While some people are having hard times, others have never had so much money in their bank account.
When the pandemic struck in March 2020, pianist Jérôme Beaulieu was finishing a five-concert tour in France with his group Misc. “We had to return to Canada right away,” says this star of the Montreal jazz scene, who was the Radio-Canada Revelation in 2014.
I met Jérôme Beaulieu seven months later, when he arrived at my place not to play jazz, but to repair our garden gate!
“I made a good living as a musician,” says this father of a four-year-old boy. But with the pandemic, Jérôme Beaulieu has seen 75% of his income evaporate, one gig after another. Almost everything has been cancelled. And who knows when the cultural scene will resume its activities? The pianist, whose wife is a singer, has therefore decided to add a new piece to his repertoire: home improvement odd jobs. “It was while doing work at home in the garden that I got a taste for it,” he says. He had some experience, having already helped his handyman dad. “I’m pursuing a few musical projects, but I’ll have to do some renovations to have a side income for a while,” he says thoughtfully.
Jérôme Beaulieu, who took advantage of the Canada Emergency Response Benefit (CERB), is one of two million Quebecers who have turned to this government assistance, including almost all artists and employees of hotels, bars, and restaurants. By the end of April, in Quebec, one in five men and one in four women had been laid off, according to a joint study by the Centre Universitaire de Recherche en Analyze des Organisations (CIRANO), the Research Chair in Intergenerational Economics (CREEI), and the Retirement and Savings Institute (RSI) at HEC Montreal. Almost a third (29.5%) of households had experienced a change in employment status since 2019 because of COVID-19.
Almost a year after the start of the pandemic, it is still difficult to establish an exact portrait of its overall effect on the finances of Quebecers. Are we richer? Who are the winners and losers? Have public health measures worsened inequalities?
“We are all united in the face of the same storm, but some are in a rowboat and others in a five-star liner,” says François Décary, director of the Association Coopérative d’Économie Familiale (ACEF) Appalaches-Beauce-Etchemins.
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It must be said that not all is bad for everyone. Despite job losses and closures, during the first five months of 2020, average weekly earnings were up 7.1% from the first five months of 2019, according to the Institut de la Statistique du Québec. Considering that at the end of April, according to the study conducted by CIRANO, CREEI, and RSI, just over half (55.5%) of all households had seen a drop in income – by 8.4% on average – we can conclude that some have seen their financial situation improve.
Félix Cadotte, 27, who works as a project manager at the Centre for Technology Transfer in Industrial Ecology in Sorel, was very worried at the start of the pandemic, but in June, he went from a part-time position to a full-time job. “Business is going stronger than ever. Organizations and ministries realize that sustainable development goes hand in hand with profitability. The growing interest in buying locally is one of the canons of sustainable development, which means that there is a huge demand for what we do.”
In addition, since he is now teleworking five days a week, Félix Cadotte eliminated a number of expenses for clothes and restaurants, and above all, he got rid of his car. “I won on two counts. I have a full-time job and have lower costs. My girlfriend and I don’t need two cars anymore, only one,” says the young man, who is saving for a house while awaiting the birth of his first child. Read also
When the great lockdown arrived and it was necessary to give up romantic outings to restaurants, happy hours with colleagues, and family getaways, many Quebecers somehow placed themselves in “involuntary simplicity,” rediscovering the virtues of “homemade” and saving. The same thing happened after the summer break, when almost all of Quebec found itself in the red zone. “The pandemic makes us realize how much money we spend on non-essentials, such as outings, trips, and restaurants,” explains Nathalie Bachand, president of ÉducÉpargne (formerly Question Retraite), a non-profit organization whose mandate is to raise awareness of the importance of cultivating good savings habits. “When all that disappears, we see our real needs more clearly,” she says.
In June, according to a SOM poll commissioned by the organization, 50% of Quebecers had revised their budget and financial priorities, two thirds “out of prudence” rather than “out of obligation.” And half of the respondents wanted to be better financially prepared for the next crisis.
In addition, 85% of Quebecers had reduced their consumption and 59% had cancelled or postponed a major expenditure, according to the same survey.
For the majority, it was only a postponement: according to the Institut de la Statistique du Québec, spending by Quebecers increased by 15.9% in the third quarter compared to the previous one. Nationwide, spending on durable goods rose by 38% over the same period – the largest increase on record, according to Statistics Canada – an increase of 7.7% from the fourth quarter of 2019!
For others, a certain awareness has taken hold. “Many people have managed to reduce their spending in a sustainable way during the pandemic, and they find that by eliminating restaurants and outings, they debit their account from $400 to $800 less each month,” notes Pierre Leblanc, founder and president of Groupe Leblanc Bankruptcy Trustees.
