Industry association finds sentiment at depths unseen even during 2008 and 1990 recessions
Small business owners across Canada are on their knees, brought low by the coronavirus crisis and begging the federal government for help.
Confidence levels plunge to new depths
In its newest Business Barometer survey, the Canadian Federation of Independent Businesses (CFIB) found that sentiment among small business owners has worsened dramatically. The national confidence level plunged from an index score of 60.5 in February to 30.8 in March.
“March 2020 has turned out to be a month like no other in Canada's economic history,” said CFIB Vice President and Chief Economist Ted Mallett. He noted that small business sentiment has reached a low never before seen in the barometer survey’s 32-year history, which includes the 2008 and 1990 recessions.
According to the CFIB, just one out of five owners said their business is in a good state, while 38% say theirs is doing poorly. Only 5% of business owners expressed plans to take on more full-time staff in the next three months, compared to 50% planning to let people go.
Optimism plummeted the most among Quebec business owners with the index nosediving 44.5 points to 15.7. The next lowest results were from Alberta (26.2) and Newfoundland and Labrador (27.8), though they underwent the mildest drops in confidence. Nova Scotia (44) and New Brunswick (44.6) both saw large declines in confidence, though they were more upbeat than other parts of the country.
A look through a sector lens showed an across-the-board drop in optimism, with levels between 21 and 36 index points. The information and recreation sector had the lowest levels of confidence, clocking in at 21.6 points; sentiment among manufacturers (24.7) was similarly depressed. Financial services businesses saw the biggest drop in confidence, shedding 35.4 points to settle at 27.1.
Contributing to all these declines are the safety measures advised by the government, including social distancing, business closures, and a wide-ranging travel ban. Mallet acknowledged that the measures are necessary, but stressed that the resulting freeze on economic activity directly and immediately impact small businesses and their employees.
Call for government relief
“We are urging governments to provide more relief for small businesses to make sure that we can restore optimism after the crisis is over,” Mallett said.
Hours after the CFIB shared the results of the survey, the federal government announced a new Canada Emergency Response Benefit, through which workers who have lost their income because of the COVID-19 pandemic can get $2,000 per month for up to four months. Ottawa has indicated that it would apply to wage earners, contract workers, and self-employed individuals, as well as those who are still employed but not getting income because of disruptions to their work situation.
The CFIB welcomed the benefit, calling it a “significant step forward,” but called for quick clarity on how it would operate in practice. It also addressed provincial governments, asking for amendments to labour legislation that would ensure they “can move an employee to be paid by the CERB or temporarily lay them off to collect employment insurance without triggering normal termination pay requirements.”
It also maintained that the CERB does not take away the need to increase the 10% wage subsidy to 75% of wages for all employers, which would be capped at $5,000 per worker per month.
“A direct wage subsidy to employers will be a far faster way to ensure workers are paid than the CERB,” CFIB said, noting that the new program will take effect in early April. “A wage subsidy will also help employers who can keep their employees working from home but have no or limited business income with which to pay them. “