canada emergency wage subsidy

The full details of the Canada Emergency Wage Subsidy are here but there are concerns

Details on the Canada Emergency Wage Subsidy are here, but professionals are already flagging major concerns over Prime Minister Justin Trudeau's latest COVID-19 economic measure.

As a quick review, the CEWS will provide qualifying Canadian businesses with a 75 per cent wage subsidy for three months, backdated to March 15, in a bid to keep employees on the payroll.

According to Finance Minister Bill Morneau, the subsidy will cost an estimated $71 billion.

The first major problem?

The sum of money.

CEWS will provide working Canadians up to $847 per week. In contrast, Canadians that are out of a job will be entitled to EI (up to $573 per week) or the Canada Emergency Response Benefit ($500 per week).

As one employment lawyer pointed out, this means that businesses have unprecedented power to determine how social welfare is distributed among Canadians.

And by setting the cap for CEWS at $3,388 per month, Canada is acknowledging that earning $2000 a month through EI really isn't enough to live off for most people.

Between paying for rent, groceries, transportation and other living expenses, the average Canadian household spends closer to $5,300 per month — making it clear that the EI cap should really be revised.

The second — and more pressing — concern with the Canada Emergency Wage Subsidy is the timing of the program.

According to Canadian senior finance officials, the money from the subsidy won't be available for up to six weeks.

That means that Canadian businesses will potentially have to come up with funds to pay their employees until mid-May, at a time when 33 per cent of businesses say they won't survive until the end of April under current economic conditions.

The government has set up programs that small businesses can access for loans in the interim, of course, such as the Canada Emergency Business Account, but these will only provide businesses with up to $40,000 in loans.

Most Canadian companies have less revenue coming in, and even though banks have agreed to suspend their mortgage payments, they're still expected to pay thousands of dollars in interest each month.

With all of that in mind, it seems unlikely that many businesses can afford to keep all of their employees on the payroll until the wage subsidy arrives in May.

This isn't to say that the Canada Emergency Wage Subsidy isn't an admirable measure; overall, the subsidy will allow Canadians across the country some degree of economic stability during a period of global uncertainty.

It could, however, be tweaked.

And at a time when thousands of Canadian businesses are facing bankruptcy in a matter of weeks, those tweaks are more essential than ever before.

Lead photo by

Jimmu Lu

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