WAGE PROGRAM ROLLED OUT

10,000 applications

• T he Liberal government launched its long- awaited wage subsidy program on Monday amid growing concerns that delays in its rollout could have already hampered the $73-billion spending plans.

Industry lobby groups have been calling on Ottawa since early March to introduce a program that would cover the majority of payroll costs for small businesses, who have already laid off millions of Canadians in response to economic shutdown measures aimed at curbing the spread of COVID-19.

Prime Minister Justin Trudeau heeded those calls in early April, but weeks of delay could have missed a key period for cash-strapped business owners, who needed prompt access to capital. Trudeau said applications for the program are now open, and paycheques could reach businesses by May 7.

“You can expect to see this money soon,” he said in his regular briefing with reporters, noting that nearly 10,000 businesses had applied for the program as of Monday morning.

Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said businesses will be particularly hesitant to rehire staff without a clear sense of when social- distancing measures could be lifted.

“It has caused many employers to at least slow down the waves of layoffs that would’ve happened,” he said. “But if you’ve already laid off employees, you’re unlikely to bring them back until you know when you can reopen.”

Some observers now expect that uptake in the massive wage- subsidy program could be lower than the expected $ 73 billion, though prolonged economic shutdown measures could easily nudge that number higher than current estimates.

A report by the C.D. Howe Institute on Monday estimated that the unexpectedly high number of applications for the Canadian Emergency Response Benefit ( CERB), offered to unemployed workers during the viral outbreak, could draw resources away from the wage subsidy program, which seeks to keep workers on payroll. Already, around seven million unemployed people have applied for the CERB, or nearly 40 per cent of the Canadian workforce.

“The heavy use of the CER B could be, in part, related to the late implementation of the Canada Emergency Wage Subsidy ( CEWS),” the report said. “We may see reductions in the number of applications as the government starts rolling out the CEWS in coming weeks.”

While many larger businesses with deeper pockets are likely to rehire staff and apply for the benefit, smaller companies with fewer than 100 employees are less likely to reverse decisions to lay off staff, Kelly said. Several airline companies, among others, have said they would begin bringing back a portion of previous staff.

“Maybe Air Canada will pay people to stay home, but most small businesses simply don’t have the cash flows to make that work,” Kelly said.

The 75-per-cent wage subsidy will be introduced retroactively beginning in midMarch, but will be wound down on June 6, according to current projections. That will give Ottawa a somewhat tight six-week window to get capital in the hands of companies while also clarifying longer- term plans to reboot the economy, according to several observers.

“The primary concern we’ve had is execution,” said Perrin Beatty, head of the Canadian Chamber of Commerce. “And the main question now is how quickly they can get money in the hands of people who need it.”

The program is currently capped at $ 847 per employee every week, moderately higher than the $ 500 per week offered under CERB.

Despite concerns over the high uptake in the CERB in recent weeks, Beatty and others expect widespread applications for the wage subsidy in coming days and weeks.

“It’s certainly not too late,” Dennis Darby, president and CEO of Canadian Manufacturers & Exporters, said of Monday’s rollout of the subsidy.

Darby said many of his members are likely to apply for the payroll relief as they look to complete existing orders that have sat dormant in recent weeks. As for when businesses are likely to return to something closer to full capacity, he said manufacturers are highly dependent on the U.S. ramping back up.

“That will dictate a whole lot for the Canadian manufacturing sector,” he said.