Amid COVID-19 lockdowns and restrictions, at least 740,800 jobs have been lost in small businesses, according to the Department of Industry.
According to The Blacklock Reporter, the researchers warn that the damage was so deep that it will be some time before the extent of the losses are realized.
“Private sector employment has declined in all provinces,” a ministry report said, adding, “Among small businesses, employment declined in all provinces.”
Analysts found that small businesses had a pre-pandemic payroll of 7.7 million employees, or about 68% of the Canadian workforce.
“In 2020, the Covid-19 pandemic posed significant challenges,” analysts said.
“The net employment change among small businesses was minus 740,800,” a drop of 9%.
Across the provinces, Prince Edward Island experienced the worst loss of small business jobs at 13%. British Columbia followed with 12%, followed by Alberta with 11%, Quebec 9%, Saskatchewan and Newfoundland and Labrador 8%, Ontario and Nova Scotia 7%, Manitoba 6% and New Brunswick 4%.
“How many businesses appear and disappear each year? In 2020, the Covid-19 pandemic has probably had an impact on the entries and exits of companies ”, indicates the report.
“However, given that the most recent data on business creation and destruction is for 2018, these impacts are beyond the scope of this report. “
Data shows that small operators – defined as those with fewer than 100 employees – entered the pandemic with 1,198,632 small businesses. Due to the closure of bankruptcy courts as a precautionary measure in the event of a pandemic, the number of collapsed small businesses is currently unknown.
The last recession in Canada in 2008 resulted in the loss of 158,000 businesses.
“In my opinion, there are hundreds of thousands of zombie businesses, businesses that have basically died but haven’t fully finalized the shutdown process,” said Dan Kelly, CEO of the Canadian Federation of Independent Business. (CFIB), during the 2020 Senate National Finance Committee hearings.
“They have a paper sign saying ‘Temporarily Closed.’ Now we’re going to see these businesses officially fail, more signs boarded up.
“Our research shows that one in seven businesses will fail before the pandemic is over.”
Kelly acknowledged that small businesses and entrepreneurs “fail all the time in ordinary economic times,” but said these businesses are usually replaced by new businesses coming in to “fill the gap.”
“We don’t see that,” Kelly said.
“We are seeing more business failures that have actually gone unreported. We are only at the tip of the iceberg as actual bankruptcies have also been slowed by COVID-19. “
A report released by CFIB on Aug. 31 – compiled from periodic questionnaires from as many as 4,950 small businesses nationwide – estimated that the small businesses that survived had a combined debt of $ 139 billion.
The report found that nearly a third of newly indebted businesses “used credit cards and the same number used their personal savings” and half of entrepreneurs said paying off their debt was “one of the biggest challenges their business faces on the road to recovery. . ”