Business groups pushing for higher wage subsidies
Finance minister defends plan, says its better than what’s offered overseas
OTTAWA— The federal government is coming under increasing pressure to boost its promised wage subsidies to businesses to keep workers on their payrolls and ensure the economy can rebound when the health crisis passes.
On Wednesday, Ottawa rolled out a streamlined benefit for workers hit by the fallout of COVID-19, promising $2,000 a month for four months to those who don’t qualify for employment insurance.
But a growing number of companies are urging Ottawa to make its proposed wage subsidy, another benefit promised last week, more generous. They say that would keep workers employed and avoid further burdening a bureaucracy already struggling to cope with a tsunami of EI applications — close to a million in the last week.
In a joint statement Wednesday, more than 60 business organizations called for direct funding from the federal government to employers in order to keep workers on the job rather than face layoffs.
“It’s critical at this point,” said Perrin Beatty, president and
CEO of the Canadian Chamber of Commerce. Small and medium-sized businesses that account for most of the employment in Canada do not have the ability to survive an extended shutdown, Beatty told the Star.
“We have to control the spread of the virus, but the question is how do we do this in a way that minimizes the economic damage to the country in the process,” he said.
“If we do not substantially increase the support for employers to keep their employees on the payroll, we will find that many of these businesses, thousands of them, will not reopen when we come out the other side of this.”
The economic aid package unveiled by the federal government last week promised small businesses a wage subsidy for three months equal to 10 per cent of salary, up to a maximum of $1,375 per employee and $25,000 per employer.
But businesses have said that’s not enough and point to jurisdictions such as Denmark and the United Kingdom, which offer subsidies of more than 70 per cent to companies in return for guarantees that workers won’t be laid off.
“It’s important we don’t leave ourselves with a massive chronic unemployment problem because the businesses have closed,” Beatty said.
The coalition of business organizations includes chambers of commerce across the country, the Retail Council of Canada, the Canadian Construction Association and the Hotel Association of Canada. The Conservatives and New Democrats have also made the same appeal.
Dennis Darby, president and CEO of the Canadian Manufacturers and Exporters organization, said more supports are needed as the crisis worsens. “Direct wage subsidies through employers would enable businesses keep production workers employed throughout the crisis,” Darby said.
Another signatory, the Canadian Federation of Independent Business, applauded the emergency benefit announced Wednesday and the fact that an employer will not have to lay off a worker to allow them to qualify.
Still, the organization wants the government to boost its wage subsidy to cover 75 per cent of a worker’s wages to a cap of $5,000 a month, saying such a program will deliver money faster to employees than any government benefit.
It would also maintain connections between workers and employers. “This is imperative to ensure employees can go back to work the day after the emergency ends, allowing Canada’s economy to return to normal as quickly as possible,” the organization said in a statement.
But it seems Finance Minister Bill Morneau and Prime Minister Justin Trudeau are split on the merits of enhancing the benefit.
Trudeau said Wednesday that Ottawa is looking at ways to provide more direct help to businesses and “looking very carefully” at what is being done in Denmark and Germany, “and looking at how we can make that work or make equivalent things work here in Canada.”
But in a Senate appearance Wednesday, Morneau defended the government’s approach and said it was better than the overseas examples often cited.
Sen. Pierre-Hugues Boisvenu challenged Morneau, asking why Canada did not follow the lead of Denmark and subsidize wages. Boisvenu said the approach taken by the federal government in forcing companies to shed employees will cause problems.
“When this crisis will be over and things are going better, those companies will be facing a major problem in trying to recruit people,” he said.
Morneau insisted the government approach would maintain ties between companies and their employees.
“Clearly we do not agree with you,” he told Boisvenu.
The goal, Morneau said, is to deliver financial assistance to Canadians facing “severe strain.”
“People in short order won’t have enough money for groceries. We need to find a way to make sure we get money to them, we need to find a way to make sure we bridge for these businesses so that employment will be there when we come back,” he said.
Still, he said the government is open to ideas. “Trust me. Should we find we need to change, we will change.”