What are the COVID-19 pandemic aid programs currently in place for business?
The most popular pandemic-relief programs for business have been the Canada Emergency Rent Subsidy, or CERS, and the Canada Emergency Wage Subsidy, or CEWS – set to expire for most sectors on Oct. 23.
CERS is available for Canadian businesses, non-profit organizations or charities that have had a drop in revenue during the pandemic and need to cover part of their commercial rent or property expenses.
CEWS is available for Canadian employers that have had a drop in revenue during the pandemic and pays employers based on the size of those losses and the size of their payroll.
The point of these subsidies is to enable businesses to rehire workers, help prevent further job losses, and ease companies back into normal operations.
The Liberal government campaigned on extending CEWS for the hardest-hit sectors of the economy until March 31, 2022. In addition, the government has the option to extend the full program until Nov. 20. And employers will still be able to submit retroactive claims past Oct. 23.
Another program that many restaurateurs have relied upon is the Canada Emergency Business Account, a loan of up to $60,000, one-third of which is forgivable if repaid by Dec. 31, 2022.
One program will continue: the Canada Recovery Hiring Program. That program, similar in many ways to CEWS, pays subsidies to employers who increase their payrolls, either through hiring, more hours to workers or through higher wages.
What about programs for individuals?
As is the case with business subsidies, pandemic benefits for individuals are slated to start winding down on Oct. 23.
The most significant is the Canada Recovery Benefit, or CRB, introduced last September to replace the Canada Emergency Response Benefit. The CRB gives qualifying individuals $300 a week, although the actual payment is $270 after a 10-per-cent withholding tax is deducted. The CRB is designed in part to support self-employed individuals who have lost at least 50 per cent of their income.
According to the latest employment data, one of the few remaining soft spots in the jobs market is among the self-employed. Existing claims would continue, but self-employed workers without a claim who lost income after Oct. 23 would be on their own.
The CRB is part of a suite of programs for individuals who lost work or income because of COVID-19, including the Canada Recovery Sickness Benefit and the Canada Recovery Caregiving Benefit. New claims under those programs are slated to end on Oct. 23, although individuals with existing claims will still receive benefits.
Also last fall, the Liberal government set a $300 minimum benefit for Employment Insurance claimants. (That was lower than the previous $500 minimum set in the early days of the pandemic, but more generous in most cases than the pre-existing 55-per-cent income replacement rule for the EI program.) The minimum benefit rate for new EI claims runs through to Nov. 20.
How many have used these pandemic aid programs?
Business owners have said the federal emergency support has been a lifeline to their industry. Many have relied on the federal funds to make up pandemic-related shortfalls. According to government data, the wage subsidy has paid $93.4-billion to 4.4 million applicants, while the rent subsidy has paid $6.5-billion to 1.7 million applicants.
In addition, the CEWS and CERS together have directed billions of dollars into the accommodation and food service industries. Federal data show that, early in the pandemic, the food sector made up around 10 per cent of all claims on the wage subsidy. By the spring of 2021, it was roughly 20 per cent.
Will the federal government extend the programs?
The wage and rent subsidies are set to expire on Oct. 23, though the Liberal government has the legal authority to extend them another four weeks, to Nov. 20, without further parliamentary approval.
Deputy Prime Minister and Finance Minister Chrystia Freeland announced on Oct. 21, however, that existing COVID-19 income support programs will expire as scheduled on Saturday. They will be replaced by a more “targeted” approach until early May – at a cost of $7.4-billion.
The Oct. 21 announcement includes two new programs: one is a wage and rent support program aimed at the tourism sector called the Tourism and Hospitality Recovery Program. Ms. Freeland said this would apply to hotels, restaurants and travel agencies that are still facing public health restrictions.
The second measure is called the Hardest Hit Business Recovery program. It is aimed at employers that can show they have faced “deep and enduring losses” due to COVID-19. It will also provide wage and rent supports, up to a maximum subsidy of 50 per cent for businesses that have experienced a 75 per cent drop in revenue.
These two programs will run until May 7, with support levels decreasing after March 13.
The minister also announced a new lockdown support program in the event that the pandemic leads to new restrictions on businesses, called the Canada Worker Lockdown Benefit. It would provide $300 a week in income support for workers who are unable to work due to a lockdown.
That means the existing CRB will not be extended. However the related programs for sickness and caregiver benefits will be extended until May 7 and the maximum duration of benefits will be increased by two weeks.
On Nov. 24, the federal government has added clear references to Canada’s cultural sector and other industries in new legislation, Bill C-2, aimed at revising and extending federal wage and rent supports for businesses that have been the hardest hit by the COVID-19 pandemic.
