Toronto Star

The pandemic’s not over, but subsidies soon will be

End of rent, wage and recovery handouts will hurt owners and workers, experts say

- ROSA SABA BUSINESS REPORTER

The pandemic has often seen employers and employees pitted against each other.

While government supports have provided a lifeline for businesses, they are also being blamed for keeping workers at home. But the reality is more complicate­d.

With wage and rent subsidies running out on Oct. 23 — just four days before the Canada Recovery Benefit ends — labour advocates say the loss of these programs will impact both workers and their employers.

“It gave us a sense of security,” said Rena Kisfalvi, president of the Canadian Union of Public Employees (CUPE) Local 4055, which represents more than 1,000 flight attendants for Sunwing.

Kisfalvi said Sunwing participat­ed in the wage subsidy program until August, allowing many workers to stay home and take care of children or other family members without fear of a big financial hit.

With the subsidy ending, Kisfalvi said she’s concerned about the fourth wave’s impact on the employees she represents.

“The pandemic’s not over,” she said. “We fully agree at some point that supports like this should end, but they should only end when the pandemic has concluded.”

As of the end of August, the Canada Emergency Wage Subsidy (CEWS) has handed out more than $90 billion in support. In some claim periods, up to five million Canadian employees’ wages were supported by the subsidy, but that number has gone steadily down as the economy reopens.

The most recent period for which the government has posted data, July 4-31, had 855,380 employees whose wages

were supported by the subsidy, representi­ng 54,370 businesses. Meanwhile, the Canada Emergency Rent Subsidy (CERS) had given out more than $6 billion by the end of August — with 53,300 applicatio­ns approved from July 4-31.

There is also the newer hiring subsidy, announced in June, which employers can access instead of the wage subsidy. The hiring subsidy covers new employees, or more hours for existing employees.

National president of Unifor Jerry Dias said it would be “foolish” for whichever party is elected to end the wage and rent subsidies and the recovery benefits at this time.

“We’re in a fourth wave,” he said. “To end these subsidies, that would be incredibly irresponsi­ble.”

Sheila Block, a senior economist with the Canadian Centre for Policy Alternativ­es said when the wage subsidy ends in October, there are a number of factors that will determine the impact on workers whose wages have been supported by the subsidy.

At first glance, the answer seems simple: A loss of revenue for the employer means a loss of jobs or hours for the employees, said Block. But there are a few things that may soften the blow, she said.

One is the fact that — at least according to employers — Canada is facing a labour shortage. Therefore, at least in theory, there will be many jobs for recently laid-off workers to fill, said Block. (Of course, some experts argue that it’s not a shortage of labour but a shortage of decent jobs.)

But then there’s the unknown of the Delta-driven fourth wave, said Block.

It’s particular­ly worrying that days after the wage and rent subsidies are set to end, so too is the CRB, she said.

“The withdrawal of the safety net at the same time that employers might be reducing employment … is absolutely a concern.”

However, North American labour union UNITE HERE spokespers­on Melissa Sobers wants to see the subsidies changed to better support workers if they are indeed extended.

Some employers used the subsidy but still ended up terminatin­g workers, said Sobers. She would like to see the requiremen­ts altered so that employers using the subsidy have to prioritize long-time employees.

Bea Bruske, president of the Canadian Labour Congress, agreed. She said without the wage and rent subsidies, many more workers would have lost their jobs over the past year.

But the subsidies weren’t perfect, she said, and if they’re extended they need to include more protection­s for workers.

“We want to ensure that existing employees aren’t being replaced by brand-new hires.”

It’s entirely possible that subsidies will be extended again, said Block — a decision for a newly elected government.

Now is not the time for employers to rely on the hiring subsidy, said Dias. Though things have been looking up in recent months, with provinces loosening restrictio­ns over the spring and summer, the fall and winter are looking grim.

“It’s like we peaked and we’re now heading in the wrong direction,” he said, with the election adding to the uncertaint­y. “If nothing else, this election should be forcing a discussion on the visions of what the economy is going to look like post-pandemic.”

Block said extending the business subsidies is a tough policy question. At a certain point, businesses need to be transition­ed from life support to rehab, she said, and it’s difficult to know when or how to do that.

Business organizati­ons like Restaurant­s Canada, the Retail Council of Canada and the Canadian Federation of Independen­t Business (CFIB) have been calling for the subsidies to continue past October.

Olivier Bourbeau, vice-president of federal and Quebec affairs for Restaurant­s Canada, said subsidies have enabled employers to stay open, even when the industry is struggling to break even.

“These are policies that keep people at work,” he said, adding that restaurant­s are struggling to hire people as many workers have found jobs in other industries.

Restaurant­s Canada is asking not only for the subsidies to be extended, but for sector-specific support.

Without continuing financial support, many restaurant­s will close permanentl­y, and many workers will lose their jobs, said Bourbeau.

“We are asking for subsidies that will help us stay open, and keep our employees, just until we can breathe.”

Corinne Pohlmann, senior vice-president of national affairs with the CFIB, said the businesses that are most concerned about the subsidies ending are, predictabl­y, the ones in sectors that have been hardesthit by the pandemic — arts and recreation, tourism, hospitalit­y and food.

“We hear from business owners that are still quite worried about the ending of the subsidies … because obviously then you have to rely more and more on the revenues coming in to be able to keep those employees employed,” said Pohlmann.

Some employers will be faced with difficult decisions, she said, such as raising prices or cutting hours and staff.

It’s unclear as of yet whether the hiring subsidy will be able to fill the gap left by the wage subsidy, said Pohlmann.

“I think for some it actually does work quite well, and for others it may not quite do enough because they’re not necessaril­y able to be in a position to add more (employees or hours).”

 ?? RICHARD LAUTENS TORONTO STAR FILE PHOTO ?? As of the end of August, the Canada Emergency Wage Subsidy has handed out more than $90 billion in support. In some claim periods, up to five million Canadian employees’ wages were supported by the subsidy.
RICHARD LAUTENS TORONTO STAR FILE PHOTO As of the end of August, the Canada Emergency Wage Subsidy has handed out more than $90 billion in support. In some claim periods, up to five million Canadian employees’ wages were supported by the subsidy.
 ?? FRANK GUNN THE CANADIAN PRESS FILE PHOTO ?? Such business organizati­ons as Restaurant­s Canada, the Retail Council of Canada and Canadian Federation of Independen­t Business have been calling for the subsidies to continue past October.
FRANK GUNN THE CANADIAN PRESS FILE PHOTO Such business organizati­ons as Restaurant­s Canada, the Retail Council of Canada and Canadian Federation of Independen­t Business have been calling for the subsidies to continue past October.

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