened across the country, such as hairdressing or construction, it’s almost impossible to work and social distance. Staff who are concerned about contracting COVID-19 may want to stay home and continue collecting the $2,000-a-month Canada Emergency Response Benefit (CERB), which they likely applied for when they were temporarily laid off.

Unfortunately, wanting to stay home and having a boss who allows you to take a few more weeks off work are two different things. Many people have been furloughed during this crisis, which is a temporary layoff. If your employer wants you to come back to work, you have to go. If you refuse to return, you could lose your government benefits.

READ: These charts show how our fight to ‘flatten the curve’ is going

Putting CERB at risk

There aren’t many rules around CERB eligibility. Pretty much anyone who has been laid off either permanently or temporarily from a job since March 15, or can’t work because they have to take care of their children, can apply. (And eight million Canadians are currently collecting payments.) However, the government has made it clear that anyone who quits their job cannot receive CERB, just like you can’t collect employment insurance in normal times if you resign.

If you have been temporarily laid off and your boss asks you to go back to work and you say no, then you’re essentially quitting your job, which means you can no longer receive CERB. Full stop. “If an employee refuses to return to work if the workplace is safe, they are effectively quitting their job and they wouldn’t be eligible for CERB,” says Heather Cameron, a senior associate lawyer at Norton Rose Fulbright Canada.

(While there have been reports that the government is still paying people who they know have quit their jobs and have applied, they may ask for that money back one day, so it’s probably not a good idea to push your luck.)

READ: How to get tested, what the symptoms are, where to get help

Making a safety complaint

The only real course of action you can take is to tell your boss that you can’t return to work because their workplace isn’t safe, perhaps because they’re not following proper reopening guidelines. In that case, the employer has to review its policies and the actions it’s taken to prove that it is properly following the rules. If you’re wrong and they are following all the rules, then you have to go back to work. If you’re right and your boss missed something, then you’ll have to go back to work once they address the problem. If for some reason they refuse, you can file a complaint – who you complain to do does vary by province, but in Ontario it’s the Ministry of Labour – but that would be an extreme and likely rare case.

Also, if you have a disability that you think absolutely prevents you from returning to work, and if your employer is demanding your return, then you can file a complaint with your provincial human rights commission who would then rule on whether the workplace is being discriminatory. Unfortunately, just general worry about getting sick or thinking that no workplace can be safe right now will not fly, says Cameron.

Can’t refuse to return to the office

What if you have a job where working from home is perfectly doable, but your boss wants you to come back to the office? You still have to go. “In most cases the employer has the right to determine the location of work, and an employee cannot insist on a work from home arrangement,” says Cameron. “Absent special circumstances, or employee rights that may exist under a contract… the employee is likely not able to dictate work location or refuse to return to the office.”

Unfortunately, it’s a similar situation if you are caring for a child and your employer demands you come back to work, according to Cameron. While parents who can’t go to work because they have to take care of their kids can receive CERB payments, if your boss doesn’t care that you have kids at home and needs you back, then you may have to go or risk losing your job.

Cameron says that this situation could trigger a human rights complaint. If someone is entitled to an accommodation based on what’s called a protected grounds of discrimination (here’s a list of what would be considered grounds for discrimination), and if making that accomindation isn’t difficult for the business to do, then not showing up to work may not be considered job abandonment. However, the human rights commission would assess each complaint on a case-by-case basis and, says Cameron “while an employee is entitled to reasonable accommodation, they are not necessarily entitled to their preferred accommodation.”

The best result would be for an employer to be in a position where they can either let you continue working from home or give you the time off you need, but as the economy ramps up, more people will be expected to come to work. Ultimately, it may end up falling to you to decide whether working is still worth it.



Canada's economy may never return to what it once was

No, it won't come roaring back by the summer. Canada is enduring an economic collapse many economists warn will make the Great Recession seem tame by comparison.

When the Chainsaw bar in Waterloo, Ont., opened its doors in mid-2009, it was just weeks after the official end of the last recession and the start of the long-slog recovery that followed. Even so, the bar soon became one of the university town’s most popular watering holes, renowned for its cheap drinks and raucous karaoke nights. So when the bar temporarily closed its doors on March 16, part of the expanding effort to stop the spread of COVID-19, many locals expected the place to be back up and running once the viral threat had subsided.

Instead, in late April, owner Ryan Good announced the shutdown would be permanent. With debts piling up, he says, even the federal government’s various rescue packages couldn’t overcome two questions nagging him: “What is the world going to look like when we come out of this, and could Chainsaw be a part of that new world?”

RELATED: Expert tips on how to save the economy

The bar’s ordeal, and the loss of 50 full- and part-time jobs there, is a microcosm of a punishing story unfolding across Canada as the country endures an economic collapse many economists warn will make the Great Recession seem tame by comparison. To combat economic fallout from the lockdown, governments and policy-makers have announced a barrage of historic measures—like emergency loans, wage subsidies and commercial rent assistance—aimed at putting businesses on life support so they can survive until social distancing restrictions are lifted. The hope, as Prime Minister Justin Trudeau has repeatedly put it in his daily press briefings, is that these steps will allow the economy to come “roaring back.”

But to what? As the weeks of coronavirus restrictions have dragged on, it has become ever more apparent that the hopes of a rapid return to the way things were before—the fabled V-shaped recovery—is out of the question. “It is wishful thinking to believe that things are going back to normal by the summer,” says Benjamin Tal, deputy chief economist with CIBC.

There are a host of reasons for this, says Tal, but one of the most acute will be enduring anxiety about a second wave of the pandemic hitting, and whether that could force another tightening of social distancing restrictions. In the 1918 Spanish flu outbreak, the second wave proved far more deadly than the first. However, even if that doesn’t happen or if there are only minor flare ups, it will still be enough to cause restaurant goers and consumers to think twice about venturing into crowded establishments. Likewise, business leaders will hold back on hiring and investing, out of uncertainty.

It’s a pattern likely to lead to what Tal describes as a “zig-zag” economy, and it’s one that could last until there is an effective and widely distributable vaccine in 2021 at the earliest. But even then, he notes, the damage wrought upon the job market over the past two months will have a lasting and damaging effect. In the coming months, unemployment will rise from its pre-crisis level of 5.5 per cent to more than 13 per cent, according to the bank’s forecast, before dropping back to eight per cent next year. That means we’ll recover from the zig-zagging of the economy into more conventional recessionary conditions on the job front. “It would be naive to think there won’t be permanent damage from this,” he says.

A closed store displays a sign pleading for help (Nathan Denette/CP)

Small businesses, which employ 60 per cent of Canadians, are particularly hard hit—which is not surprising, since many like Chainsaw are on the front lines of the service industry, which has been particularly impacted by social distancing. A survey conducted by the Canadian Federation of Independent Business (CFIB) of its members found 40 per cent of small businesses owners believe they may not be able to keep the lights on if the current COVID-19 restrictions were to last until the end of May. But even if measures begin to lift this month, as provincial premiers have cautiously vowed, it will be too late for many businesses.

“In my estimation there is no way, even with all the support programs or if restrictions start to lift, that we come out of this without tens of thousands of small businesses closing,” says CFIB chief executive Dan Kelly. “Even if it’s just three per cent of small businesses that close, we’re still talking about 30,000 companies.”

Of course, these forecasts stand in stark contrast to what stock markets seem to expect. Throughout April, investors seemed willing to give optimists the benefit of the doubt. Since global markets bottomed on March 23, with the S&P/TSX composite index having plunged 37 per cent, markets everywhere rebounded sharply in April in what was the best month for stocks in more than three decades. That was despite a string of brutal data releases that showed the sharp rise in unemployment and a collapse in retail sales, manufacturing and real estate activity.

READ: The end of economic growth

At least as of early May, when this story was published, markets were dutifully taking their cues from central bankers who have pumped trillions of dollars of liquidity into the financial system to keep it from seizing up.

Count outgoing Bank of Canada governor Stephen Poloz among those who believe the old normal is not out of reach. On April 29, he delivered a virtual speech that was full of the type of hopefulness you might expect from a central banker trying to hold an economy together. He dismissed comparisons that have been made between this crisis and the Great Depression—the last time the economy contracted to such an extent—as “unhelpful,” and instead likened this moment to a natural disaster. “Economic recoveries from natural disasters are usually quite rapid and robust,” he said, touting the soundness of Canada’s economy going into the pandemic as a strength that will carry us back out. “Just as a healthy, fit individual is more likely to shake off COVID-19, so is the Canadian economy,” he said.

Yet it’s worth asking just how fit Canada’s economy was before the pandemic hit. In fact, the parts of the economy that were powering growth were those fuelled by indebted households, like retail sales and the real estate sector. Business investment, meanwhile, had stagnated once again.

The strains were already starting to show before the pandemic sped up the process. A closer look shows that a lot of businesses were struggling amid a slowing economy even before the lockdowns put a freeze on economic activity—meaning some of the businesses laying off workers were already at risk of closing for good. Starting last fall, the number of business insolvencies began to rise on a year-over-year basis for the first time since the early 2000s, according to data from the Office of the Superintendent of Bankruptcy.

Last month, Shakers—an indoor and outdoor family entertainment centre in southeast Calgary that usually employs around 50 people during the summer months—announced it was shutting down permanently after 14 years in operation. For owner Christine Buhr, it was a decision that had been coming long before the world ever heard of COVID-19. While the attraction had powered through the Great Recession relatively easily, the downturn that struck Alberta after oil prices began to crash in 2014 left a lasting scar. “We were one of the first economic indicators of how bad things were,” she recalls. “We saw a massive drop-off after that.” As the province raised the minimum wage, the economics of the business became impossible to justify and she was exploring the sale of the Shakers property. So when the pandemic hit, along with yet another collapse in oil prices, “the writing was on the wall,” she says.

READ: What the turmoil in oil markets means for Canada’s economy

The carnage from these and other temporary and permanent closures has had a devastating effect on households that will be felt long after the pandemic runs its course. As of the end of April, more than seven million people had applied for the federal government’s Canada Emergency Response Benefit (CERB), which pays out $2,000 a month to workers impacted by COVID-19—more than 300,000 of those applications in just the final week of the month. Stephen Brown, an economist with Capital Economics, estimates that households have lost 40 per cent of their wage income across the entire economy since February. While CERB payments help close the gap, Brown estimates the net loss in income is still 21 per cent.

For some workers, in particular women with children, this crisis could set them back years, says Lindsay Tedds, an economist with the University of Calgary. “Everyone is talking about opening up the economy and nobody is talking about how you get parents back to work when schools are closed or when parents want to keep their children home because they are immunocompromised,” she says. Yet we know that when parents leave work to take care of children, it severs their attachment to the labour market with lasting consequences. “If we don’t think about this properly, women particularly are going to be hit by this and it could take generations to come out of this,” says Tedds.

For now, economists are left to grapple with how the economy is going to change in the short and long term as a result of this crisis. In an April report, CIBC’s Tal peered three months into the future at what life in Canada is likely to look like. In short: how we work, live and consume would be scarcely recognisable to our pre-pandemic selves. Many older Canadians and those with preconditions will be expected to remain at home. Factories will require minimum distances between workers and operate at reduced levels, which will crimp output. Stores and restaurants too will require customers to maintain social distancing, while many businesses will continue to ask large numbers of their employees to work from home. As Bank of Nova Scotia warned its employees last week, “Our ‘new normal’ is unlikely to be us resuming our ‘old normal’ in terms of how and where we work.”

