Canada trims projected costs for wage subsidy program

Estimates drop 38 per cent as workers opt for direct support

Canada cut the projected cost of its wage subsidy program while boosting the price tag for direct support to individuals, suggesting a slow return to work in the wake of COVID-19.

The federal government’s wage subsidy program, meant to be its flagship measure to buffer the economy from the pandemic, will cost $45 billion, 38 per cent less than a previous estimate, according to an update from the finance department. The cost of the Canada Emergency Response Benefit (CERB) is seen swelling to $60 billion from $35 billion. The CERB pays $2,000 per month to workers who’ve lost their jobs or income due to the pandemic.

The shift indicates Canadians may remain unemployed for longer than the government anticipated. Canada shed two million jobs in April, the highest number since 1982.

Prime Minister Justin Trudeau has encouraged companies to rehire their laidoff employees using the wage subsidy, which covers as much as 75 per cent of a worker’s pay with a maximum payment of $847 a week.

Ottawa’s plan had been to reduce the amount of people receiving CERB while simultaneously increasing the number of companies using the wage subsidy. However, companies have been slow to take up the subsidy. Business leaders have criticized the government for delaying its implementation, which they say forced companies to let go of workers and they can’t afford to hire them back right now.

The cost of total direct measures to support the economy has increased to $152.7 billion, according to the update. Costs are expected to continue to rise as the Finance Ministry has yet to calculate how much extending the two programs will cost, the update said.