The Government of Canada is making significant changes to the Canada Emergency Wage Subsidy program to broaden its reach and provide better targeted support so that more workers can return to their jobs quickly as the economy restarts.
“We are ensuring that Canadians are able to get back to work as quickly as possible. The adjustments we are proposing would ensure that the CEWS continues to address Canadians’ needs while also positioning them for growth as economies continue to gradually and safely reopen,” said Bill Morneau, Minister of Finance.
CEWS CHANGES ARE DESIGNED TO GET PEOPLE BACK TO WORK
The government changes will:
Allow the extension of the Canada Emergency Wage Subsidy (CEWS) until December 19, 2020, including redesigned program details until November 21, 2020;
Make the subsidy accessible to a broader range of employers by including employers with a revenue decline of less than 30 percent and providing a gradually decreasing base subsidy to all qualifying employers. This would help many struggling employers with less than a 30 percent revenue loss get support to keep and bring back workers, while also ensuring those who have previously benefited could still qualify, even if their revenues recover and no longer meet the 30 percent revenue decline threshold;
Introduce a top-up subsidy of up to an additional 25 percent for employers that have been most adversely affected by the pandemic. This would be particularly helpful to employers in industries that are recovering more slowly;
Provide certainty to employers that have already made business decisions for July and August by ensuring they would not receive a subsidy rate lower than they would have had under the previous rules; and
Address certain technical issues identified by stakeholders.
The government said that since its launch about 3 million Canadian employees have had their jobs supported through CEWS.
CEWS was put in place for an initial 12-week period from March 15 to June 6, providing a 75 percent wage subsidy to eligible employers. On May 15, Morneau announced that the government would extend CEWS by an additional 12 weeks to August 29.
Diane J. Brisebois, President and CEO, Retail Council of Canada, said the organization welcomes the government’s new initiative and RCC has been working diligently over the past several weeks to identify potential improvements to the CEWS program based on the realities faced by its retailers.
“The main issue RCC identified was that the program be reoriented to support businesses during their recovery period. We are pleased that the government responded to our concerns by transforming the program to allow for proportional support, rather than a single threshold that either triggered or denied the full benefit,” said Brisebois, adding that the announcement provides a ramp on the CEWS program that will help retailers continue to receive a portion of the 75 percent wage support even as its retailers start to see a gradual return to normal revenues, but where revenues remain lower than they would have been historically.
“RCC and its retail members are also pleased to see that businesses who have had any reduction in revenue will now receive a subsidy proportional to their revenue loss. RCC advocated strongly for this straight-line approach and we are pleased to see it included in (the) announcement.
These are two critical wins for retailers for whom the wage subsidy is the make-or-break tool to retain and hire back more than a million employees across Canada.”
CEWS REFORM WAS URGENTLY NEEDED IN THE RESTAURANT SECTOR
“We now ask Parliament to adopt all core changes as quickly as possible,” he said.
In a release on July 10, Restaurants Canada said that at least 400,000 people previously employed in the Canadian foodservice sector were still out of work which was still half of the jobs that the sector lost since the start of the pandemic and a third of the foodservice industry’s workforce still not recovered.
“Reforms to the federal wage subsidy are urgently needed to help foodservice businesses bring more Canadians back to work amid ongoing restrictions,” said Lefebvre in early July. “44 percent of restaurant operators who responded to our latest survey said they did not apply for the subsidy for at least one of their establishments because it would not meet the requirements.”
SMALL BUSINESSES WILL NEED HELP UNDERSTANDING COMPLICATED CEWS RULES
Dan Kelly, President of the Canadian Federation of Independent Business, said small businesses will be able to make their staffing plans for the rest of the year with a better understanding of how much government support will be there depending on their sales. Extending the subsidy and providing firm details are critical parts of getting Canadians back to work.
“CFIB welcomes the change that will extend eligibility for the wage subsidy to all businesses with any level of revenue loss over the months ahead. The all or nothing approach cut out many firms that were not able to predict their sales levels or had revenue losses under the 30 percent threshold. Many more small firms will now be eligible for a smaller subsidy which will allow them to be more confident in making hiring decisions while their revenues remain uncertain,” he said.
“But the new rules are incredibly complicated and small business owners will need significant help in understanding whether they will qualify and how much support they may receive. There are top-ups for those with revenue losses greater than 50 percent and safe harbour rules for those who would otherwise get a smaller subsidy in July and August. Over one third of CFIB members report their sales are less than half of normal levels. Many of these decisions make good sense, but a detailed analysis is required to fully understand all of the implications. CFIB is committed to working with the federal government to help communicate the new rules to small business owners and provide advice on any necessary changes.”
Kelly said the CFIB urges the federal government to make quick progress to reform other key business support programs, including proceeding with promised changes to eligibility for the Canada Emergency Business Account, and expanding the size of the loans and the percentage forgiven upon repayment. It is also critical that immediate changes be made to the Canada Emergency Commercial Rent Assistance program as it is just not working for most small business owners.
“Getting support directly to tenants and rethinking the 70 per cent revenue drop test are top priorities for small business,” said Kelly.
“Small firms look forward to the day that subsidies can be replaced by sales. But over half of small firms report it will take them six months or more to return to normal revenue levels. While (the) announcement will help smooth this transition for many, quick action on retooling all programs to aid during the recovery is urgently needed.”