Wage subsidy is "good value" but business fears L-shaped recovery

Canada's business leaders are facing considerable challenges ahead as the pandemic continues to stymie strong economic bounceback

Wage subsidy is "good value" but business fears L-shaped recovery
Steve Randall

As Canada awaits the Throne Speech with anticipation of new measures to help the economy bounceback, the business community is weighing the challenges ahead.

If recovery maintains its current pace, then already-debt-laden small businesses expect to battle for a year to return to normal sales with the hospitality sector facing an 8-year struggle.

That’s according to the latest Small Business Recovery Dashboard from the Canadian Federation of Independent Business (CFIB) which found that normal sales were reported by 17% of respondents in June with a modest increase to 30% by September.

"This underscores the need to kick the recovery into a higher gear. The current situation just isn't sustainable for too many businesses," said Laura Jones, Executive Vice-President at CFIB. "One simple thing every politician in the country can do right now is talk about the importance of supporting small business. 

The latest figures show that:

  • 70% of small businesses are now fully open (64% two weeks ago)
  • 42% are fully staffed (41% two weeks ago)
  • 30% are making normal sales (28% two weeks ago).

CEWS reforms
A separate survey by KPMG reveals that Canada’s big business leaders believe that the Canada Emergency Wage Subsidy (CEWS) is vital to keep people in work.

Three quarters of respondents say the subsidy has kept people on the payroll with 53% reporting that it has enabled them to offset other COVID-related costs and 23% said it had helped them rehire laid-off staff.

"While there has been an upturn in the economy, many Canadian business leaders are still uncertain about what the coming months will bring, and welcome continuing support during this fragile recovery period," said Lucy lacovelli, Canadian Managing Partner of KPMG's national Tax practice.

Most respondents feel that the recent redesign of CEWS is a good investment to help get Canadians back to work and boost the economy.

However, almost half of business leaders believe that CEWS should only be available to those businesses or sectors that have been significantly impacted by the pandemic.

"It's clear from the results that business leaders have different perspectives on whether the program should be used to help all companies that have been impacted or just focus on those hardest hit by the pandemic," adds Ms. Iacovelli. "Recent changes have also made the application process more complex, however by extending the deadline to January 31, 2021 for all claim periods, we may see more companies applying into the fall and even retroactively."

Opinion is also divided on the redesign of the program with 44% of respondents giving it a positive rating, 24% rating the program as average, and 17% holding a negative view.

 

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