8 Radical Suggestions to Jump Start Canada’s Job Growth After COVID19

With all the free time you now find yourself with, I am sure you have been scrolling through social media feeds. Have you noticed posts asking along the line of, How much longer can we keep our economy shutdown? Last week #EndTheShutdown was trending on Twitter.

People are starting to get unnerved by the economic fallout; especially when it comes to their personal finances.

COVID19, and the resulting rapid economic downturn, is being compared to the 1918 Spanish flu, the Great Depression, SARS and the 2008 financial crisis. While comparisons can be made, the fact is the world is navigating uncharted waters. Our reaction to COVID19 has created a double edge sword… shutting down the economy, with the exception of what is deemed to be “essential”, in an attempt to control the spreading of a virus. Health vs. money.

If the shutdown goes on much longer, the economic damage, if not so already, will be irreparable in the short-term. We already have globalization, automation, robotics, AI eating away at jobs. Now COVID19 comes along and for better or for worse we bring the entire economy to a crawl, even decimating entire industries such as hospitality, food service and retail.

When we talk about economic recovery we are talking about reversing the enormous increase in unemployment created by shutting down Canada’s economy. Hoping, with crossed-fingers Canada’s economic recovery will be as fast as the fall is wishful thinking. Imagine you fell off a steep cliff. Climbing out, if you are uninjured and physically in shape to do so, will take much longer than it took you to fall in.

To be expected, post-COVID19 business models will be leaner. Employees will need to work harder, be more engaged in their employer’s success and keep their sense of entitlement in check.

So far, there is no date when the shutdown of non-essential businesses will be lifted. When this happens, we will see what businesses remain standing. It will not be pretty. Discussions how to kick start Canada’s post-COVID19 economy should be happening now. It is not too early to talk about how the Canadian government, and our individual consumerism, will be instrumental in restarting Canada’s economy (READ: Get unemployed Canadians back to work ASAP.), which just five weeks ago was robust.

To start the discussion here are eight radical suggestions ( suggestions some will find politically incorrect or be offended by), or maybe not so radical, to jump-start Canada’s job growth after COVID19:

1. Mandatory retirement at 65.

I will begin with my most radical suggestion, mandatory retirement at 65.

According to Statistics Canada, in 2015, 1 in 5 Canadians, over the age of 65, reported working during the year. That is almost 1.1 million Canadian seniors!

We need to make room for younger workers, especially recent graduates. Youth unemployment has always been on the higher side of the national average, According to T rading Economics, the youth unemployment rate in Canada increased to 16.80% in March, from 10.30% in February of 2020. You can expect youth unemployment to skyrocket unless steps are taken now.

Making retirement at 65 mandatory for those who are on a company payroll ( business owners, those self-employed, contractors, would be exempt, as would be certain professions such as doctors and nurses) would immediately open up jobs. I see this as a low hanging fruit. This will come across as being harsh, but someone who has worked 35–40 years has had their chance to earn a living, to create their financial future. The number of jobs available is finite. By default when someone retires they are giving another person the same opportunity they had. With unemployment now at the height it is this make makes economic and social sense.

As a caveat Canada’s Old Age Security ( OAS) pension should not be taxable.

2. Consumer tax on items that can be manufactured or grown in Canada.

When applied strategically taxes can guide consumer spending.

Jobs are created when demand for a business’s products or services supports the requirement for employees. The more demand a company has for its offerings, the more employees needed. Bottom-line: Canadians supporting Canadian businesses, via their spending, creates jobs.

Consumers purchasing foreign-made goods because it is “cheaper” is the reason Canada imports so many products that can be manufactured or grown in Canada. Consumers paying a nominal tax upon purchasing imported goods that can be produced or grown in Canada would create revenue for the government. However, the core purpose of this tax would be to have Canadian consumers gravitate towards “Grown in Canada” and “Made in Canada.” Of course, there would be exceptions. Fruits such as oranges, bananas and pineapples would be exempt from this tax, while garlic from China or blueberries from Chile would have an import tax consumers would pay upon purchasing..

3. Cross border tax.

Canadians travelling within Canada, thus spending their money within the country supporting local businesses, creates jobs.

A nominal cross border tax, for non-essential travel, creates revenue for the government and makes Canadians think twice about which economy they are supporting. Imagine if just 30% of Canadians deferred their travel from outside the country to within Canada how much of an economic boost that would be to Canadian businesses.

4. No income tax on the first $35K earned.

The more money Canadians have in their pocket, the more they will spend ( hopefully locally). Since purchases are taxed, the income tax not collected would be made up via the increased taxes collected on the increased spending.

5. Lower payroll tax.

An employer’s most significant expense is their payroll. Make it as inexpensive as possible to hire employees.

6. Long-term interest-free business loans.

Businesses hire employees. They spend money on supplies, rent, and utilities. Upon providing a solid business plan, and a passing a credit check, offer a business loan of up to $250K to be paid back, interest-free, in monthly installment starting in 5 years. Canadians starting businesses inevitably will lead to job creation.

7. Those currently employed cannot apply for a new job outside their company.

When COVID19 finally passes the objective should be to have unemployed Canadian get back to work as fast as possible. Those who were fortunate enough to have kept their job throughout the pandemic should remain in their current job/company (you can move within your organization) until January 1, 2022. Finding work in the best of times is difficult. To apply for a position post-COVID19, you need to show you are currently unemployed. Removing the added competition from candidates who are employed, which employers end to gravitate towards, will go a long way helping those who are unemployed find work quickly.

8. Offer tax incentives to industries (sectors of the economy).

In 2009 Jim Flaherty, Canada’s federal Minister of Finance ( 2006–2014), introduced in the Federal Budget a temporary Home Renovation Tax Credit for eligible home renovations and alterations. Basically the HRTC provided a 15% tax credit to individuals for eligible expenditures in excess of $1,000 but not more than $10,000 made in respect of eligible dwellings. I often wondered why this type of tax credit was not continued. To assist various industries a tax credit similar to the HRTC could be implemented with various industries. One year there’s a tax credit for home renovations, the next year for automobiles, the following for appliances, and so forth. Such a tax credit, the eligibility requirement focusing as much as possible on “Made in Canada”, would stimulate spending which inevitably would create jobs.

All I have offered here are rough suggestions, which can be temporary with a hard stop date, can be adjusted to consider seasons ( Importing strawberries in January has merit to warrant not having an import tax.) and resources constraints.

The objective is to start the discussions around how will we get back as many Canadians to work. There will inevitably be business closures. Sectors of the economy, which depend on discretionary spending ( Sports, entertainment and the hospitality sector rely on people going out and spending what disposable income they have.) will not be recovering in the near future. There will be opportunities for new businesses to start up.

How do you envision Canada’s employment recovery post-COVID19?

Originally published at https://www.linkedin.com.