In the meantime, the bad economic news continues to pile up. The average forecast among economists at the country’s five largest banks sees Canada’s economy shrinking by more than 40 per cent in the second quarter, on an annualized basis. As if it needed declaring, the C.D. Howe Institute’s Business Cycle Council, the arbiter of recession dates in Canada, said on May 1 that the pandemic recession officially began in March.

Call it the month when the Canadian economy as we knew it died. For thousands of business owners and millions of workers, there’s no going back.

This article appears in print in the June 2020 issue of Maclean’s magazine with the headline, “What lies ahead.” Subscribe to the monthly print magazine here.



How to save the economy

Top Canadian economists explain what Ottawa should do next

Since March, governments have released a blizzard of new programs and policies to stabilize the economy. But what comes next? We asked economists for their big ideas about what Ottawa and the provinces should do now.

Clarity creates confidence

Pedro Antunes, chief economist, Conference Board of Canada (Colin Rowe Photography)

(Colin Rowe Photography)

Pedro Antunes, chief economist,
Conference Board of Canada

While social distancing and the halt to non-essential activity were necessary to halt the spread of COVID-19 and avoid straining our health-care system, they carry a large economic cost. Consumer and business confidence has been shattered and governments have responded with a host of programs to cushion the economic fallout. Unquestionably, these policies and programs were required, but the fact that they have not been applied consistently across the country contributed to an already uncertain operating landscape. Restrictions on activity vary from province to province while the information about support programs put in place by federal, provincial, and municipal governments (even some Crown corporations offered relief) is overwhelming and difficult to navigate.

The key to emerging from this recession will be restoring business and consumer confidence so that, as restrictions are eased, they are ready to hire and spend. Governments can support confidence by being transparent with respect to when and how restrictions will be phased out, what health and security requirements specific businesses will need to adhere to, and what they will do in the event of a resurgence of COVID-19 cases. While companies are used to dealing with our multitude of interprovincial barriers and regulations, alignment between Canada’s federal and provincial leaders on the plan to phase out restrictions would reduce uncertainty at a time when we simply have too much of it.

RELATED: The economy may never return to what it once was

A summer of instant infrastructure

Michael Veall, professor of economics, McMaster University (Georgia Kirkos)

(Photo by Georgia Kirkos)

Michael Veall, professor of economics,
McMaster University

While policy adjustments continue, the main bases appear to have been covered for income support. The focus should shift to safe job creation. Normally I am cautious about boutique programs, but it is not the time to be squeamish.

Dust off that old standby, a temporary home renovation tax credit, but with quick payouts and social distancing provisions. Extend that program to small business. Take a bow for the orphan wells cleanup program and look for other ways to create jobs while solving known problems that will have to be dealt with sooner or later. Make it sooner. Encourage provincial governments to do what they can to re-ignite construction and resource industries. Besides the ongoing push on medical supply manufacture, introduce a sharp and short subsidy of immediate internet and telecommunications investment. Use subsidies to ramp up childcare as soon as operationally safe. Ship money to municipalities for anything shovel-ready, including environmental projects, tree-planting being the cliché.

Make it the summer of instant infrastructure. Avoid delays by letting starting-times depend on local conditions. The unifying principle is rapid employment and output creation. Everything should be a limited-time offer: an incentive for action now, not months from now. Finally, while Canada had a reasonable safety net, it wasn’t designed for this kind of crisis. Plan a new one.

The kids aren’t alright

Tammy Schirle, professor of economics, Wilfrid Laurier University (Tomasz Adamski)

(Photo by Tomasz Adamski)

Tammy Schirle, professor of economics,
Wilfrid Laurier University

What are two things that matter most for landing that first great job after graduation? A graduate’s social networks and the state of the economy will largely define their career trajectory. Moving into the labour market in the middle of this pandemic will be devastating. Studies have shown that entering the workforce during a typical recession is associated with a large loss in earnings for new graduates, compared to their potential, and the negative effect takes up to 10 years to fade. We’re looking at graduates with few options to work in the coming months, and the opportunities for those from less advantaged socioeconomic backgrounds are even worse. We will need support for programs that find innovative ways to bring new entrants into the labour market, perhaps with work-from-home internships, targeting those lacking networks, as well as broader income support for those unable to land that first great job.

EI should be kicked to the CERB

David Macdonald, senior economist, Canadian Centre for Policy Alternatives (Courtesy of David Macdonald)

(Courtesy of David Macdonald)

David Macdonald, senior economist,
Canadian Centre for Policy Alternatives

Let’s formally replace our creaking EI system with a modern equivalent based on the Canada Emergency Response Benefit (CERB). Just like the 1970s computers that run it, EI was built for another era of work with regular hours, a formal workplace and decent pay. This crisis has exposed its flaws: it’s bureaucratic, unresponsive to workers’ needs, incredibly slow, and incredibly complicated. Our dated EI system was built out of the crisis of the Great Depression in 1940, and a modern EI system through CERB is being rebuilt to meet a modern-day crisis. We need a system built for and more adapted to our economy, to our times, to our reality, to our fast-paced lives and smartphones.

The COVID-19 crisis finally forced us to throw the antiquated EI system into the trash and build a new one on the spot. Despite being done quickly, the design benefits of the CERB are substantial: it’s built for speed, it covers gig workers, it provides a floor on benefits for low-wage workers, it’s dramatically simpler to administer, and it’s easy to understand what you’ll get. Hopefully these features will be the foundation for a new modern EI system following this crisis, and we can leave our post-war EI system where it belongs: in the bin.

Good government needs fair tax systems

Frances Woolley, professor of economics, Carleton University (Courtesy of Frances Woolley)

(Courtesy of Frances Woolley)

Frances Woolley, professor of economics, Carleton University

A government is, in essence, an insurance company with an army. It can insure against the kinds of risks that private insurance companies cannot, or will not, take on. In Canada, Employment Insurance, the Canada Emergency Response Benefit, and other programs are insuring workers against income and job losses caused by this coronavirus. Canadian firms and investors are being insured through wage subsidies, loans and the Bank of Canada’s actions to provide stability in financial markets. Provincial health insurance systems provide every Canadian with health-care coverage.

Yet for government insurance to be effective in protecting both the economy and the people and businesses who make up the economy, everyone has to opt in and pay insurance premiums. In recent decades, however, many have tried to opt out. For example, firms avoid paying Employment Insurance premiums and other payroll taxes by reclassifying employees as self-employed, independent contractors. There is widespread lobbying for lower tax rates or special tax breaks.

The COVID-19 pandemic is reminding Canadians that governments play a vital role in ensuring economic stability and prosperity. They can play that role most effectively when they are supported by a strong, fair, and efficient tax system. What I hope to see coming out of this crisis is a serious effort to strengthen the revenue foundations of good government. This means regularizing gig economy work, levelling the tax playing field between digital and bricks-and-mortar firms, preventing the tax base erosion, and reducing tax avoidance.

A sales tax holiday for consumers

(Courtesy of CFIB)

Ted Mallett, chief economist, Canadian Federation of Independent Business

The unknowns about COVID-19 with respect to public health are complicating Canada’s efforts to manage the economic policy aspect of the crisis. Short-term measures on incomes, payrolls, credit and rent in a shutdown environment are eventually going to have to transition to support for restart and recovery. For small businesses, that path will be uneven and bumpy. Even if permitted to reopen, businesses will be faced with higher operating expenses before any meaningful revenues return. Credit and wage subsidy measures, therefore, will have to stay in place as that process begins. Consumers too will be shy to reestablish old habits, so they may need nudges from demand-inducing measures like sales tax holidays to help get money circulating again. Boosted infrastructure spending may help a little, but past experience shows its value doesn’t always measure up to its costs.

Longer term, Ottawa and the provinces will need to focus on the fiscal hangover. Attention should be on incentivizing participation in the work force—because we need to earn our way out of this. Education, immigration, childcare and mobility-directed measures to bring in and to keep people working are widely supported by the general public, as are removing barriers to business creation. For other necessary measures, like delaying retirements, some may need more persuasion. There will be difficult choices ahead and limited funds, so we can look forward to a completely new policy-making environment.

This article appears in print in the June 2020 issue of Maclean’s magazine with the headline, “How to save the economy.” Subscribe to the monthly print magazine here.



COVID-19 has created a debt crisis for Canadian households

From debt consolidation to consumer proposals here are options to consider

With about 10 million people receiving Canada Emergency Response Benefit payments so far, many Canadians are making a lot less money than they did two months ago. According to Statistics Canada, Canadians earned, on average, $4,383 per month at the start of 2019; those on CERB will bring in $2,000 a month. While it’s good to have some money coming in, that gap (and it will be a lot more for some) is going to be a major issue for out-of-work Canadians.

You don’t need to be a psychic to predict that over the next weeks and months, the country will see an increase in personal bankruptcies, while household debt is going to soar. Well before COVID-19, there was growing concern over the country’s personal finances, with debt-to-income ratios topping 176 per cent in the third quarter of 2019, which means for that every dollar of income we earn we owe $1.76. Consumer insolvencies, while rare relative to the number of people in Canada, topped 137,000 in 2019, a 9.5 per cent year-over-year increase. A 2019 survey from accounting firm MNP also found that 46 per cent of Canadians were $200 or less away from financial insolvency.

READ: How dormant websites could lead to a better understanding of the COVID-19 crisis

While that was alarming then, it’s far more troubling now. At least in 2019 most people had jobs, while their net worths were rising thanks to rising equity and housing markets. In early May, Credit Canada, a non-profit debt counselling organization, conducted a survey that found that 66 per cent of respondents would experience, or are already experiencing, a “severe financial crisis” due to a job loss or a cut in income. MNP’s latest Consumer Price Index also found that 46 per cent of Canadians are worried about their current debt levels, while 25 per cent of respondents said they’re unable to meet all their debt obligations every month – and this survey was done before the quarantine began.

While the difference between what people were making before COVID-19 and what they may be making now on the CERB will likely cause credit card and line of credit debts to climb, Canada’s real debt reckoning could come in the fall, when the mortgage and loan payments that so many people have deferred come due again. “I hope it’s not going to be the same kind of situation that the U.S. saw during the subprime crisis,” says Adriana Molina, a spokesperson with Credit Canada. “But the insolvency rate is going to skyrocket because those deferral periods are time limited. A huge cohort of people that will eventually need to pay up.”

With job losses on the rise, and the time frame for an economic recovery getting pushed out further and further (despite some places reopening), there’s a good chance that people who did defer still won’t be in a position to start paying their mortgages again. These issues aren’t exclusive to those who haven’t managed their money either. “There are people who pay their bills on time, their credit cards every month, didn’t have much debt and took on a mortgage in a financially sound way,” says Molina. “They had jobs, balanced their budget and didn’t spend beyond their means. All the sudden the rug has been pulled out from underneath them.”

READ: How to apply for CERB if you’re laid off because of COVID-19

Debt reducing options

So, what are you supposed to do if your debts are, or will soon be, on the rise? If you have an emergency fund, then tap into that, but Molina says most Canadians don’t have one. You could also cut expenses, though, at this moment, you’re likely not spending as much on discretionary costs, like eating at restaurants and going to movies. While that lack of spending could help you keep debt down, if you’re used to earning a decent paycheque and now you’re making less, your fixed costs, such as mortgage, utilities and car payments, could still be high.

