With wage and rent subsidy programs are due to end but are Canada’s businesses able to support the workforce?
We are a little more than one month away from the beginning of the end for federal support for Canadian businesses.
As programs such as wage and rent subsidies wind down, can the many small, independent businesses that are the backbone of the economy, support workers?
The Canadian Federation of Independent Business (CFIB) is concerned.
"Small business recovery is at a virtual stand-still and we're already hearing from business owners who are alarmed about the planned subsidy reductions," said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. "It's understandable that the government wants to phase out emergency relief programs eventually, but we're not there yet. Businesses need to know they can rely on federal support until they can get back to regular operations."
The CFIB’s research reveals that only 54% of businesses are fully open this month, down slightly from April, just 31% are making normal sales (up slightly from April) and 41% are fully staffed (virtually unchanged).
Women hit hardest by pandemic
New data this week from Statistics Canada shows that women were more impacted from unemployment than men during the March 2020-February 2021 period.
They accounted for almost 54% of year-over-year job losses and a high proportion of these were working in small firms, especially in service industries.
Services has been more impacted than goods during the pandemic and StatCan data shows that the sector provided almost 90% of employment for women (Feb. 2020) compared to 68% for men.
Women working in small firms in the services sector accounted for 24% of all pre-pandemic employment (men: 22%) but suffered 38% of year-over-year decline in employment (men: 24%).
Business owners to tap savings
CFIB polling shows that, among small firms, 51% are using the Canada Emergency Business Account (CEBA), 48% are using the Canada Emergency Wage Subsidy (CEWS), and 29% are relying on the Canada Emergency Rent Subsidy (CERS).
With businesses having accrued an average $163,000 in debt during the pandemic, many will be in no position to hire and may be forced to scale back.
"Many business owners are in much worse shape now than they were in 2020, after more than a year of lockdowns and restrictions, which are still ongoing in parts of the country," concluded Pohlmann. "They are hanging on by a thread and face months if not years of recovery once the pandemic is over. Pulling back government support right when they need it most would be devastating."
Worryingly, more than one quarter of small business owners indicated they will need to make up the shortfall in their firm’s finances using either credit cards or personal savings.
CFIB is calling on the federal government to continue support for small businesses including keeping all of its support programs in place until the entire economy can reopen.