Ottawa vows to adjust wage subsidy for the reopening, but businesses still waiting

The federal government on Wednesday said changes are coming soon to its key subsidy for workers’ wages during the COVID-19 pandemic, a vow that comes as businesses are hoping the program’s criteria will be eased to allow more firms to partake.

After proposing on May 15 to extend the then-12-week-long Canada Emergency Wage Subsidy until Aug. 29, the federal government held consultations on possible changes to the measure, including the 30-per-cent decline in revenue that’s now needed to make a business eligible.

The changes have yet to arrive, even as the subsidy, which began March 15, is now into its second 12-week period. However, the federal economic and fiscal “snapshot” that was released on Wednesday promised tweaks are coming soon.

“As economies reopen and business activity resumes, the government will soon announce changes to the CEWS to stimulate rehiring, provide support to businesses during reopening and help them adapt to the new normal,” the update said. “In anticipation of this forthcoming announcement, the government has set aside additional funding as part of the 2020 Economic and Fiscal Snapshot.”

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CEWS covers 75 per cent of an employee’s wages for as much as 24 weeks, up to $847 per week. Nearly three million Canadian workers have had their jobs supported by CEWS, Finance Minister Bill Morneau said Wednesday, with that number still growing.

The $82.3 billion now projected to be spent on the wage subsidy forms part of the COVID-19-related surge in government spending that, along with a drop in tax revenue because of various restrictions, will inflate the federal deficit to a projected $343.2 billion for its 2020-21 fiscal year.

But while the government said Wednesday that 538,080 CEWS applications had been approved as of June 29, there are a number of businesses still hoping the measure can be further fine-tuned to allow them to benefit from it.

The Canadian Federation of Independent Business has said this could be done by eliminating or reducing the need for a 30-per-cent drop in revenue, or by setting up a “sliding scale” so firms with smaller declines in revenue can gain access to a smaller subsidy. At any rate, the coming tweaks are overdue, according to CFIB president Dan Kelly.

“We just started the new period of the wage subsidy for July and they still haven’t announced the bloody changes to the wage subsidy that were promised back in mid-May,” Kelly said in an interview.

While the wage subsidy is good policy, it arrived after some shut-down businesses had already laid off staff, and it remains underused, Kelly said.

“But now that businesses are able to open again, the wage subsidy could play a really key role in the recovery if they redesign it to be of support to employers at different levels of business losses,” Kelly said.

Canadian Manufacturers & Exporters said it similarly suggested “relaxing the qualifying criteria” for CEWS, bringing in a pro-rated subsidy and extending the program past August.

“Manufacturers commend the efforts of the government to help businesses weather the crisis,” said Dennis Darby, president and CEO of CME, in a press release on Wednesday. “However, we are still hoping to see more support for the sector in the months to come.”

Restaurants Canada said earlier this week that 75 per cent of respondents to its recent survey said they are receiving the wage subsidy. The industry group recommended keeping the measure available for as long as there are restrictions in place, with a gradual drawdown in support as business recovers.

“The 30 per cent revenue decline threshold should be scaled to support restaurants in their recovery, instead of serving as a disincentive to improving sales at the risk of losing access to the subsidy while businesses are still operating at a loss,” the association added in a release.

• Email: gzochodne@nationalpost.com | Twitter: GeoffZochodne