The announcement lists a large number of business categories that will qualify under the more generous tourism and hospitality program, provided they meet the criteria of having revenue losses of at least 40 per cent. Categories include everything from restaurants and nightclubs to fitness facilities and theatres. The program offers a subsidy rate of up to 75 per cent.
The massive subsidies to workers and businesses during the pandemic are the main drivers of the large federal deficit, which was an estimated $354.2-billion in 2020-21, according to the April federal budget. The budget projected this year’s deficit would be $154.7-billion, while the Liberal Party platform estimated that it would be $156.9-billion. (The Liberals proposed additional spending, along with offsetting tax hikes and other revenue increases.)
The Finance Department and Canada Revenue Agency declined to provide statistics for the hiring subsidy program.
What will losing these programs mean for businesses?
Those who support the extensions note that the Canadian economy has not yet fully recovered from the pandemic, and that some parts of the country are experiencing an alarming fourth wave of the virus.
Restaurants Canada is pushing for subsidies to continue as long as restaurants are subject to public-health restrictions, such as capacity limits.
“It will be catastrophic if these supports don’t continue,” said Todd Barclay, president of the industry group.
Perrin Beatty, the president of the Canadian Chamber of Commerce, said too many businesses are still coping with public-health limits that prevent them from being self-sustaining. “It’s critical [the subsidies] continue,” Mr. Beatty said. “Having brought them this far, we can’t allow people to drown 50 feet from shore.”
Canadian Labour Congress president Bea Bruske likewise said the personal support programs should be extended. “There’s definitely still a need. There are still many people who are unable to return to the work force for a variety of reasons,” she said, adding that subsidies should be complemented with new training programs.
Business groups that spoke to The Globe and Mail, including the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, the Retail Council of Canada, Restaurants Canada and the Tourism Industry Association of Canada, all suggested most of their members preferred to access the wage subsidy instead of the hiring benefit.
What’s the reaction from businesses on the new ‘targeted’ COVID-19 benefits?
Beth Potter, president of the Tourism Industry Association of Canada, said her sector welcomes the new subsidies announced on Oct. 21.
“I think it’s going to help a lot of businesses make sure they’re around by the time we get back to regular travel patterns next year,” Ms. Potter said.
Todd Barclay, president of Restaurants Canada, said that while he appreciated the hospitality sector’s inclusion in the extended subsidies, he was concerned that restaurants would receive no help if they were below the threshold of a 40-per-cent revenue loss.
“What kind of business can survive with a 39 per cent reduction in revenue?” he said.
Dan Kelly, president of the Canadian Federation of Independent Business, told The Globe and Mail that the challenge with a targeted approach for subsidies is that many other businesses with similar constraints, such as gyms, will not get the same level as help – even if they still face capacity limits.
He also said the fact that tourism and hospitality businesses needed a minimum of a 40-per-cent revenue loss to qualify was too high.
“A loss of a third of your revenue is still pretty profound, and there’s no support, other than the hiring program,” he said.
What does this mean for Canada’s employment recovery?
Statistics Canada reported that Canada’s employment has jumped back to prepandemic levels. The country added 157,100 positions last month in September. The unemployment rate fell to 6.9 per cent from 7.1 per cent.
Though, the labour market is heading into an uncertain period as these federal programs are slated to expire.
The hospitality industry, which has struggled to hire and retain workers, lost 26,700 in September. Employment in that industry is down 14.8 per cent over the pandemic. Only agriculture has fared worse, down 20.2 per cent. As of September, 389,000 people were continuously unemployed for 27 weeks or more – more than double from when the pandemic started.
More than 300,000 people stopped receiving jobless benefits through EI in mid-September. Between Sept. 13 and 19, around 1.37 million people were receiving regular EI benefits for job loss, according to a preliminary estimate published Monday by the federal government. The previous week, there were 1.69 million EI recipients.
Business groups have complained about a labour shortage, saying the CRB and more generous EI benefits are to blame, at least in part.
- Finance Minister Chrystia Freeland says new ‘targeted’ COVID-19 benefit programs to cost $7.4-billion, run until May 7
- Ottawa in discussions to extend pandemic aid beyond Oct. 23 deadline
- Ottawa under pressure to extend business and worker COVID-19 benefits ahead of Oct. 23 deadline
- Canada’s high-end restaurants face struggle to survive
- ‘A remarkable milestone’: Canadian employment jumps back to prepandemic levels
- EI numbers plunge as benefit transition takes hold
With reports from Globe staff.
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