It may be possible to consolidate your existing unsecured debts, such as credit card and line of credit loans, under a single debt and at a better rate, says Molina (Credit Canada specializes in helping people do that), or even get your mortgage lender or auto loan provider to permanently cut your interest rate rather than just giving you a break that you’ll have to make up later. (Getting rates cut on secured loans, such as a house, may be more difficult to do, but it’s worth a shot.) You could also refinance your mortgage at a lower rate – and mortgage rates have fallen since the crisis began – but depending on how much term you have left, that could be expensive.

If things get really bad, you could file for bankruptcy, where you may get absolved from paying your unsecured debts. However, a note about your bankruptcy will remain on your credit report for at least six years and that may make it more difficult to obtain credit in the future. An increasingly popular alternative to bankruptcy is filing a consumer proposal, arranged through a licensed insolvency trustee, which would see you pay creditors a share of what you owe them.

READ: Pulling off a bureaucratic miracle: How the CERB got done

Avoid payday loans 

One option to avoid is payday loans. They sound great – payday lenders give you an immediate influx of cash, which you’re then required to pay back when you get some cash, but interest rates on these loans are exorbitant. A report from the Canadian Centre for Policy Alternatives said that payday lenders often charge an annual interest rate of between 391 per cent and 652 per cent, depending on the province. While there’s no evidence yet to suggest that payday loan use is increasing in Canada, it’s not hard to imagine a scenario where interest in these loans increase.

No matter how you look at it, for the next few months, if not longer, it’s going to be more difficult than ever for Canadians, and especially those who are out of work, to make ends meet. Cut your expenses by as much you can, try and get an interest rate reduction on secured and unsecured debt and then wait. At some point the economy will turn, the jobs will come back and your income will rise again.



How dormant websites could lead to a better understanding of the COVID-19 crisis

These charts from a Toronto research company with a unique way of collecting survey data show how people are grappling with the coronavirus

Data updated May 15, 2020

From the moment the world went into pandemic lockdown officials have struggled to stay on top of the fast-moving crisis, both in terms of halting the spread of COVID-19 through social distancing and lockdown measures, as well as understanding and mitigating the severe shock to the economy and peoples’ lives. With governments, businesses and health experts flying blind, timely data has never been more vital.

As it turns out, one surprising solution may come down to our fat fingers.

Toronto-based RIWI is in the business of opinion research and analysis, but unlike surveys that ask questions through conventional channels like email or phone interviews, RIWI uses machine-learning technology to collect real-time data through questionnaires people reach when they randomly stumble onto the Internet’s millions of dormant or vacant web domains, whether by clicking on search results or mistyping URLs.

READ: Coronavirus in Canada: These charts show how our fight to ‘flatten the curve’ is going

“We’re able to tap into the opinions of people who don’t otherwise answer surveys,” says Neil Seeman, the founder and chief executive officer of RIWI, which grew out of a University of Toronto lab during the H1N1 pandemic in 2009. “This is the first pandemic we’ve had in this complex, dynamic, noisy web-enabled information environment, where the way you receive information, and interpret information is in some ways more important than the data itself.”

With the latest job numbers for April showing employment collapsed by another two million, sending the unemployment rate to 13 per cent, RIWI’s data adds more layers to how we understand the current health and economic crisis.

Maclean’s asked RIWI to share some of its survey results, which we will update as the lockdowns across Canada and elsewhere are gradually lifted. The survey questions focus on key economic questions, like the impact on incomes and how people are using emergency money they receive from government, as well as gauging the public’s confidence in health officials and their advice on social distancing.

The results also show the views and behaviours of those in several other countries. “The word pandemic comes from the Greek word for global,” says Seeman, who describes himself as an infodemeologist. “To understand the crisis in Canada and how to prevent the secondary wave, the tertiary wave, one needs to look globally and learn from other countries.”

For more on RIWI continue reading after the charts.

On mobile charts display best in landscape mode.

How well are health officials dealing with COVID-19

While confidence in health officials continues to drop in the U.K. and the U.S., in Canada there has been an increase after a steep drop in April.

Keeping our distance

How social distancing has changed over time

On balance Canadians are starting to ease up on social distancing, while the share of those insisting there is no need to practice social distancing has nudged up to 14 per cent.

Struggling to pay bills because of COVID-19

What are people doing with their emergency cash from the government

Many have seen their income shrink by half

The share of Canadians who have lost half or more of their income now stands at around 40 per cent, up from 37 per cent last week. In its April jobs report Statistics Canada found that “36.7 per cent of the potential labour force did not work or worked less than half of their usual hours during April.”

COVID-19’s biggest hit to incomes is among the young

According to RIWI’s findings, 51 per cent of Canadians aged 14 to 24 saw their incomes halved, while 47 per cent of those in the next age bracket of 25 to 34 did so. Likewise StatCan’s job report found young workers suffered by far the steepest job losses. Employment among those aged 15 to 19 fell 40.4 per cent while those aged 20 to 24 saw employment fall 31.1 per cent.

To reopen or not to reopen after COVID-19

Canadians continue to be more supportive than Americans of the speed with which their governments are reopening their economies.

The idea for RIWI, which stands for real time interactive worldwide intelligence, grew out of an idea Seeman sketched on his daughter’s erasable marker board in 2006 to use dormant and vacant website domains as vehicles to conduct surveys. He patented the idea that year. “I’ve been obsessed with one problem, which is how do you collect reliable, continuous scientific opinion data from every day people in every country around the world,” he says.

In the web’s early days he’d traded in web domains, but registering and selling URLs had never been a particularly lucrative business. By the mid-2000s Seeman began working in the health care field and by 2009 he was able to build out his unique data-gathering strategy while running a health strategy think tank at the University of Toronto’s Massey College. RIWI was put to the test that year tracking public perception of the vaccine developed to fight the H1N1 pandemic. RIWI gained further attention in 2011 by tracking and predicting the fall of Egyptian leader Hosni Mubarak. (In 2015 RIWI went public on the Canadian Securities Exchange.)

The concept behind RIWI’s data gathering is simple, albeit unorthodox. There are hundreds of millions of Internet domains and at any moment tens of millions sit empty, either because they were abandoned or were registered but as yet unused. Vast numbers of domains are slight variations on other website names someone registered in order to catch traffic when users mistype an address into their browsers.

READ: Pulling off a bureaucratic miracle: How the CERB got done

RIWI contracts with domain name brokers, website registries and ad tech publishers to use those domains to circulate its surveys or those of its clients and partners, which have included universities, the UN World Food Program, the U.S. Agency for International Development and hedge funds. Surveys are gathered anonymously, though the company uses a respondent’s IP address to identify their location. While the company acknowledges the survey respondents skew slightly younger, because of the demographic make-up of web users, its unweighted survey data closely matches census data by age, gender and geographical distribution. To date, more than 1.6 billion people from nearly 230 countries have responded to RIWI surveys, Seeman says.

As the world grapples with COVID-19 Seeman emphasizes the need for real-time data to continuously evaluate both the state of the economy and how receptive people are to the advice of public officials. And not just in Canada, but in other countries hit hard by the virus, including China.

“Right now there’s a narrative around the world that in China the economy is bouncing back. It’s not. It’s struggling. It’s very painful,” he says. “We can learn a lot from China if we put aside all our cognitive associations with China and look at the people of China — what they are observing, thinking, doing, reacting, both on the economic side and on the health protection side, can help inform us. Not only medically in terms of the real experiments they’re doing, but helping us understand what we need to do to be prepared for the next wave of the epidemic.”

The challenge of knowing which messaging from health officials works, and which doesn’t, will also only grow as governments begin to lift restrictions on economic activity and movement. “Going back to work in a graduated way is a very difficult message to convey to an already confused public,” he says. “How do you test which message is effective and which is not.”





How food supply disruptions from COVID-19 are leading to higher prices for consumers

Q&A: An Ontario farm and trucking operator explains how COVID-19 is making produce more expensive

COVID-19 has upended Canada’s food supply chains. Plants have shut down, grocery stores are struggling to keep their shelves stocked, and farmers have had to grapple with both labour shortages and produce gluts. As a result food prices are already rising.

On Tuesday Prime Minister Justin Trudeau announced the latest coronavirus aid package, this one aimed at the agri-food sector, including $77 million for food processors to keep workers safe, $125 million to help cattle and hog producers and $50 million on a surplus food purchasing program.

Scott Biddle is someone with a unique perspective on Canada’s food supply, as the owner of Scotlynn Group, a large farm producer and food trucking company in Vittoria, Ont., southwest of Hamilton, Ont. near the shore of Lake Erie. Scotlynn runs its own fleet of 350 trucks and manages 2,000 more, carrying food products from Canada to the U.S. and bringing produce back to Ontario. It also operates farms on both sides of the border, including one of Canada’s largest asparagus farms as well as producing sweet corn, watermelons and pumpkins.

Maclean’s spoke to Biddle about the problems COVID-19 has caused to Canada’s interconnected food system. The interview has been edited for length.

Q: Where are you seeing the biggest disruption to Canada’s food supply chain?

A: We transport a lot of southbound freight from Canadian businesses to produce regions in the U.S. and use those trucks to bring produce back into Canada. But now you have plants here that have slowed down or temporarily shut down their facilities, so we’re having to pay for a lot of equipment to run empty trucks to a lot of these U.S. locations to bring food back into Ontario. That obviously costs more and it’s putting the price of produce up.

Q: By how much?

A: It really depends on the product and how much is on the truck. But it could cost anywhere from $3,000 to $5,000 a load more in costs just to get the empty trucks to the produce regions. It essentially costs the consumer more money because peppers are going to sell for $5 versus $2.50 or whatever it is.

READ: Trudeau’s daily coronavirus update: $252 million fund to help the agri-food industry (Full transcript)

Q: Can you give me an example of what that disruption looks like?

A: You have the Ferrero Rocher plant [which makes Nutella and other products in Brantford, Ont]. They’ve temporarily closed their facilities. Meat plants have closed or slowed down. Ice cream, anything perishable, anything food related, that’s what we haul. A lot of that has slowed down or stopped. But we still need to send the trucks to California, Florida, Washington, New Jersey, and bring produce back.

Q: What about on the farming side of your business. What’s the situation been like there?

A: We’ve struggled bringing offshore labour in with the restrictions and the extra restrictions put in place by the local health department. [The federal government has mandated temporary foreign workers must remain in self-isolation for two weeks while the Haldimand-Norfolk Health Unit has also said no more than three self-isolating workers can occupy a single bunkhouse, some of which are designed to house dozens.]

We normally bring in 242 guys. We’ve been able to get in 207 of our men from Mexico so far, and on Saturday we got 130 of them out of quarantine to start. Our first crop is asparagus. We should have enough men on the farm to get things started. But we’ve hard to turn to a lot of local labour and students to keep things on track to get crops planted.

Q: What was that like?

A: We’re fortunate, we come from a small town farming community with a lot of students who are used to working on farms and have great work ethic, so we’ve been able to recruit enough who now don’t have other jobs.

Q: What did you have to do to keep workers self-isolated?

A: Given the three men per house restriction we’ve turned to local motels and hotels. We’ve rented three entire hotels to put our men in. We’ve got security, and hired restaurants to make  their three meals plus snacks a day. The cost is north of over a half a million dollars just to quarantine our labour and the cost of food. The costs are significant, but we need those men, so not having them here is not an option for us.

Q: The government has provided some relief, is that helping?

