Small businesses have mixed reactions to the proposed Canada Emergency Wage Subsidy (CEWS). The measure was introduced by Prime Minister Justin Trudeau as a response to the coronavirus (COVID-19) pandemic and its effect on businesses.
Eligible employees will include partnerships, non-profit organizations, taxable corporations, and individuals. These employees would also have to demonstrate a decrease in revenue to qualify.
The proposed measure promises a 75% wage subsidy, up to $847, for up to 12 weeks. It will also be retroactive to March 15, 2020. This will help mitigate job losses and encourage employers to re-hire workers who were laid off due to COVID-19.
However, not all employers are satisfied with the CEWS. According to a recent survey by the Canadian Federation of Independent Business (CFIB), 37% of the respondents said the measure would not help them.
Meanwhile, 21% of small business owners were unsure, while only 29% believed the subsidy would be helpful in terms of avoiding more layoffs and improving staff recall.
“The federal government took a big step by increasing the wage subsidy to 75 per cent and opening it up to businesses of all sizes and structures,” Dan Kelly, the president at CFIB, said. “In order to meet the program’s objective of helping businesses retain staff and avoid layoffs, more work remains to be done to make this program successful.”
Of those 37% of respondents who said the CEWS would not help them in terms of staff retention, 38% believed it was too late to reverse layoffs. Meanwhile, 30% said the wait time of six weeks for the subsidy to take effect was too long. There were also concerns expressed about not being able to qualify for the measure in the first place, as well as the worry that the support would not be enough to retain employment.
As for the 29% who said the measure would help them, 44% of the respondents believed that it would help retain staff who are still on payroll. In addition, 35% said the CEWS would help them keep all of their employees, while 29% noted that the subsidy will help recall laid off workers.
“Businesses are facing a lot of cost pressures right now,” Corinne Pohlmann, the senior vice-president of national affairs at CFIB, said. “Only 19 per cent remain fully open, down from 21 per cent last week. We’re hoping the government won’t be too prescriptive when it interprets who qualifies for the subsidy.”
Pohlmann added that some firms with tight profit margins may find it difficult to continue operating with the 30% decrease in revenues. Businesses that are new and seasonal, as well as high-growth firms are also facing the challenge of qualifying for the subsidy.
The CFIB offered several suggestions on how the Government of Canada can help businesses access the CEWS for the sake of job protection. They suggested offering more flexibility to firms with special circumstances such as being affected by 2019 events. The CFIB also proposed a reduction of the 30% revenue drop requirement to 15% for businesses that were affected in mid-March.
“The vast majority of small businesses have been deeply affected by COVID-19,” Kelly said. “They are worried for their employees and about their ability to ever reopen. Right now, we need to quickly put in place the measures that will allow us to preserve our small businesses and keep them connected to their employees so we can recover once the crisis is over.”