Business, labour groups say wage subsidy too little to help
OTTAWA — A growing number of business and labour groups are urging the federal Liberals to up their promised wage subsidy to help companies hit hard by COVID-19 keep people on their payrolls.
The latest salvo came from the United Steelworkers union on Tuesday morning, around the same time the Canadian Federation of Independent Business panned the promise for not going far enough to save jobs.
The Liberals have promised small businesses a 10% wage subsidy for 90 days, up to a maximum of $1,375 per employee and $25,000 per business.
There are calls for Ottawa to increase the subsidy to 75% from the Canadian Federation of Independent Business, the federal New Democrats and Greens. The Steelworkers want it increased to 80% as is being done in the U.K., which has also set a monthly cap of almost $4,000.
The Business Council of Canada and Canadian Chamber of Commerce have issued similar requests for more wage help.
Dan Kelly, president of the Canadian Federation of Independent Business, said the belief across all those groups is that helping employers retain workers, instead of paying the money through employment insurance or other similar benefits, will help the country get back into recovery mode quickly.
The Liberals have said their economic stimulus plan, which includes $27 billion in spending and $55 billion in tax deferrals, is only a start.
Canada, as part of a joint declaration Tuesday from G7 finance ministers and central bankers, agreed to do “whatever is necessary” to protect jobs and businesses, and urged other countries to follow suit as long as required.
All the measures announced to date, coupled with the economic situation, likely puts the starting federal deficit for the coming fiscal year around $86 billion, up from the estimated $28.1 billion late last year, according to a Royal Bank report this week.
It’s possible that the Liberals will up the wage subsidy as in other countries, but likely not soon enough to stave off heavy job losses, said Kelly.
“Hearing everything is on the table, but not having any more meat on the table is wearing thin with the business community that is absolutely freaking out,” he said.
The job losses from the shock could be significant. The Conference Board of Canada estimated in a report Monday the economy could shed more than 330,000 jobs over the next two quarters.
“When someone is fired, the time it’s going to take for them to reapply to get a job, the effort it’s going to take for them to find new employment is colossal if you think about the scale and the magnitude of how many people are losing their jobs,” NDP Leader Jagmeet Singh said Monday in making the case for a wage subsidy of 75%.
Wage subsidies may be the fastest way to ensure that income continues to flow to households to cover essential costs and maintain their connection to the workforce, said Jennifer Robson, an associate professor of political management at Carleton University in Ottawa.
Some businesses like big grocery stores won’t need the help, she said, but a subsidy might help others facing cash-flow and operational constraints — by being ordered to close, for instance — “hang on to more workers, even if at reduced pay relative to pre-crisis levels.”