A: The government has come in with a subsidy of $1,500 per man, which is going to help offset a little over half of those costs, but the other half is going to go back into the product, so that product is going to have to sell for more.

Q: How much more?

A: The price increases won’t be that dramatic. You might be talking $2 on a case of 48 cobs of corn. A watermelon might go up by 50 cents or 75 cents. The costs right now for transporting produce into Ontario with no southbound freight, that’s definitely where the higher costs are coming from.



COVID-19: Canada layoff tracker

We're tracking reported layoffs from the coronavirus pandemic as they happen across Canada

Updated April 30

The dramatic measures taken by governments and businesses to slow down the spread of COVID-19 has created a tidal wave of layoffs in Canada and around the world. In March employment fell by more than one million, according to Statistics Canada, while April is expected to bring millions in additional lost jobs.

As of April 28 Service Canada had received applications from 7.3 million Canadians for federal aid through the Canada Emergency Response Benefit. So far, $25.6 billion has been paid out. Both figures are set to climb. A report released by Statistics Canada found one-in-five Canadian businesses had laid off more than 80 per cent of their staff.

We’re tracking the layoff announcements as they come in. The list below is drawn from media reports and press releases announcing major layoff, and we’ll be updating the list as new job cuts are announced across the country in the coming days, weeks and perhaps months. The vast majority have been described as temporary layoffs.

READ: What to do if you’re laid off because of the coronavirus

It’s important to note that this is far from a comprehensive list. Many thousands of small and medium-sized businesses have been forced to close their doors and hand out pink slips to workers, and the vast majority of those cases don’t make the news. A survey by the Canadian Federation of Independent Business, which represents 110,000 small- and medium-sized businesses, found one-third of businesses fear they may close within a month without financial assistance.

If you’re aware of a big layoff announcement that’s not on this list, send us an email and let us know.

Coronavirus layoffs

Roughly in order of when they were reported 

Calgary Stampede: The Greatest Outdoor Show on Earth temporarily cut 900 staff, or 80 per cent of its workforce.

General Motors: Announced all production will be suspended, impacting 4,000 jobs.

Ford Motors Co: Shut down all production in Canada, affecting 6,900 workers.

Toyota Motor Corp: Suspended all operations in Canada affecting 8,000 workers.

LNG Canada: The company behind liquified natural gas project in Kitimat, B.C. laid off 750 workers, half its staff.

Porter Airlines: Suspended all flights and laid off most of its 1,400 workforce.

Cirque du Soleil: Quebec circus entertainment giant suspended all shows and lays off 95 per cent of its workforce, or 4,679 people.

Fiat Chrysler: Suspended operations and lays off 8,900 workers.

Irving Shipbuilding: Suspended operations at its Halifax shipyard and lays off 1,370 workers.

Air Canada: The carrier said on March 20 it would lay off 5,150 flight attendants, followed by a decision to put 600 of its 4,400 pilots on unpaid leave. On March 30 Air Canada said it would lay off an additional 16,500 employees effective April 3. UPDATE: On April 8 the Toronto Star reported the company will rehire 16,000 workers by taking advantage of Ottawa’s 75 per cent wage subsidy.

Banff Centre for Arts and Creativity: Temporarily laid off 400 staff, about 75 per cent of its workforce.

Stratford Festival: Laid off nearly 500 employees after cancelling all shows until May 2.

Freshii: Restaurant chain closed all locations and lays off “hundreds” of employees.

READ: What the Canada Emergency Wage Subsidy means for workers hurt by Covid-19

Stratford Festival: Issued 500 temporary layoff notices.

Cineplex: Theatre giant laid off all part-time staff, roughly 11,000 jobs, some of whom are hired by Sobeys grocery chain to meet demand.

Transat: Airline laid off 3,600 staff, about 70 per cent of its workforce.

Bombardier: Quebec transportation giant laid off 12,400 workers in Canada.

City of Saskatoon: Laid off 126 temporary staff.

La Co-operative nationale de l’information independante: Quebec newspaper chain laid off 143 staff.

New Flyer Industries: Winnipeg-based bus maker temporarily laid off 6,500 employees and permanently cuts 300 jobs.

Quebec City: Laid off 2,000 city workers.

Saltwire Network: Atlantic Canada media chain laid off 250 workers.

WestJet: Airline laid off 6,900 of its workers. Update April 9: Rehiring 6,400 employees because of federal wage subsidy. Update April 16: Will lay off 1,700 pilots between May 1 and June 1.

White Spot: B.C.-based restaurant chain laid off 3,000 workers.

Airbus: The French aircraft manufacturer laid off 1,400 workers, half its workforce in Mirabel, Que where it builds the A220 aircraft.

Leon’s: Furniture retailer shut its Leon’s and The Brick stores and lays off 3,900 workers.

TC Transcontinental: Laid off 1,600 people in its printing unit.

Vancouver Aquarium: A week after closing its doors, laid off 343 employees, or 60 per cent of its workforce.

Resort Municipality of Whistler: Laid off 200 casual and auxiliary staff.

Steve Nash Fitness World: Fitness chain shut down and terminates roughly 1,200 employees.

Indigo Books & Music: Laid off 5,200 staff, or about 75 per cent of its workforce. Update: On April 13 Indigo said it is rehiring 545 workers.

Boston Pizza International: Laid off half of its 192 corporate staff and said franchised restaurants have made similar cuts.

Sunwing: Airline laid off 1,063 flight attendants and 470 pilots.

Calgary YMCA: Laid off 1,400 staff amid closure of all facilities.

Casinos Regina and Moosejaw: Will lay off 550 staff as of April 3.

Lush: Laid off an undisclosed number of employees at its 258 cosmetic stores across North America.

Province of Alberta: Redirected $128 million in education funding to Covid-19, forcing the lay off of more than 20,000 support staff life substitute teachers and educational assistants.

Reitmans (Canada) Ltd:  Laying off 90 per cent of its retail store employees and 30 per cent of head office staff. Reitmans has 7,000 employees in total.

Palliser Furniture: The Winnipeg company laid off 72 per cent of its workforce, or around 2,200 employees. 

City of Edmonton: Will lay off 2,000 non-essential staff including recreation and library employees as of April 14. Update April 27: Laid off 900 more staff.

City of Calgary: Will lay off 1,200 part-time and casual staff, though exact numbers haven’t been made public.

City of Regina: Laid off 360 casual employees and postponed the recall of 500 seasonal jobs.

Gap Inc: Laid off 80,000 employees in Canada and the U.S.

READ: Coronavirus plunges Canada’s economy into the abyss

Mullen Group: The oilfield services and trucking company expects to give short-term lay off notices to half its 6,100 workers.

Canada’s restaurant industry: A survey by Restaurants Canada of its members found 800,000 restaurant jobs have been cut since March 1.

City of Windsor, Ont.: Laid off 500 city employees.

Ritual: The food ordering and pickup app laid off half its staff, or around 200 workers.

City of Vancouver: Laid off 1,500 employees, mostly at community centres, theatres and libraries.

City of Guelph, Ont.: Laid off 600 casual and part-time employees.

City of Mississauga, Ont.: Laid off 2,000 part-time and non-essential employees.

City of Ottawa: Laid off 4,280 part-time city workers.

City of Kamloops, B.C.: Laid off 100 staff.

City of Thunder Bay, Ont.: Laid off one-third of its workforce.

Mogo: The Vancouver fintech laid off 30 per cent of its staff, or around 80 people.

City of Delta, B.C.: Laid off 500 employees from its parks and recreation and infrastructure departments.

City of Surrey, B.C.: Laid off 2,000 employees, including recreation and library staff.

City of Waterloo, Ont.: Laid off 430 part-time staff.

Canopy Growth: Cannabis producer laid off 200 retail workers. Update April 30: Laying off another 200 people across its operations.

City of Cambridge, Ont.: Laid off 400 part-time staff.

BC Ferries: Cancelled all routes and laid off 1,400 staff. Update April 14: The company has rescinded the layoffs while determining if it qualifies for Ottawa’s emergency wage subsidy.

CAE Inc: The flight training company laid off 2,600 employees, roughly a quarter of its workforce, and reduced hours for 900 workers. Update April 21: CAE recalled 1,500 laid-off employees.

City of Barrie, Ont.: Laying off 470 part-time theatre and recreation staff.

Vancouver Bard on the Beach festival: Cancelled its 2020 season, resulting in the loss of 240 jobs.

Torstar: Publisher of the Toronto Star eliminated 85 positions amid a collapse in ad revenue.

City of Kitchener, Ont. Laid off 842 casual and part-time workers.

Organigram Holdings: Cannabis producer laying off 45 per cent of workforce, or about 400 jobs.

Royal Ontario Museum: Laid off half its 323 full-time staff and put remainder on reduced hours.

Strathcona County, Alta.: Laid off 500 employees working in recreation, parks and culture.

Canadian auto dealers: A survey by the Canadian Automobile Dealers Association of its members found 96 per cent have laid off employees. Of 862 dealerships that responded to the survey, 76 per cent had laid off 10 or more people, equal to at least 6,500 jobs.

City of Kawartha Lakes, Ont.: Laid off 200 part-time and contract staff.

City of Peterborough, Ont.: Laid off 326 mostly part-time workers.

City of Winnipeg: Laid off close to 700 workers.

City of Gatineau, Que.: In second round of job action it is laying off 160 employees, bringing its total to more than 700.

Fast Trucking Service: Saskatchewan oil services company 250 of its 350 employees.

Burnaby, B.C.: City laying off 1,500 workers in the parks and recreation department.

Shaw Communications: Laying off 10 per cent of its staff, or around 1,000 people.

Halifax Regional Municipality: Will lay off 1,500 casual, temporary and seasonal employees.

Cargill meatpacking plant, Calgary: Shut plant and laid off 1,000 workers after 38 employees tested positive for COVID-19.

TransLink: The Metro Vancouver transit authority is laying off 1,500 workers.

Winnipeg School Division: Laid off 330 of its 6,000 employees.

River East Transcona School Division, Winnipeg: Laid off 600 employees.

Toronto Transit Commission: Laying off 1,200 employees over the coming weeks.

HBC: Laid off 90 Toronto-area staff.

Postmedia: Laid off 80 staff and shut 15 papers.

Algoma Steel: Laid off 70 full-time employees.

Vancouver Airport Authority: Announced an undisclosed number of layoffs of its 500 staff.

University of Saskatchewan: Announced an unspecified number of layoffs to begin May 4.

Resolute Forest Products: Will lay off 1,000 workers in Quebec.

Calfrac Well Services: Announced 70 per cent of its 1,600 North American field personnel.



Workers who are rehired may have to cancel and repay their CERB payments. Here's how.

While the number of Canadians collecting CERB is likely to grow, some workers are now in a position of having to stop collecting payments

It’s not easy being in government during a once-in-a-century (hopefully) global pandemic. Out of all the difficult issues the Liberals have had to tackle over the last few weeks, rapidly developing financial supports for millions of Canadians has got to be the hardest. While every program will be scrutinized at some point, most people are bullish on the Prime Minister’s performance, with a recent Angus-Reid poll giving Justin Trudeau a 54 per cent approval rating, his best rating since 2017.

One program in particular – the Canada Emergency Response Benefit (CERB) – has been met with widespread enthusiasm, which is both good and bad. It’s bad because, at last count, nearly 10 million Canadians have had to tap into the $2,000 a month payment, which means an unprecedented number of Canadians are not working right now, but most agree that they’ve been able to get those funds quickly and efficiently.

