Trudeau touts federal wage subsidy, but businesses say program falls short

Prime Minister Justin Trudeau stopped by a bistro in Chelsea, Que. today to promote a federal wage subsidy program meant to help keep workers on the payroll during the pandemic crisis — but advocacy groups are pushing for changes to the program to help more businesses qualify as the economy reopens.

Trudeau said the Biscotti & Cie restaurant, where today's event was held, was able to keep 75 workers employed with the assistance of the Canada emergency wage subsidy (CEWS).

"Small business owners create jobs, fuel the growth of our economy and enrich our communities. And our government is there to help them when they need it most," he said.

The government has been encouraging employers to apply for the wage subsidy program, which covers 75 per cent of an employee's pay, up to $847 a week. Uptake remains lower than expected, however.

As of June 15, about 353,350 applications have been approved, worth about $13.3 billion. The overall cost of the program was pegged at $73 billion.

Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), said the main reason for the lower uptake is the delay in announcing the 75 per cent subsidy and the long wait before money was delivered. The government initially proposed a 10 per cent subsidy.

He said it took about a month for the government to introduce the bigger subsidy, and another six weeks to get the application in place, meaning it was mid-May before any businesses started to see the money.

Too little, too late?

"Most businesses couldn't hang on that long. One of the only quick actions they could take to ensure the business itself would survive was to cut costs, and wages are typically their largest expense," he said.

Kelly said CFIB had urged the government to launch the program as quickly as it did the Canada Emergency Response Benefit (CERB) as a way to maintain the connection between employers and workers and avoid layoffs.  

"We are now paying the price for that, as employers struggle to get their workforce back together," he said.

Kelly said he's pleased the government extended the program until the end of August, but hopes for changes to eligibility rules, including the requirement to show a 30 per cent drop in revenue.

Calls to change revenue rules

Trevin Stratton, VP policy and chief economist at the Canadian Chamber of Commerce, agrees that timing was a critical factor for uptake.

"The low demand for the CEWS was likely the result of the program coming into effect well after businesses made the difficult decision on layoffs and shuttered operations," he said. "Once business crossed that threshold, they were unlikely to reverse course until the economy re-opened."

Stratton said eligibility rules are also a factor. Employers who already had laid off employees would have to pay them for four weeks before they could qualify for the wage subsidy.

"As a result, the CEWS is not ideally suited to what we're seeing as the economy re-opens — a gradual, trickling back of the workforce, rather than an immediate bounce back to full capacity. This may be why we are seeing CEWS applications tapering off," he said.

The Chamber of Commerce is also calling for a pro-rated subsidy that would allow businesses to qualify for a partial subsidy if their revenue drops are less than 30 per cent, as well as a change that would allow businesses, including not-for-profits, that use third-party payroll providers to qualify.

'Nonsensical barriers'

Conservative MP and critic for small business and export promotion James Cumming said he continues to hear from employers who are having trouble accessing the wage subsidy because of "nonsensical barriers."

"There is also tremendous uncertainty both for employers and employees about whether businesses can continue to operate given concerns about a second wave, limited access to funding relief and revenue losses. The Trudeau government's failure to address these issues continues to affect consumer confidence and business feasibility in the long run,"  he said.