Ottawa extends wage subsidy
More businesses to qualify, Liberals consider lowering eligibility threshold
Canadian businesses affected by the COVID-19 pandemic will be able to access the federal government's emergency wage subsidy for an additional 12 weeks, until the end of August.
Prime Minister Justin Trudeau announced the extension at his daily news conference on Friday.
“Wherever possible, we wanted to keep you connected to the job you love and to the workplace where you contribute every day. When we launched this program, I talked about the neighbourhood spots it would support, the local restaurant, the salon, the gym that had been forced to close or seen business dry up,” Trudeau said.
“Well, today, a lot of those places are looking towards reopening and they need to be able to bring back workers and even hire more as this happens.”
The Canada Emergency Wage Subsidy (CEWS) covers wages of employees — 75 per cent of the first $58,700 of salary up to a maximum of $847 per week per employee — for businesses of all sizes, with no cap, that have shown at least a 30 per cent decline in revenue compared to the previous year (or 15 per cent for March).
The program was initially slated to run from March 15 to June 6, but will now run to Aug. 29.
Speaking with journalists later in the day, Finance Minister Bill Morneau said the benefit is also now available to Indigenous governmentowned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers, registered Canadian amateur athletic associations such as Hockey Canada, registered journalism organizations, non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools or flight schools, as well as partnerships that are up to 50 per cent owned by non-eligible members;
Previous eligibility criteria excluded municipal and local governments, Crown corporations, public universities, colleges, schools and hospitals.
Morneau said this change, effective immediately, will be retroactive to March 15.
In addition, the government announced intentions Friday to propose legislative amendments to the CEWS to provide flexibility for employers of existing employees who were not regularly employed in early 2020, such as seasonal employees, to ensure that the CEWS applies appropriately to corporations formed on the amalgamation of two predecessor corporations and to better align the treatment of trusts and corporations for the purpose of determining CEWS eligibility.
The government also has plans to consult with businesses and labour representatives over the course of the next month, Morneau said, and may make further adjustments to the program based on what it hears, such as a potential adjustment to the 30 per cent revenue decline eligibility threshold, in order to encourage hiring.
“Our message to employers remains the same: we hope that you apply to this program and rehire your workers,” Morneau said.
“Workers drive our economy. By making sure they have jobs to go back to, we are making sure Canada stands ready to recover.”
Asked about the cost estimates for the program with the expansions, Morneau said it was too early to provide any numbers, and the priority of the government is to give more certainty to businesses so they feel comfortable hiring back more Canadians as the economy begins to open.
SLOW UPTAKE?
So far, Ottawa has received 132,481 applications for the CEWS, representing 1,693,131 employees, and has paid out $3.36 billion of the $73 billion the program was initially expected to cost.
In a statement, the Canadian Chamber of Commerce said it welcomes the extension of the wage subsidy program and the inclusion of more business structures for eligibility, but more improvements are still needed to ensure more businesses qualify.
“We appreciate that the federal government is working very hard to develop and deliver financial measures to help businesses and Canadians weather the impact of COVID-19. … We also appreciate that uptake for the CEWS is far below original expectations. Many businesses have closed or are not operating at full capacity, limiting applications, but many more do not qualify for reasons including they do not meet the current revenue loss thresholds, use non-t4 employees or engage third-party payroll providers,” the statement reads.
“We look forward to continuing to work with the government on behalf of Canada's businesses to ensure the help they receive is sufficient to get them through — and beyond — this crisis in the best shape possible.”
During the question and answer portion of his news conference, Trudeau was asked why the program has not resulted in the amount of rehiring that was expected.
“I think there is a reflection that this is an unprecedented situation and there is a lot of uncertainty about what the coming months might bring,” he said. “As businesses are trying to figure out when they might be able to reopen, are looking at numbers of cases and trying to imagine what that might mean for their business in the coming weeks, in the coming months, they are busy trying to juggle a whole bunch of different factors that they have very little window into.”
That is why, he said, the government announced the continuation of the wage subsidy and why changes to the 30 per cent eligibility threshold are being considered.
“We wouldn't want people who are getting back their business going to feel like they have to hold back on their growth, on their expansion, on the rehiring in order to be able to continue benefiting from the wage subsidy,” he said. “So we're going to work with industry, work with labour, work with stakeholder groups to make sure we're getting it right.”