Canadians are experiencing the economic effects of COVID-19 very differently — and it largely depends on how vulnerable they were prior to the pandemic, a new poll suggests.
The youngest people in the workforce — those in Generation Z — appear to be struggling the most, according to the poll, which was commissioned by insolvency firm MNP.
Nearly 70 per cent are $200 or less away from insolvency, which includes 39 per cent who are already insolvent, meaning their financial resources aren’t enough to cover their current obligations.
Other groups among the hardest hit in the pandemic include renters — 57 per cent who are in that same position — about half of women, and 67 per cent of households earning under $40,000.
“The younger generation, those still with student loans, Z generation … renters, they’re feeling the pinch,” said Grant Bazian, president at MNP LTD.
Canada is starting to see a K-shaped recovery, Bazian said.
That’s when the economy bounces back after a recession, but instead of the growth being uniform, different sectors and groups recover more quickly than others.
Young people, renters and lower-income Canadians are not the only ones who could be left out of the recovery. Throughout the pandemic, advocates and experts have also highlighted the disparate impact of COVID-19 on seniors, racialized Canadians and those with disabilities.
The poll findings come from the MNP Consumer Debt Index, a quarterly survey that takes the temperature of Canadians’ finances. The index is currently at its second-lowest result of 94 points (the weaker the score, the worse Canadians are feeling about their debt).
Overall, the poll found that just under half of Canadians are $200 away from insolvency or already insolvent.
That figure is on the rise, having increased four points since July, the last time the poll was published.
Canada’s bankruptcy and insolvency statistics suggest the billions in government supports rolled out this year are saving people from having to take such action — at least in the short term. In August, consumer filings were down more than 40 per cent compared with the previous year.
Federal income supports have recently been extended for many, and jobs are recovering. Canada added 378,000 positions last month, a stronger result than economists expected but still 720,000 jobs shy of pre-pandemic levels.
Insolvency trustees across the country, however, are starting to hear from more people who are struggling, Bazian said. He also expects an uptick in inquires come tax time, because benefits like CERB are taxable.
His advice is to get in touch with a professional to learn about the options before your finances reach a tipping point.
“Reaching out earlier — sooner than later — will help people decide what course of action take when it gets really bad for them,” he said.
The MNP Consumer Debt Index was compiled by Ipsos on behalf of MNP LTD between Sept. 1 and 3, 2020. For this survey, a sample of 2,001 Canadian adults were interviewed. Weighting was then employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled.