On a decision to wind down a federal wage subsidy, the Liberals are reversing course, swearing in their throne speech to prolong the program for businesses affected by COVID-19 into 2021. By providing a smaller subsidy with each passing month, the government planned over the summer to begin scaling backs the program through the rest of the year. It eased conditions for using the program. Since revenues for SMEs stayed low while costs remained steady, the Liberals were warned they would need help in 2021.
While acknowledging the economic situation facing many employers is still fraught, the Liberals’ throne speech promised to extend the subsidies to summer 2021. The throne speech also promises to put workers who lose their jobs under the employment insurance system. This would be the only vehicle to benefit hard-hit workers though they earlier didn’t qualify for the decades-old program. The lockdowns in March and April led to a loss of three million jobs, and 2.5 million more workers have had their hours slashed as non-essential businesses were ordered to close, making the Canadian labour market to be highly hampered by the pandemic.
Though the recovery has been uneven, beginning in August, the country has recovered about two-thirds of those job losses.
According to Statistics Canada, in August, around one-fifth of the labour force was considered underutilized due to the pandemic. The throne speech promised to utilize federal expenditure to get back the last million or so jobs, together with direct investments in the social sector and incentives for employers to hire and retain workers. Another way to create jobs is through the extension of the wage subsidy.
The government had paid out just over $35.3 billion in benefits to 312,750 different companies as of Sept. 13. However, in recent weeks, the number of workers covered by the subsidies has fallen. Dan Kelly, president of the Canadian Federation of Independent Business, stated that the prolonged wage subsidy would assist small companies. According to Kelly, there is also a positive sign for nervous owners since the throne speech’s promise of targeted help for businesses subjected to localized lockdown. He said the speech was very much focused on ongoing COVID-19 relief and supports to business.
Besides, the Liberals are planning to wind down the Canada Emergency Response Benefit. They said Canadians covered by employment insurance would move to that program with access eased. The people who don’t qualify would be pushed to a new 26-week “recovery” benefit. Nonetheless, the throne speech says that before moving every worker in the country onto EI, the new benefit will be a transitional program. Moreover, the throne speech also pledged to update the government’s technology systems. That will be a must for EI as the main system that provides payments is more than 40 years old.
Perrin Beatty, the president of the Canadian Chamber of Commerce, said the detail on the promises when companies and workers are looking for specifics amid widespread uncertainty was missing from the speech. He said what they had seen was a chain of spending programs to respond to the pandemic, but what they had not seen was a COVID management strategy. On the other hand, the throne speech assured a fiscal update this fall but didn’t make any reference to a fiscal anchor. Goldy Hyder, president of the Business Council of Canada, said that the fall economic statement must promote investment, spur job creation, and deliver a fiscally responsible and disciplined plan to restore confidence.