Jobs subsidy set to cost an extra $600M

OTTAWA • The parliamentary budget officer says extending a pandemic measure designed to avoid layoffs at companies will cost the federal treasury almost $600 million over three years.

Most of the extra spending, about $404 million, will take place in this fiscal year under the costing estimate the budget office put out Thursday, with $174 million next year and a final $15 million the year after that.

The extra spending will cover a one-year extension for provisions to make it easier to access the work-sharing program that provides an employment insurance top-up to workers who reduce their hours to avoid layoffs.

The extension will mean that work-sharing arrangements at a company can last up to 76 weeks from the pre-pandemic maximum of 38, not requiring a “cooling-off” period between times that companies and workers can access the program, and expanding eligibility criteria.

Budget officer Yves Giroux’s report says the decision will push the cost of benefits this year to $882 million, instead of $512 million, and the three-year total to nearly $1.2 billion rather than $643 million.

But the budget office notes the numbers could shift depending on how long it takes the labour market to recover from last year’s historic plunge in jobs.

Generally, the work-sharing program follows the path of the economy, meaning a deeper or more prolonged recovery in the jobs market would push up the number of workers and companies looking for the federal help.

April’s budget document noted how usage of the work-sharing program has expanded over the last year beyond manufacturing to other areas of the economy like professional, scientific and technical services that include occupations such as accountants, engineers and researchers.

As of May, the country was about 571,100 jobs, or three per cent, below pre-pandemic levels seen in February 2020, but the statistics agency estimated the actual gap may be larger once adjusting for population growth during the pandemic.

April’s federal budget estimated that the country would close that first gap by this summer, but the second, larger gap by early next year.

Economist expect the June jobs report to show an increase in employment for the month as restrictions rolled back nationwide, hinting at a summer hiring spree as vaccination rates rise and more parts of the economy reopen.

With conditions expected to improve, federal aid has started to roll back the value of wage and rent subsidies to businesses, and aid to hardhit workers.

The Canadian Federation of Independent Business, which represents thousands of small businesses nationwide, is asking the government to reverse declines in the wage and rent subsidies until the economy and the border are fully reopened.