Higher wage sub­si­dies sought from Lib­er­als


Cana­dian busi­ness or­ga­ni­za­tions are plead­ing for more help as they con­front an un­prece­dented eco­nomic down­turn caused by the COVID-19 out­break.

More than 60 busi­ness or­ga­ni­za­tions teamed up on Wed­nes­day to send a lengthy wish list to Ot­tawa but, above all else, they are seek­ing in­creased wage sub­si­dies as waves of lay­offs start to hit Cana­dian com­pa­nies.

“I am very con­cerned that without a sig­nif­i­cant in­crease in the as­sis­tance made avail­able to busi­nesses to keep their em­ploy­ees on the pay­roll, we are go­ing to see mas­sive num­bers of lay­offs and tens of thou­sands of small busi­nesses go­ing out of busi­ness en­tirely,” said Per­rin Beatty, the pres­i­dent and chief ex­ec­u­tive of the Cana­dian Cham­ber of Com­merce. “It will mean that when we come out the other side of the tun­nel there won’t be a busi­ness for em­ploy­ees to go back to.”

With a govern­ment-im­posed shut­down keep­ing peo­ple out of re­tail stores and restau­rants, the econ­omy needs to be put on life sup­port to keep busi­nesses alive and ready to spring back to life when the COVID-19 cri­sis sub­sides, Beatty said.

Along with wage sub­si­dies, the cham­ber is also ask­ing gov­ern­ments to post­pone any im­pend­ing “tax in­creases, non-es­sen­tial new reg­u­la­tions and un­nec­es­sary con­sul­ta­tions.”

At a news con­fer­ence on Wed­nes­day, Fi­nance Min­is­ter Bill Morneau said to ex­pect more an­nounce­ments about aid to busi­nesses in the “com­ing days.” The govern­ment has al­ready of­fered a 10 per cent wage sub­sidy, up to $25,000 per com­pany.

“It’s mul­ti­ple sec­tors. We’re look­ing at the air­line sec­tor, we’re look­ing at the hos­pi­tal­ity sec­tor writ large, which is fac­ing enor­mous chal­lenges,” said Morneau. “In terms of when we’ll have more to say? It will be in the very near term.”

The govern­ment will also un­veil aid for Canada’s be­lea­guered oil and gas in­dus­try, which has en­dured years of eco­nomic trou­ble from low oil prices and now sees prices plunging even far­ther.

With an un­prece­dented eco­nomic shut­down, the govern­ment should err on the side of over-re­act­ing rather than un­der-re­act­ing, said Rocco Rossi, the pres­i­dent and chief ex­ec­u­tive of­fi­cer of the On­tario Cham­ber of Com­merce.

“My fear is re­ally around the dam­age that’s be­ing done. If it’s al­lowed to to con­tinue, it will put at risk and slow, tremen­dously, the re­bound,” said Rossi.

The govern­ment has also made mas­sive amounts of ex­tra lend­ing ca­pac­ity avail­able, with $10 bil­lion avail­able for small and medi­um­sized busi­nesses through the Busi­ness De­vel­op­ment

Bank of Canada and Ex­port De­vel­op­ment Canada and $300 bil­lion in ex­tra lend­ing ca­pac­ity through pri­vate banks.

Nu­mer­ous sources have told the Na­tional Post that even more lend­ing ca­pac­ity is in the works, but Rossi said the news that nearly a mil­lion Cana­di­ans ap­plied for em­ploy­ment in­sur­ance last week shows more debt won’t solve the prob­lems of small and medium-sized busi­nesses.

“If credit fa­cil­ity was go­ing to solve things, you wouldn’t have seen a mil­lion ap­pli­ca­tions (for EI). And that’s be­cause many of those busi­nesses sim­ply can’t af­ford to go into more debt,” said Rossi.

With all the un­cer­tainty in the econ­omy, many busi­nesses will be ap­pre­hen­sive about tak­ing on more debt and some may not even be able to, said Ken Kobly, the pres­i­dent and chief ex­ec­u­tive of­fi­cer of the Al­berta Cham­bers of Com­merce.

“At this point, in par­tic­u­lar, in Al­berta, where we’ve gone through four or five years of chal­leng­ing times, it’s pretty dif­fi­cult to sug­gest to a small busi­ness that they need to go out — or it may be im­pos­si­ble for them to go out — and get ad­di­tional fund­ing fi­nanc­ing from the banks,” said Kobly.

Both Beatty and Rossi said that cash flow is the prob­lem for most small busi­nesses and that wage sub­si­dies are the best way to pro­vide that.

Busi­ness groups have pointed to the United King­dom and Den­mark, where wage sub­si­dies have reached lev­els as high as 80 per cent of a worker’s salary. But there are some key dif­fer­ences in Canada’s sit­u­a­tion and it may be an in­di­ca­tion of quirks in the way govern­ment’s trans­fer money to peo­ple.

In Canada, parental leave ben­e­fits flow through



the em­ploy­ment in­sur­ance sys­tem, while in the United King­dom they are sub­si­dies that flow through the em­ployer. Sim­i­larly, Canada’s COVID-19 re­lief runs through the EI sys­tem and the U.K.’S re­lief flows through wage sub­si­dies.

In the U.K., the 80 per cent sub­sidy cov­ers up to £2,500 ($4,220) per month and would place em­ploy­ees on a leave of ab­sence, rather than lay­ing them off.

Beatty ar­gued that a wage sub­sidy for busi­nesses would take some of the pres­sure off the em­ploy­ment in­sur­ance pro­gram. It would also al­low peo­ple to main­tain their health ben­e­fits and some kind of connection with the com­pany, which would al­low a quick re­hir­ing process if the econ­omy springs back to life.

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