While there’s a good chance the number of CERB recipients will rise in the coming weeks, some people are now wondering how to cancel those payments or in what situations they might need to give that money back.

When should you stop collecting CERB?

There are a few situations where you might want to stop collecting. The main one is that you’ve returned to work and are now earning a paycheque from an employer. The CERB was put in place to help people who are out of work due to COVID-19. That includes employees who were let go after March 15, self-employed individuals who are no longer earning an income because of the pandemic, parents who have had to take time off work to care for now out-of-school children and those who have fallen ill with the coronavirus, or are taking care of a loved one who has gotten sick, and therefore can’t go into work and earn an income. If you no longer fall into any of these categories, then you should stop collecting CERB payments.

Some people will get rehired thanks to another government program: The Canada Emergency Wage Subsidy (CEWS), which helps businesses pay employee salaries. Getting rehired because your workplace is making use of CEWS is still getting rehired, which means you’ll have to stop your CERB payment. (If you do get brought back because of CEWS, your cheques will come from your employer. Your workplace applies to the government to get reimbursed for your salary.)

READ: What the Canada Emergency Wage Subsidy means for workers hurt by Covid-19

As well, you are allowed to earn $1,000 per month in additional income, but if you start exceeding that amount, you may need to stop collecting.

There is another, and certainly odd, reason to reign in your payments. You can apply for CERB two ways: via the Canada Revenue Agency’s website and also through Service Canada. Those who have inadvertently (we will give them benefit of the doubt) signed up on both websites may be receiving two payments per month, instead of one. If you are getting two cheques, you’ll have to give one back.

How can you stop your CERB payments?

You don’t need to stop payments, per se. If you want to continue receiving your $2,000, you must reapply for that money every month. If you’ve started working again just don’t reapply. It’s as easy as that. You are entitled to receive money again if your situation changes because of COVID-19.

There may be situations, though, where you’ve received a cheque that you no longer need. Maybe you’ve realized that you’re actually not eligible to receive the CERB (the government is trusting you to make that determination) or your work has decided to pay you back for any income missed. In those cases you will need to repay those funds.

In an email sent to Maclean’s, the CRA said, “An individual is required to repay the CERB if they no longer meet the eligibility requirements for the four-week period in question. As an example, let’s take an individual that applied for the four-week period of April 12 to May 9. At the time that they applied, they expected to have little or no work or income for the four-week period of April 12 to May 9, but they just found out that their employer has rehired them and will be giving them back-pay for that same four-week period. In this situation, this individual will be asked to repay the CERB for that four-week period of April 12 to May 9.”

There’s also the chance that you’ve received a cheque and then went back to work and got paid, say, for two out of the four weeks of the month. In that case, you’ll likely have to repay at least some of the CERB, but it’s not yet clear how that might work. “I can’t speculate as to what type of payment the CRA is going to ask for and when,” says Hali Van Vleet vice-president of people advisory at accounting firm BDO. “The best advice is to call the CRA and explain the situation and find out how to repay it.”

How do you repay the CERB?

If you do need to repay the CERB, the Government of Canada’s website lays out how to do it. But, basically, you either return the uncashed cheque, write the CRA a new cheque for the amount owing or repay through your MyCRA account.

The CRA is asking people to return any money before December 31, because then they don’t have to send you a T4 for the money you’ve received. (CERB is taxable, which means you will receive a T4, just like you would any employment income and you will have to pay tax on those funds.)

It’s still not clear how the government will get its money back if you continue to collect cheques, even after you’re not entitled to them anymore. All they say is, “In delivering the CERB, the CRA will be verifying that individuals are eligible to receive the benefit. In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts.”

As of now, the government is putting the onus on you to either collect or stop your CERB payments, so don’t run afoul of the rules. If you’re unsure of what to do, just call the CRA and they’ll be happy to help you figure out how to give them their money back.



Cue the sad trombone for Canadian crew stuck aboard cruise ships

Musician Rick Pauzé—marooned in relative luxury off Manila—is one of 267 waiting an awfully long time to get home

Rick Pauzé, a trombonist on the Sea Princess, spent months playing for crowds as the massive vessel bounced around Australia, New Zealand and Papua New Guinea. But when the coronavirus pandemic hit, and the 2,000-capacity ship offloaded the last of its passengers in Sydney, the crew wasn’t allowed off. As the Sea Princess drifted between ports for several weeks in search of a shutdown plan, Pauzé whiled away the time by playing concerts for nobody and, at one point, taking a lesson in how to fend off pirate attacks.

When the ship eventually anchored off the giant southeast Asian port of Manila, he played hall monitor, wandering empty corridors as his Filipino crewmates endured quarantine before they were allowed off. Long after Ottawa announced that the last Canadian cruise passengers were on the way home, Pauzé remained in his luxurious floating prison, unsure how long he’d be stuck at sea.

Pauzé, 57, is one of scores of Canadian cruise-ship workers left behind as the federal government scrambled to repatriate paying customers whose dream voyages had been ruined by COVID-19 outbreaks. Even on ships where no outbreak happened, the mere threat of the virus could leave passengers in agonized limbo, as some countries refused to let the boats dock and people to disembark. As of April 27, Global Affairs Canada was tracking 267 Canadians who remained on 84 such vessels.

READ MORE: There are officially zero Canadian passengers still on cruise ships sailing the high seas

When he boarded the ship on March 14, Pauzé had already spent more than four months at sea. That day, as the ship departed Hobart, the capital of remote Tasmania, the retired schoolteacher had no idea he’d be caught in a logistical nightmare that his employer, Princess Cruises, was struggling to navigate.

On March 11, the World Health Organization declared the coronavirus a global pandemic. The next day, Princess Cruises shut down its operations with four ships still at sea off Australia’s coast alone. Crew of the Sea Princess were forbidden from mingling among passengers, who were allowed to disembark in Sydney on March 17. The ship spent several days navigating the Aussie coast, sailing back and forth, awaiting direction. On April 2, Brisbane finally offered a dock to resupply and refuel. “When we did dock it was an industrial area that seemed rather remote and abandoned,” says Pauzé. “It was at the mouth of the river not near the cruise terminal.”

Canada’s embassy in Australia was in contact with Pauzé, one of eight Canadian crew on the Sea Princess—musicians and spa staff from Vancouver, Toronto and Quebec. At the time, thousands of Global Affairs Canada bureaucrats were focused on repatriating Canadian passengers stuck on ships scattered all over the world’s oceans. Sylvain Leclerc, a Global Affairs spokesman, said official provided “ongoing consular assistance” to Canadian crew and worked with the cruise lines on getting them home.

But getting off the ship required a port willing to accept Pauzé and his coworkers, even if they headed straight to an airport to fly to Canada. Brisbane wasn’t it. A few days later, rumours circulated the ship was headed to the Philippines. Pauzé credits his captain, Tony Ruggero, with providing frequent updates—even if there wasn’t much to say.

RELATED: What makes François Legault think Quebec is ready to re-open?

Rick’s wife, Dorothy, has struggled to maintain contact with her husband. WiFi, which members of the crew purchase with their own money, was spotty. Video chats were choppy. “I’ve had a countdown on my phone since he left, and it was all fun,” she says. “It’s not a happy countdown anymore because I really don’t believe he’ll be home by then.”

The Sea Princess’s official itinerary for 2020 included trips to Fiji, American Samoa, Hawaii and French Polynesia—a months-long odyssey that, for Pauzé, would have ended on May 12 in Sydney. But the pandemic, of course, had other plans.

Eventually, the Sea Princess headed north, and the plan was for Filipino crew to quarantine for 14 days while the ship sat in Manila Bay. Along the way, the crew was trained on how to deal with pirate attacks—there had been reports of increased piracy in the region—with water cannons and loud speakers.

When the ship arrived near Manila on April 20, several large passenger ships anchored in a cluster, waiting for the opportunity to dock. Pauzé knew some of the crew on nearby vessels, and they shared bits of information when they could by text.

When Ruggero tweeted a photo on April 22 of the ship receiving fresh produce, the crew had been aboard for 40 days straight. The same day, the last six Canadian passengers on cruise ships—all of them aboard the Costa Deliziosa—disembarked in Italy and headed home.

Princess Cruises didn’t directly answer questions about the fate of the Sea Princess crew, pointing to a statement saying the company had repatriated thousands of crew members and remained committed to returning “all our teammates safely home to their loved ones.”

Humbled by the pandemic, Pauzé has modest plans for when he pulls into his driveway back in Barrie. “Feel the breeze and sunshine and the ground not moving,” he says. “Just the feeling of being home will be wonderful.”

Economic analysis

Taxpayer bailouts for big corporations should be a last resort

Paul Boothe: Lessons from Ottawa’s 2009 automaker bailout for those seeking help for troubled industries like oil and gas and airlines today

Paul Boothe is a former economics professor and provincial and federal deputy minister. He led the federal team negotiating the restructuring of GM and Chrysler in 2008/09.

As the economic effects of the pandemic are increasingly felt, we are seeing a series of large government programs designed to aid workers and business. Business support has been aimed especially at small and medium sized enterprises (SMEs). The rationale is that we need to prevent large numbers of SMEs from failing during the pandemic, so that they can restart quickly once the public health situation stabilizes.

We are also now hearing calls from industry groups and provincial politicians for the federal government to support larger companies in trouble. Often, the government bailout of General Motors (GM) and Chrysler during the Global Financial Crisis (GFC) of 2008/09 is cited as a precedent.

For example, last week Alberta Premier Jason Kenney pointed to the automotive sector bailout and said, “Albertans are absolutely right to expect and to demand at least similar treatment for by far the largest industry in Western Canada.”

As governments consider whether to offer support to troubled companies, it’s worthwhile to have a clear picture of the action we took during the GFC and the impact it had on the two companies. Here is a quick review and some lessons that we can draw from the experience.

READ: What the turmoil in oil markets means for Canada’s economy

At a high level, three governments (US, Canada and Ontario) provided debtor-in-possession financing to GM and Chrysler as they went through an accelerated bankruptcy process to restructure their businesses. Total Canadian support exceeded $13 billion dollars. Like today, the Government of Canada also provided lots of other extraordinary support to financial institutions and smaller companies through the Canada Mortgage and Housing Corporation, Export Development Canada and the Business Development Bank of Canada.

Pre-bankruptcy, we provided both GM and Chrysler with interim loans at market rates to keep them solvent while we examined their restructuring plans. We rejected the plans a couple of times before we approved them – each time we told the companies we were looking for bigger cuts and more cost savings to match our forecast of future demand for autos.

Once we had approved their restructuring plans, we put the companies through an accelerated bankruptcy process in the US. Equity holders were completely wiped out and bond holders received pennies on the dollar. As part of the bankruptcy, we provided debtor-in-possession loans, putting taxpayers ahead of all other creditors. We also took a small amount of equity.

As part of the restructuring, we replaced the senior management of both companies and put our own representatives on their boards of directors. Both firms were under strict government supervision that severely limited management pay and perks and required approval from both US and Canadian governments for any major decisions.

Needless to say, the boards and management of the restructured companies hated being under government supervision. They worked as hard as they could over the next five years to pay us back and get us out of their businesses. This is exactly what we hoped for. A significant proportion of the government support was recovered as the bankruptcy loans were repaid. Governments were able to sell their shares in both companies when share prices recovered.

