Forecasting forward through “present” health impositions of the pandemic, our economy will emerge, differently, but the economy will adjust and once again prosper.
Getting to this point will inflict lacerations to the economy, the residual impacts can be observed through scarring.
A term often used by economists is labour market scarring. This relates to a negative long-term effect that labour displacement (unemployment) has on future labour market possibilities. It can be in the form of displaced youth challenged to enter a changed employment market, or retail workers in our urban centres displaced when businesses close due to work-from-home policies. Economic scarring will be broader than just labour effects and, in our case, can have impacts that may take years to manifest.
Labour is relatively easy to measure. Professor Jonathan Portes of Kings College London in June estimated shutdowns impacted up to 30 per cent of the workforce. He also identified human capital, firm capital, education and business investment as all having declined through the pandemic as losses to the economy added impactful scars to GDP. The loss of these attributes will take years to replenish as each works through a phase of atrophy.
Another local complexity to our economic trajectory is air-link. The loss of reliable and robust air connectivity to key hubs will certainly impair economic recovery. This is an area not discussed, but certainly worthy of provincial policy support as we start planning for recovery and returning travel.
A more direct impact to individuals and their ability to resume operations is mental health. A chronic impact to the economy has expanded incredibly through the stresses of an uncertain pandemic. In December 2020, the Lancet stated, “People with depressive, anxiety or obsessive-compulsive disorders are experiencing a detrimental impact on their mental health from the COVID-19 pandemic.”
As no surprise, the Psychiatric Times indicated in October 2020, “Overall, the research demonstrates that COVID-19 is affecting the mental health of children and adolescents and that depression and anxiety are prevalent.”
These scars are now starting to manifest.
There are hundreds of studies affirming increases in anxiety, depression and mental health strains. The impacts are consistently documented, and as such our economy also needs to adapt, accommodate and repair this “scar”.
Over time injuries heal. Athletes use focus, physiotherapy and adaptation to resume activity post damage. However, in the fullness of time, the scars of these injuries often return later in life while some athletes never fully recover from the time of injury.
Governments and policy makers now need to focus on developing supports to rehabilitate the economy post impact. Business needs to shift focus from accommodating the injury to recovery. Rebuilding energy and enthusiasm to return to pace.
We have lost economic momentum in the majority of our sectors (construction, leisure activities, stay-at home are exempt), and we need to stimulate these sectors and reconnect a workforce. In physiotherapy terms, we need to TENS impacted sectors.
We are within sight of recovery and proper focus can accelerate our resumption, several quarters out. There will be scars evident for many years as our economy adapts and adjusts to new challenges, but now is the time to transform industries and empower our people.
Blake Doyle is The Guardian’s small business columnist.