Advertisement

Ottawa’s wage subsidy far too low to help small businesses: CFIB

Coronavirus outbreak: Justin Trudeau unveils funding for families, small businesses
Speaking to reporters outside Rideau Cottage in Ottawa on Wednesday, Canadian Prime Minister Justin Trudeau said that the $82 billion in support for Canada's economy in the wake of the global COVID-19 outbreak represents more than three per cent of Canada’s GDP. Trudeau said the economic measures will ensure that Canada’s economy rebounds after the pandemic.

Ottawa’s $27-billion in direct funding for workers and businesses is a step in the right direction but stops far short of what’s needed to help Canada’s entrepreneurs amid the novel coronavirus crisis, according to the Canadian Federation for Independent Business (CFIB).

“The focus of business and worker support measures should be to avoid layoffs from companies that are dealing with a deep and immediate drop in sales as a result of the economic effects of self-isolation,” CFIB president Dan Kelly said in a statement on Wednesday.

READ MORE: Trudeau unveils $82bn in aid for families, business amid coronavirus uncertainty

Kelly zeroed in on a new wage subsidy presented by Prime Minister Justin Trudeau and Finance Minister Bill Morneau that would provide businesses with funds for up to 10 per cent of workers’ pay for a period of three months. Companies would receive a maximum of $1,375 per employee for a total of up to $25,000 per employer.

Story continues below advertisement

“While the measure is a good one,” according to Kelly, “the level of the subsidy needs to be far higher in order to help.”

Coronavirus outbreak: Trudeau says goal of stimulus is to help people no longer receiving income
Coronavirus outbreak: Trudeau says goal of stimulus is to help people no longer receiving income

The CFIB said 50 per cent of its small businesses had reporter a drop in sales as of last weekend, with the number likely to have risen significantly since then.

“One in four businesses reports they will not be able to survive a significant drop in income more than one month,” Kelly noted.

[ Sign up for our Health IQ newsletter for the latest coronavirus updates ]

The proposed wage subsidy is “small,” said Tammy Schirle, a professor of economics at Wilfrid Laurier University.

READ MORE: Live updates — coronavirus in Canada

Schirle praised the federal government for acting quickly in designing a broad range of measures meant to shore up the economy and reach to many Canadians who would otherwise fall through the gaps of the traditional safety net.

Coronavirus outbreak: Morneau announces $10 billion to support businesses amid COVID-19 concerns
Coronavirus outbreak: Morneau announces $10 billion to support businesses amid COVID-19 concerns

However, when it comes to measures aimed at helping businesses retain their workers, Shirle worried the aid package unveiled today did not go far enough.

“A 10 per cent boost will help with covering some basic payroll costs,” Schirle said.

Story continues below advertisement

But I don’t think it’s going to be enough support for a lot of businesses.”

Some European countries that have adopted similar supports for employers are providing wage subsidies of between 75 and 90 per cent, according to Kelly.

Ottawa’s $27-billion aid package comes in addition to a proposed $55 billion in tax deferrals meant to help businesses and households have more cash at hand.

READ MORE: Trudeau announces economic aid package to help Canadians amid outbreak

The federal government also previously announced a $10-billion credit facility through the Business Development Bank of Canada that would help struggling businesses access credit.

Morneau said Ottawa will consider further measures as the situation evolves.