READ: Coronavirus in Canada: how to get tested, what the symptoms are, where to get help

What lessons can we draw from this episode as we consider supporting troubled companies during the pandemic? The first lesson is to be clear on the rationale for support. Taxpayers should not be called upon to insure managers, equity holders or creditors of large, troubled companies against the fallout from the pandemic. To the extent taxpayers are involved at all, it is to mitigate the impacts of business failures on the economy as a whole.

Second, accessing private capital should be troubled companies’ preferred option, with public support existing as a last resort. The terms and conditions of the public support should induce companies to do everything they can to avoid using it. Terms and conditions should include severely limiting board and management pay and perks, requiring regular government monitoring and approval of major decisions, and putting taxpayers ahead of equity holders and other creditors if the company fails.

Finally, the support should be limited in both amount and time. Taxpayers need to know the total amount of support and its conditions, how and when it will be paid back, and how it affects overall government finances. Governments should promise to report regularly until the loans are repaid.

The global pandemic has brought with it the largest economic shock Canada has faced in living memory. Federal and provincial governments have moved quickly to support families and firms in an unprecedented way. This is entirely appropriate. But as with the GFC, the effects of the shock will likely be felt for years to come. Understanding the rationale and limits to taxpayer support of troubled companies will help ensure that governments will have the capacity to manage those effects not just today, but over the long haul.



Electric cars don’t need grilles. Don’t tell car buyers that.

The first-generation Nissan Leaf electric vehicle (EV) didn't have one and people weren't happy. The function of the grille is evolving in the EV era, from mostly operational to strictly ornamental.

(Getty Images, Reuters)

When the first-generation Nissan Leaf electric vehicle (EV) hit the road a decade ago, something was noticeably different. The car looked like it had had a dramatic nose job—the front grille was missing. Originally designed as a way to allow air in to cool an engine via the radiator, the grille was no longer needed on the battery-powered Leaf, and the company had made a design decision to do away with it.

Some owners loved the new look. Others, not as much.

“The design was polarizing,” admits Francois Lefevre, chief marketing officer for electric vehicles at Nissan Canada. Some EV drivers liked that the car stood out, while others preferred a more traditional front-end design. “They wanted to say, ‘Hey, I’m driving an EV’ without screaming out loud,” Lefevre says.

In the end, the traditionalists won out. After surveying more than 300,000 Leaf owners since 2011, Nissan put a faux grille on the front of its second-generation Leaf released in 2018, including the latest 2020 model. The so-called “V-motion grille,” with a multi-dimensional blue background, is more aligned with the Nissan brand, Lefevre says. “There is a lot of personality there and a lot of identity with the grille.”

Many car buyers, it seems, don’t just like grilles; they like massive ones. Consider the front end of any modern pickup truck (like the RAM 1500) or SUV (like the Lexus RX) for a sense of just how dominant grilles have become in current car-design language.

READ: When in doubt, make electric vehicles cheaper for Canadians

The function of the grille is evolving in the EV era, from mostly operational to strictly ornamental. Yet a part that, in some cases, serves no purpose at all is turning out to be a key brand differentiator for automakers. It’s why many of the established brands are sticking to their lanes when it comes to constructing the front fascia of their future vehicles.

“The shape, texture and proportions of the grille are really what sets apart the personality and brand image,” says Liz Wetzel, co-director of the transportation design program at Lawrence Technological University in Southfield, Mich.

Well-known examples include the Mercedes-Benz Panamericana grille, Jeep’s seven-bar grille and the kidney-shaped front end of a BMW. Brands such as Rolls-Royce and Bentley are also known for their distinctive front ends. In the EV models for some of these iconic brands, such as the Mercedes-Benz EQ category, there are faux grilles that maintain the look of the same part in the automaker’s traditional internal combustion engine vehicles.

It’s the new automakers such as Tesla, without a historic brand to preserve, that are taking more risks with the front end of EVs, Wetzel says. She points to examples such as Tesla’s Model 3 and its Cybertruck concept vehicle, as well as the Rivian R1T pickup truck from American startup brand Rivian, whose investors include Amazon and Ford.

“We are starting to see more creative executions,” Wetzel says. “It’s a real opportunity for designers to create a whole new personality and face of the vehicle . . . There are different customers and, with that, different brands will take different approaches.”

Ford has developed two types of front grille for the all-electric Ford Mustang Mach-E; an “implied grille” that looks like a shield for the GT option, and more of a smooth body colour piece for the other models. Joel Piaskowski, Ford’s global design director for cars and crossovers, describes the latter as an “upside-down horseshoe.” All include the Mustang’s recognizable pony emblem, front and centre.

Piaskowski says the grille area, which he describes as the “jewellery of the vehicle,” is a place for Ford to play with looks that can set it apart from other brands. “We are taking what our customers know and appreciate in our brand equity . . . and applying it in a new manner to battery-electric vehicles,” Piaskowski says.

Ford’s dual move makes sense, Wetzel says, by appealing to both the traditional Mustang buyer and those newer to the brand. “They didn’t want to shock the customer too much and are offering something that is a stepping stone,” she says.

Mercedes-Benz considered losing the grille look when it started to design its EQ category of EVs, according to Robert Lesnik, the automaker’s head of exterior design in Stuttgart, Germany. “We asked ourselves . . . ‘Should we get rid of what we’ve built up over the decades and do something faceless, or stick with what we have?’ ” Lesnik recalls. “The clear answer from us, the designers and the board, was that we want to have something recognizable. The face is very important for the brand.”

Mercedes-Benz designed a slightly different faux grille for all of its EQ series automobiles, each displaying its three-pointed star logo. Lesnik says the grille is a critical design piece that the automaker’s customers (and wannabe customers) can identify and connect with—and is unlikely to be removed in its EV cars in the foreseeable future.

And while the grille may not have the same use as in the traditional engine-powered automobiles, Lesnik says the faux version has a lot of potential to host new technology, such as sensors, as well as unique lighting options. For instance, the company’s Vision EQS concept car boasts a black-panel grille light matrix with 188 circuit boards and 940 individual LEDs that communicate with the vehicle and its surroundings. “In the end, it’s not the air intake anymore, it’s a high-tech piece,” Lesnik says.

Nissan is also unlikely to make another drastic change to the front end of the Leaf for years to come, Lefevre says. It comes back to connecting the car with its loyal customers. “If we change too much in the grille, we will lose that Nissan identity,” he says. “It’s a delicate balance . . . We need to respect the brand design.”

This article appears in print in the May 2020 issue of Maclean’s magazine with the headline, “The Grille Seekers.” Subscribe to the monthly print magazine here.

Economic analysis

What the turmoil in oil markets means for Canada's economy

Negative oil prices are a warning sign that the economic fallout from COVID-19 could be even worse than a lot of people are expecting

You don’t have to be a commodities trader to know that something extremely unusual is happening to oil prices. For the first time ever, the price of West Texas Intermediate crude dropped below zero on Monday, ending the day at negative $37. The decline seemed to have come out of nowhere, too, with prices plummeting by 302 per cent over the course of a few hours. (Prices “rebounded” on Tuesday to $9 at the time of writing.)

With Canada still very much an oil economy, it’s likely that a lot of Canadians took notice of this unprecedented price decline, but what does it really mean and what might be the impact on this country’s already struggling finances?

Too much oil supply, not enough demand

There are a couple parts to this price plummeting story, but we’ll start with supply and demand. In some ways, commodity pricing is easy to understand. The more of something people want to buy, the higher the price goes. If that item is overproduced and therefore readily available anywhere and from anyone, sellers will make the price more attractive so that buyers will take it off their hands. Ideally, supply and demand would be in balance—companies would produce about as much oil as people want to buy—but that’s not what tends to happen.

Over the last several years, oil production has ramped up significantly, particularly in the U.S. America is now producing 140 per cent more barrels of oil per day than they were in January 2010. With energy economies like Canada, Saudi Arabia and Russia still pumping out the Texas tea, you’ve got a lot more oil now than you did a decade ago.

READ: A different type of crisis demands a different type of data

While supply and demand has, more or less, been in balance for a few years—partly because Russia, Saudi Arabia and other Middle East nations have cut production to keep oil prices stable—there have been times when supply has outpaced demand, which has then caused prices to fall.

Since mid-March, when people started staying indoors, demand for oil has fallen off a cliff. People don’t need gas anymore, which is the main end-product of oil, as they’re not driving or flying anywhere. At the same time, production continues, with U.S. oil and gas producers still pumping out about 12 million barrels of oil per day.

Nowhere to store excess oil

What happens to U.S. oil that doesn’t get purchased? It gets stored in large crude oil tanks, mainly in Cushing, Oklahoma, but also in other areas across the country. Oil companies can store up to 76 million barrels of oil in Cushing, but those storage facilities are nearing capacity. Amrita Sen, chief oil analyst at Energy Aspects, told the Financial Times that Cushing’s storage tanks will be entirely full at some point in May.

Therein lies the problem: There’s too much supply, too little demand and nowhere to store all the stuff that’s still getting produced. If you can’t convince someone to pay you for something you’re selling, and if they won’t even take it off your hands for free, then you might consider paying someone to take possession of an item you want to get rid of. (There’s more to it than that—prices fell when they did in part because of how oil trading works, but it’s complicated.)

READ: A heat map of coronavirus cases in Canada

What does the oil price crash mean for the economy?

Not surprisingly, negative or ultra-low oil prices aren’t good for oil companies or oil-producing countries like Canada, says Martin Pelletier, a Calgary-based portfolio manager with Wellington-Altus Private Counsel Inc. If no one’s buying what you’re selling then you’ll have no choice but to go out of business. It’s no different than the restaurant down the street having to permanently close up shop during COVID-19 because of a lack of customers.

According to Natural Resources Canada, the oil and gas sector accounts for 5.6 per cent of the country’s gross domestic product and between 11 per cent and 20 per cent of total exports, depending on the year. If more companies close and more layoffs happen, then it’s pretty clear that Canada’s economy will be even more compromised. “The impact will be even more profound in Canada and it will work its way into other areas,” says Pelletier.

The rapid price decline is also a sign that the economic devastation from COVID-19 may be worse than many people, including stock market investors, think. (The S&P/TSX Composite Index was down three per cent on Tuesday, which is a lot in normal times, but not so much today.) “The energy market is telling you that broader economies are in awful shape,” says Pelletier. “It’s going to be terrible. The average person is underestimating COVID’s economic impact.”

What about gas prices?

The only silver lining for cash-conscious Canadians is that gas prices will fall even further, though this only really matters if you’re still commuting to work. Unfortunately, you won’t get paid to fill up your car, but prices could fall by another 10 cents a litre if oil stays low for a while, says Patrick De Haan, head of Petroleum Analysis at Gas Buddy. As well, you’ll still have to pay taxes on gas, which in Ontario adds 37 cents on every litre pumped.

The other thing to keep in mind is that oil prices won’t be down forever. When you look at the futures market and what traders are willing to pay in the summer and fall for a barrel of oil, it’s back into the $20 range. That could drop if demand doesn’t pick up, but there is at least some hope that when the social distancing restrictions end people will start driving again.

Even so, prices may not rise enough to help Canada’s energy sector—Pelletier says the right price level for oil is around $45 a barrel—but negative oil won’t become the norm.



A different type of crisis demands a different type of data

Opinion: We need to quickly begin monitoring not just the public health aspects of the pandemic, but also the the economic and social fallout

Armine Yalnizyan is an economist and the Atkinson Fellow on the Future of Workers. Danielle Goldfarb is head of global research at RIWI.

COVID-19 is a health crisis that has triggered an economic crisis which threatens an insolvency crisis. The pace and targeting of public health measures and emergency economic response policies, as well as the impact of re-starting normal activity, will determine whether the fall-out feels like a shorter-lived natural disaster or a cascade of catastrophes, with long-lasting effects.

In the face of so much uncertainty, Canadian policy makers are grappling with a subtle but critical dilemma: they are not armed with the best arsenal of data to help navigate disaster and avoid collapse. But it is possible to gather better data and do so immediately.

The policy-making of the past several weeks has largely occurred in the absence of timely official statistical measures. The data we do have is old by the time the decision-makers see it. How do we know if we’ve got the right information to deal with what changes so swiftly? And will stale-dated data jeopardize optimal timing of critical policy course corrections?

The latest releases from Statistics Canada in the past days show a massive GDP contraction rivalled only by the Great Depression, and breath-taking job losses in March alone. Those early  statistics are likely just the tip of the iceberg.

READ: A heat map of coronavirus cases in Canada

While official sources must be our information anchors, they inevitably provide insights through the rear-view mirror. Just as many big businesses use real-time data to understand and adjust their operations, so the truly enormous business of governing in a pandemic should tap into the timeliest insights to direct swiftly evolving public policy.

We are now heading into the next phase of the outbreak without clarity on whether and when physical distancing measures will intensify or lessen. In order to optimally adjust, improve and target public health and economic policies, we need daily data on COVID-19’s impact on Canadians’ livelihoods, financial well-being, fears and behaviours to watch how each of these subtly evolve, and in turn shape economic and social realities. Behavioural fear is the ‘X-factor’ in any crisis. Its presence or absence is impossible to model in forecasts without real-time data. People behave in unexpected ways when lives and livings hang in the balance. Anxieties can trigger or immobilize action. Concerns can postpone or impede the resumption of “normal” work and leisure. At the same time, lack of concern can compound unintended consequences, too.

We need to quickly begin monitoring not just the public health aspects of the pandemic, but also the mental health dimensions, as well as the economic and social fallout. We must also maintain this scrutiny over the next 12 to 24 months. Our policy-makers require data that goes beyond job loss to include reliable, ongoing measures of income deterioration, especially in the so-called gig economy, as well as trends in the dynamic financial anxiety that shapes consumer behaviour at different phases of the pandemic.

We believe daily tracking is the way to go, something the Federal Reserve Bank of Minneapolis has already started. That bank’s wide-ranging data collection exercise uses COVID-19 Impact surveys to track physical and mental health, as well as social and financial well-being.

This is a call for more data, which could be supplied in any number of ways. One example (and this is not a sales pitch) is RIWI’s continuous random sampling of the on-line population since mid-March. RIWI’s survey tool, which is able to monitor daily changes in compliance with public health directives during outbreaks as well as labour market and consumer behaviour around the world, reveals that that Canadians have been remarkably hard-hit economically by COVID-19,and slightly moreso, surprisingly, than our American counterparts.

What can more timely data tell us? Since the job market report, RIWI survey responses suggest  Canada’s unemployment rate rose to 22 per cent by April 21 (mirroring a similar outcome in the U.S., where researchers used a similar technique). Worse: by mid-April, 22 per cent of Canadians reported that they had lost all income due to COVID-19, and an additional 12 per cent said they’d lost up to half.

To assess the full scale of the economic fallout, we need to know about income loss as well as job loss, which Statistics Canada’s Labour Force Survey does not do. This detail is particularly relevant for people working for multiple employers or gig workers who also tend to be younger and worse paid than typical wage-earners. Loss of even a few hours of pay can be devastating for workers barely patching together a living. Official statistics didn’t give us a very clear picture of how many such workers there were before the crisis, nor how COVID-19 was changing things.

The RIWI survey shows that, by mid April, two in five Canadians reported they couldn’t last more than a month if they lose their income. Two in five respondents said they didn’t have access to paid sick leave and couldn’t stay home if they got ill. Two-thirds said any cash from the government would go straight to covering basic needs. These data show that support needs to extend far beyond the one million people that the LFS said lost jobs on April 9. They illuminate how the emergency economic response measures that have been frequently adjusted may need to continue to be tweaked to reach the extraordinary number of people who need help, even though the majority of Canadian workers still have their job and income.

READ: The doomed 30-year battle to stop a pandemic

The path to recovery is not obvious. What proportion of unemployed Canadians might be able to return to what they were doing before March 15? Will a prolonged period of uncertainty and fear lead to a more permanent re-shaping of the economy? Will people save more? Go out less? Travel infrequently? How many households and businesses lose everything because of pre-March 15 debt that they cannot repay or extend? Governments, business and the non-profit sector need timely answers to these questions. They could have the means to do it. The combination of official statistics and daily soundings offers a robust tool-kit for decision-makers.

To Statistics Canada’s credit, the agency is putting out new types of surveys to capture social and economic impacts of COVID-19. They are short and easy to understand, which is critically important at a time when many Canadians are contending with information overload. But if we rely only on episodic data collection, we will miss important daily inflection points, or fail to anticipate or observe important psychological shifts related to the pandemic that drive consumer or labour market behaviour.

In a crisis that moves as swiftly and unpredictably as the COVID-19 pandemic, we need to track financial impacts and behavioural changes on a daily basis.

Agile policy demands agile data. Let’s use all the tools we have to steer quickly, with confidence, to the other side of the pandemic.

*Full Disclosure:RIWI has provided results of this methodology to international institutions, central banks and governments. RIWI is not working with Statistics Canada. While RIWI’s methodology is unique, there are other technologies and approaches that are able to provide near real-time, daily information to track and monitor relevant trends and that policy makers could adopt. 


Economic analysis

Cities are facing a coronavirus fiscal crisis

Analysis: Canada’s cities are under intense fiscal strain from COVID-19 and Ottawa and the provinces will soon need to act

Jack Lucas is associate professor of political science and Trevor Tombe is associate professor of economics at the University of Calgary

To control the spread of coronavirus, vast numbers of Canadians are staying home and keeping a safe distance from others. While this is necessary to slow the virus, it comes with significant costs to individuals, businesses, and governments. It means sudden increases in government spending, decreases in revenue, and dramatic increases in public debt.

We rightly focus on the fiscal strain on Canada’s federal and provincial governments, but we mustn’t forget about municipal governments. Their challenges are unique, and their ability to cope more limited.

Property tax deferrals, potential defaults on payments by homeowners and businesses, waiving fees on many city services such as transit and parking fees—all of these policy choices mean less revenue for local services. For Ottawa and the provinces, public debt provides a shock absorber. For most municipal governments, however, this option is heavily restricted.

As a result, Canada’s cities are under intense fiscal strain from COVID-19. And our local leaders know it.

READ: Coronavirus in Canada: These charts show how our fight to ‘flatten the curve’ is going

Data from the Canadian Municipal Barometer provide a unique insight into municipal leaders’ thinking about their fiscal situation. In January and February of 2020, just before the pandemic, we asked mayors and councillors across Canada to rate their municipality’s fiscal health on a scale from 0 (fiscal crisis) to 10 (perfect fiscal health). In the past two weeks, we went back to the same local leaders with the same question. Comparing these responses allows us to understand how much the pandemic has shifted local leaders’ perceptions of their municipal government’s fiscal health.

In the figure below, we summarize the percentage of our respondents who considered their municipality’s fiscal health low (0-3), medium (4-6), and high (7-10) in the two surveys. The results suggest that attitudes have indeed shifted, with a smaller percentage in the “high” category and a larger percentage in both “low” and “medium” fiscal health.


Given the extraordinary upheavals of the past month, these changes are surprisingly modest. But the overall numbers are misleading. Even today, in the heart of the pandemic, many rural municipalities have zero reported cases of COVID-19, while big cities like Toronto and Montreal have thousands. Canada’s big cities face a challenging one-two punch: they are particularly hard-hit by the pandemic and also responsible for an especially diverse array of services. We would expect to see more pronounced changes in perceived fiscal health among Canadian Municipal Barometer respondents from larger municipalities.

Our second figure, below, is identical to the first but only includes responses from cities above 100,000 residents. The results are striking: in a period of just weeks, the percentage of mayors and councillors who place their municipality in the “low” fiscal health category has doubled from seven to fourteen percent—a stunning shift in so short a span of time. Nearly one in six leaders in these cities tell us their municipality is closer to fiscal crisis than to perfect fiscal health.


Their concerns are not misplaced. And, if anything, they appear too optimistic.

Canada’s municipalities were expected to see roughly $200 billion in revenue this year. Roughly one-third of that is from property taxes, another third from transfers from provincial governments, and the remaining third from sales, fees, excise taxes, and other sources. COVID-19 and the resulting lockdown will cut into most of these sources substantially. With transit ridership low, recreation facilities closed, building activity stalled, park revenues evaporated, and property taxes deferrals at risk, the fiscal hole for municipal governments may be hard to manage.

For each 10 per cent of property owners who cannot pay their taxes in Vancouver, for example, the municipal government there will lose $80 million. For each 10 per cent who cannot pay across the country, the total revenue loss may exceed $6 billion. Toronto recently estimated various scenarios. A three-month lockdown and gradual recovery might create a $1.5 billion shortfall, they estimate — over 10 per cent of their total budget. For perspective, if this applied nationally, the shortfall could reach $20 billion across all of Canada’s cities. Though significant uncertainty remains, and smaller cities are at less risk, it is clear that significant fiscal stress for local governments is a reality in Canada.

How should governments respond?

In the short-term, direct support to municipalities may be needed. For perspective, the United States earmarked US$67.5 billion for direct support of local governments within its recent $2.2 trillion COVID-19 relief package. Only available to cities with populations above 500,000, the funds will help offset costs related to city pandemic responses. A similarly large package in Canada would total over C$10 billion. This is potentially the magnitude of support that may be required.

In addition to direct support, provinces may also extend greater flexibility to municipalities to borrow during this unique shock. British Columbia, only a few days ago, did just that. And even if direct borrowing is restricted, borrowing from internal capital reserves will become widespread.

Beyond fiscal measures, governance reforms have also been floated in the past two weeks. Long-standing calls to rethink “who does what” in Canada’s provincial-municipal systems are likely to grow as the pandemic reveals the challenges municipalities face in policy areas like public health and long-term care.

Different provinces will respond differently. And each city faces its own unique challenge. But most will see strain, and since local governments account for roughly one-fifth of our country’s total government spending, this will matter for us all. Whatever the details of our local fiscal responses to COVID-19 may prove to be, action will soon be needed.



What really happens to the clothes you donate

A clothing grader in Brampton, Ont.—which buys unsold, used clothing and sells it to buyers across the globe—provides a glimpse into one of the world’s largest second-hand clothing economy hubs

Inside the 33,000-sq.-foot warehouse of Toronto Textile Recycling, four men working in pairs carefully load clothes into two balers. They step back, almost in unison, as the machines press down to pack the mismatched clothing into tight, rectangular bundles.

Behind them, about 100 feet away, nine women stand on the warehouse’s mezzanine, where a conveyor belt feeds them what looks like an endless stream of apparel—men’s workout shorts, women’s purses, children’s T-shirts. The women sort the clothes based on gender and age (men, women, children or babies), and use or type of fabric (sportswear, cotton, flannel, wool and more).

