The most lasting change to come out of the Covid-19 crisis could be reform to Canada’s social safety net, suggests Benjamin Tal, deputy chief economist at CIBC Capital Markets.
Speaking at the Ontario Securities Commission’s (OSC) annual policy conference on Wednesday, Tal said that some effects of the pandemic — such as the broad shift to working from home — could well be overstated, and likely won’t represent a fundamental change in how society operates.
But Tal also cautioned against underestimating how dramatically — and permanently — society will be changed in other ways by the pandemic.
One area that could see a fundamental long-term change is Canada’s social safety net, after the pandemic exposed the vulnerability of the existing employment insurance system, particularly given the harder hit low-wage workers suffered during the crisis.
Lessons learned from the pandemic may result in governments introducing some form of guaranteed basic income or other reform to better protect vulnerable Canadians, Tal suggested — a change that would ensure higher government spending and, ultimately, higher taxes in the years ahead.
With regard to people continuing to work from home, Tal said that large segments of the population rushing to work at the same time every day may now seem “primitive,” but he expects workers will return to the office at some point.
There will be greater flexibility in how people work, Tal predicted, but also a gradual return to normal life in the coming months as rapid testing, improved treatment and vaccines for Covid-19 are developed.
These developments should underpin a strong recovery in mid- to late-2021, Tal suggested, following a “relatively harsh” winter, in economic terms.