Small Businesses Hardest Hit
Small firms experienced larger decreases in economic activity than large firms in the quarter coinciding with the onset of the COVID-19 pandemic, says a study published by Statistics Canada. ‘Economic Impact of the COVID-19 Pandemic on Canadian Businesses across Firm Size Classes’ shows two measures of economic activity - actual hours worked by employees in production and real gross domestic product (GDP) - decreased overall across all firms, but small firms, particularly those in the services sector, were among the hardest hit. The COVID-19 pandemic decreased economic activity through related government interventions such as the closure of non-essential businesses and travel restrictions, as well as through a decrease in demand. Small- and even medium-sized firms may have experienced relatively larger decreases in activity because the pandemic had particularly severe impacts in industries where smaller businesses tend to be concentrated and in firms where physical proximity is required, such as in the tourism, transportation, restaurant, accommodation, and arts and entertainment sectors. Hours worked and real GDP declined in the first quarter of 2020 in both the goods and the services sectors. In both sectors, the declines in hours worked were larger among small- and medium-sized firms. In contrast, hours worked in large firms in the services sector increased by 2.8 per cent in the first quarter of 2020.