Across the country, the savings rate for Canadians climbed to 27.5% in the second quarter, helped by rising wages, government assistance, and lower spending. It suddenly fell to 14.6% in the third, but that is still significantly more than the savings rate of 2% recorded in the fourth quarter of 2019, observes Statistics Canada.
According to a survey conducted in July 2020 by Angus Reid, 8 in 10 Canadians rated their financial situation “good” or “excellent”!
Financial institutions have noted this savings trend. For the first nine months of 2020, Desjardins Group measured an increase in deposits of 17% compared to the same period in 2019.
And those who had placed their money in financial markets lost nothing. “At the beginning of the pandemic, there was a stock market panic that lasted from February 23 to March 20. It was a descent into the abyss that erased three years of gains. Many clients could not resist the emotion and asked us to sell everything,” says Louis-Bernard Dubé, financial planner at iA Financial Group in Terrebonne. “In six months, all the stock markets had returned to the same point. Those who kept a cool head and sold nothing remained in the same situation. Those who sold fell back for the most part.”
David Paré, financial planner at Desjardins Securities, also tells his clients that it is never good to react under the influence of emotion. “A person who exits the market has only a one in four chance of doing well, because it is almost certain that they will have sold and repurchased their shares at the wrong time.” Read also
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People already in financial difficulties before the pandemic had six months’ access to a range of deferred payments and reduced rates for their mortgages, credit card debt, student loans, and Hydro-Quebec bills. “This concerted effort is unheard of!” says Pierre Fortin (no relation to the L’actualité business columnist), president of Jean Fortin & Associates, a licenced insolvency trustee group in Laval. As of October 31, no less than 13 Canadian financial institutions had granted mortgage repayments to more than 796,300 people across the country – or one in six mortgages. In Quebec, 650,000 people would have taken advantage of deferrals of various payments on their loans, according to the financial recovery consulting firm Raymond Chabot.
For people with high debt, this six-month respite provided unexpected liquidity, or thousands of dollars in the bank. As a result, the Office of the Superintendent of Bankruptcy recorded half as many bankruptcies in September (977) as in the same month the previous year (1,848). “But be aware, this sudden liquidity was an illusion. Interest continued to accumulate on their debts,” said Éric Lebel, partner, financial recovery advisor and licensed insolvency trustee at Raymond Chabot. Moreover, the effect has already started to be felt and the number of insolvency and bankruptcy cases started to rise again in Quebec in September: 30% more insolvency cases than in August and 20% more bankruptcies were recorded, again according to the Office of the Superintendent of Bankruptcy.
Trustee Pierre Fortin expects those in debt, after the 2020 respite, will find it difficult to keep their heads above water for the next several years. “People who have not been able to keep their jobs do not come out enriched. Those who were in debt are now more in debt. “
Social assistance recipients are among the other losers from the pandemic. “These people were not able to benefit from ECPs. Some have lost jobs that allowed them to survive, ”explains François Décary, from ACEF Appalaches-Beauce-Etchemins, mentioning a client who was on social assistance and who supplemented his income by doing small households in the villages. NPOs.
“Special allowances like the PCU are not a freebie,” says Francine Hamel, budget consultant at ACEF in Quebec. These taxable benefits, by increasing income, will disqualify many people from support programs, such as legal aid or housing allowance. “These people will have a clear idea in July 2021: that is when governments will have finished calculating the allowances and programs to which citizens are entitled.
The various effects of the pandemic crisis on the personal finances of Canadians will be felt in 2021, or even in 2022. At least, if we trust the conclusions of a study on the aftermath of disasters published in 2019 by Urban Institute, an American non-profit organization specializing in social and economic policy research. The study concludes that residents affected by a disaster, even when they have received financial assistance from the state, experience negative consequences on their personal finances in the medium term: declining credit rating, difficulty in repaying debts , foreclosure, bankruptcy.
Right now, it is the question of taxes (due April 30) that preoccupies almost all of the financial experts interviewed. According to a survey by Raymond Chabot, a third of respondents who received PKU did not set aside the amount needed to pay the associated tax. Among 18-34 year olds, the proportion climbs to 50%. Like what even after the vaccine, COVID will continue to make waves in the personal finances of Quebecers.
Actress Sophie Bourgeois (L’Échappée, at TVA), for her part, assures us that she will not be repeated there. She, too, had recourse to government aid, her theatrical and filming plans and even a teaching contract were canceled in March. “A nasty slap,” said the 48-year-old actress. Pride took a hit, but we get up. “
The mother of two children aged 12 and 8, who continues to rely on the Canadian Economic Recovery Benefit (PCRE), is currently stepping up television scriptwriting initiatives with producers and broadcasters. She vowed to herself that she would maintain her writing business no matter what, even when business picked up. “I don’t want to go through this anymore. We have to diversify. I will never be just an actress again. “
