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Federal wage subsidy extended to end of August

Prime Minister Justin Trudeau says a federal wage subsidy for employees in businesses hit hard by COVID-19 will last at least until the end of August.

The subsidy was set to expire in the first week of June, only a few weeks after the first payments rolled out.

Speaking outside his Ottawa residence Friday, Trudeau said the idea is to give employers more runway and confidence to resume operations slowly if they have to. He is also asking companies to bring back their employees.

Broadening program

Finance Minister Bill Morneau is to reveal details of a broadening of the program later today, including what Trudeau said will be expanded eligibility.

A release from Morneau’s department said eligibility rules will allow Indigenous-government-owned corporations or partnerships to qualify, as well as amateur athletic associations, registered journalism organizations, and private colleges and training schools.

Trudeau also said the government will make adjustments to the program, including changes to the threshold for how much qualifying companies’ revenues must have declined, to ensure employers can continue getting help as business kicks back up.

“As the economy reopens, there is a danger of unintended consequences,” he said.

“If part of the eligibility criteria for getting the wage subsidy is a decrease of 30 per cent of your business, we wouldn’t want people who are getting back their business going to feel like they have to hold back on their growth, on their expansion, on their rehiring in order to be able to continue benefiting from the wage subsidy.”

Simplified subsidy

Dan Kelly, president of the Canadian Federation of Independent Business, said the simplified wage subsidy would be a boost for small businesses and a relief for seasonal industries like tourism looking ahead to a soft summer.

“It is a major shift on the part of the federal government towards getting Canadians back to work and carefully reopening the economy. This is welcome news,” Kelly tweeted.

The subsidy covers 75 per cent of wages for employers that have seen sharp declines in revenue since the novel coronavirus pandemic hit Canada hard in March, up to $847 per worker, per week. The legislation that created the subsidy gave the government the authority to extend qualifying periods for help through to the end of September.

Pulling workers away from CERB

The hope was that the subsidy would pull workers onto payrolls and away from the a $2,000-a-month emergency benefit for employees who have either lost their jobs or seen their incomes drop below $1,000 a month.

Federal figures posted Friday morning show just under eight million people have applied for that Canada Emergency Response Benefit, receiving just under $35.9 billion between them. The program had a budget of $35 billion.

The latest federal figures show Ottawa has paid out $3.36 billion in wage subsidies to 123,642 companies, the vast majority of which are for under $100,000 in aid.

The figures are far below what federal officials envisioned for the program that aims to keep employees tied to their job for when business activity resumes.

Trudeau also said the government will provide the same level of payroll support to universities and health-research institutes through a $450-million fund.

Rehire workers

In Ottawa, the prime minister pleaded with business owners to hire new workers or rehire old ones to help get the sputtering economy moving again.

“Business owners: Please take confidence from this announcement,” Trudeau said.

“You now have some runway to catch your breath as you get restarted, so please, bring back your employees.”

-With files from Canadian Press reporters across the country