The garments then travel to ground level, falling into 14-foot mountains of clothing. There, more workers examine them, checking for wear and tear. The clothes are graded based on the condition they’re in.

From the outside, one would never guess that this nondescript warehouse just off Highway 407 in Brampton, Ont., is a glimpse into one of the world’s largest second-hand clothing economy hubs. Toronto Textile Recycling is one clothing grader among 40 in the Greater Toronto Area that buy the unsold, used clothing from charitable organizations like the Salvation Army and Goodwill, sort it and sell it to buyers in Africa, Asia, Central and South America, and Eastern Europe. From there, it goes to local retailers in those places to be sold to consumers.

By 2023, the world’s resale apparel economy will be worth an estimated $51 billion. It’s a full-blown global industry that, in Canada at least, has grown largely under the public radar. “Most North Americans are uncomfortable with the idea that their used clothes would be exported and used outside of the country,” says author Adam Minter, who visited this cluster of brokers and graders in the Mississauga-Brampton area while researching his 2019 book Secondhand: Travels in the New Global Garage Sale.

Many people like to believe their clothes will go to someone in their community who needs them, Minter adds, but in most cases that doesn’t happen: “There’s just so much of it.”

Few understand the growth of the second-hand clothing industry better than Steven Bethell, president of Ottawa-based Bank & Vogue, one of the largest used-clothing traders in North America. He moves five million garments a week (the equivalent of 70 tractor-trailer loads) through a business that operates within multiple silos, and trades to the graders located in areas like Toronto, Karachi and Dubai. He also owns second-hand retail shops called Beyond Retro in London and Stockholm, plus a repurposing factory in India where workers source on-trend, used materials like denim, which the company turns into new designs for high-street brands like Converse (the upper of the classic Chuck Taylor sneakers, for instance, is made with post-consumer denim).

Bethell traces the industry’s roots to the early 1970s, when Pierre Trudeau’s government opened up the country to East African Indians who were being expelled from the continent. Some of them knew the grading business. “So you have mainly Gujarati guys in Toronto,” he says, referring to the western Indian origin of many of those newcomers.

Ahuja opened Toronto Textile Recycling in 2014 (Photograph by Christie Vuong)

Preet Ahuja, the 44-year-old owner of Toronto Textile Recycling, has been in the clothing industry his entire life. His family owned a textiles business back in Punjab. In 2001, a friend told him about an uncle who was a clothing grader in Mississauga. When Ahuja arrived in 2004, the Greater Toronto Area had 110 graders, the largest group of such exporters in the world. He spent 10 years as a used-clothing broker—buying apparel from second-hand clothing outlets and selling it to graders—before opening his own grading company and warehouse in 2014.

Ahuja handles 250,000 lb. of clothing per week, selling mainly to importers across Africa in countries like Ghana, Senegal and Tanzania. After the garments arrive at the port, Ahuja says, the importers pass them along to middlemen in those countries, who move the bales to remote areas. There, local retailers buy them, he adds, in some places hopping on bicycles and selling them door to door.

Around 75 per cent of used goods donated to organizations like the Salvation Army are not purchased by the public in stores. That surplus, what Ahuja calls “raw material,” is sold to the graders, who sell 85 per cent of it to places where there’s a market for it, or to recyclers who make rags for the construction industry or turn cotton, wool and acrylic into fibres to make blankets or floor mats. The remaining 15 per cent goes to landfill.

Still, donated clothing can make a difference in the world—even if it doesn’t wind up on the backs of people in the donor’s community. Charities like Mission Thrift Stores use the proceeds to support literacy programs in developing countries, Ahuja notes, while the Salvation Army runs homeless shelters and food banks. Before dumping clothes into the donation bin, it’s worth finding out which organization has partnered with this donation box, whether your clothes will be sold and to whom, and how those funds will be used.

This article appears in print in the May 2020 issue of Maclean’s magazine with the headline, “Wear to go in Brampton.” Subscribe to the monthly print magazine here.


Why Covid-19 finally makes the 'essential economy' impossible to ignore

Economist Armine Yalnizyan on what the economy will look like after the pandemic, and how decades of spending cuts left Canada ill-prepared when the crisis struck

Armine Yalnizyan is an economist and author based in Ottawa. She is currently a fellow with the Atkinson Foundation, working on a project on the future of workers. She recently served as senior economic policy advisor to the deputy minister of Employment and Social Development Canada, and was previously senior economist of the Canadian Centre for Policy Alternatives. Yalnizyan spoke to Maclean’s for a feature in the latest print edition on the end of growth. This is an edited transcript of that interview.

Q: Is it fair to say that in the longer term, what we’re facing is not just a coronavirus-triggered economic crisis—that this crisis sort of highlights and compounds existing economic problems?

A: Yes, it does kind of cleave open the fissures that were already there, though it also opens up brand new ones. It’s like the new class struggle is going to be between people that think that they’re beyond the rules and the people that realize that their wellbeing is a function of other’s wellbeing.

Q: You’re talking about social differences rather than economic?

A: No, social and economic. Have you seen the GIF that was designed by a New Zealand epidemiologist for how Covid is transmitted and how social isolation works?

That’s exactly how the economy works. I get money and then I share my money, via the things I have to buy, with others. And that multiplies. And when I lose money, there’s this cascade of lost income to the system.

READ: The end of economic growth

I think we are starting to see how health and wellbeing has got a connecting effect. [It’s the same for the economy.] My economic wellbeing is a function of others of economic wellbeing. Whereas for the last 30, 40 years it’s been very self-interest driven, very Darwinian, survival of the fittest. Our responses to economic downturns is bootstraps—get yourself better skills, develop your resiliency, fit right back in. It hasn’t been system driven. But now we’re starting to see much more clearly the way in which economies are interdependent, so that when one part of the economy starts to sag, it has ripple effects. The biblical image is how different parts of the body are still all parts of the body and when something happens to your left hand, you’re going to feel it through the whole body. So this epidemiological model offers a way of understanding that economic interconnectedness as well.

Q: There’s obviously the disruption that this crisis has caused, and it’s going to have devastating short term economic impacts, and longer-term impacts. But does it also perhaps present an opportunity for a reset and for rethinking some assumptions that we’ve made economically?

A: Not only that, for rethinking the architecture of our social security system. Don’t forget in the early to mid 1990s, we went through several rounds of cutting back all of the supports for working-age adults through unemployment insurance, through jobless benefits and through social assistance benefits, and at the same time cutting health services. What did we get in return? Budgetary surpluses. And what did we get for our budgetary surpluses? Tax cuts. So we never have fixed the problems we created in the early 1990s with respect to resilience in the event of a very serious economic downturn.

Q: And this highlights some of that.

A: Oh yeah. And at the federal level, they basically MacGyvered a whole new architecture for social security in six days. And it had elements of what some of us have been talking about for decades—those of us that said, you’re making a huge mistake cutting the way you’re, you’re cutting, you’re going to leave an awful lot of people exposed and those exposed people are going to bring down the house. I have tons of colleagues who’ve been talking about how to fix the system to make it recession-ready.

We talked about it in the wake of the 2008-09 global financial crisis, which for Canada was shockingly brief. The first nine months of that crisis look like the great depression of the 1930s in terms of joblessness. But it was a very sharp, V-shaped recovery because China was the ox that pulled our cart. So we didn’t notice the same fault lines that existed 10 years ago and everything we did in response to that—and we did a lot—was, as Mr. Harper would say, timely targeted and temporary. But now we’re seeing this isn’t something that is timely, temporary, and targeted. This is everywhere and for a long time. It’s going to require cash distributed with speed to an unprecedented number of people. So the Canada Revenue Agency is going to save our bacon. Which is hilarious, right? Because we all hate it.

READ: Could the coronavirus financial crisis lead to another populist storm?

Q: So we have a number of initiatives aimed at helping citizens and businesses to not go into free fall. But what happens down the road? After 2008, 2009 there was an expectation that there would be this V-shaped curve and that growth would go back to pre-2008 levels. And that didn’t happen. So is it even less likely that it will happen this time?

A: So on the other side of this, there’s a couple of unknowables and a couple of knowables. One knowable is that the economy will be more demand-driven than export-growth-driven. So whatever growth is going to happen is going to come from Canadians demand for goods and services, more so than whatever emerging economies are looking for. Exports will return, but they will not be driving growth. It will be driven by demand more than it has for the last 40 years.

Q: And is this because of political reasons or because things are changing on the ground in those emerging markets as well?

A: It’s partly because the emerging economies are also hit by the pandemic. Some emerging economies have got better healthcare systems than the United States, but they have less access to resources. Even though they’re younger, we don’t know whether they’ll get sicker. We don’t know whether they’ll have more deaths of the working-age population. We know that they could be harder hit by the pandemic than even we were. So that’s point number one.

Point number two is what’s been going on in the last few months, courtesy of Donald Trump, has been more production at home, less reliance on exports. The pandemic will double down on that. We don’t know now whether we can rely on our trading partners. So that will boost manufacturing activity at home. One example of technology accelerating that is 3D printers. We always knew that the potential for 3D printing is to relocalize production. You could get your intellectual property from anywhere. You could design something from anywhere, but the actual manufacturer could be at your local library, at your local hardware store . It could be literally in your backyard.

My point is, we are reconfiguring the sources of growth to be more rooted in domestic conditions. It’s not the end of globalization by any stretch, but what we’ve done for the last 40 years may not continue at the same pace going forward. So domestic demand matters. And the number one thing that happens to domestic demand in Canada is that a bigger proportion of the consuming public is old and getting older, and they’re going to move from working age to post working age, which will mean that their incomes will fall, which means they will consume less.

Q: That demographic question of course predated the current crisis.

A: Something big is about to happen in terms of slower growth rates that had nothing to do with the pandemic. That was the organic setting for it. Now post pandemic there will be a bunch of factors that are not predictable: How long this goes, how many businesses it knocks out, how many people are able to come back. That is all a function of policy— and our social behaviours.

And then the final unpredictable element is this experience is teaching us that there is something that I have dubbed—along with “slowth”—the essential economy. When we are told that we may not undertake nonessential travel or trips out of our home, we stop and think what is the essential part? It’s food, it’s shelter for those who don’t have it, medical supplies, healthcare if you need it and making sure you have access to electricity, water and communications, which would be by and large phone and internet. That’s the essential economy. And of course dealing with waste, right? And essential childcare for frontline responders who have nobody to take care of them. That’s the essential economy.

READ: People are risking death so we can stay home. We need to pay this debt.

Q: It’s a pretty short list.

A: When you break it down, what does it take for an economy to function, for society to function? It’s not a terribly long list. So what part of the essential economy do we take to the other side? How do we pay undervalued workers in grocery stores that you know, deliver our meds to us, to the door, through the postal service and through deliveries? How do we, how do we pay in value these people that are essential to our wellbeing? We know we’ll need more healthcare, more elder care, and more childcare on the other side of this. We know that the caring sector of the essential economy will be more needed. Where do those people come from? Are they paid or unpaid, and paid well or paid poorly?

And every element of what I just said has got a for profit and a not for profit element to it. It has a public and a private element. And it’s that combination, the mix that we choose, that will determine what kind of growth is on the other side of this. And if we choose to have women do more unpaid stuff, that will have an implication too on how the economy grows. Because women are actually a huge part of the essential economy, both paid and unpaid. This recession is completely different from anything else we’ve seen. And one element of it is that it’s a she-session. The role of women in both losing jobs as well as doing jobs and unpaid work has never been more important.