Canada wage subsidy changes would encourage companies to rehire

OTTAWA/TORONTO (Reuters) - Canadian businesses hit by the coronavirus pandemic might be able to rehire more workers now that the government has broadened an emergency federal wage subsidy, industry groups and economists say.

“We are far from out of the woods at this point and businesses are going to need that continuing assistance,” said Perrin Beatty, president and CEO of the Canadian Chamber of Commerce. He said the chamber was “very encouraged.”

Uptake of the program has been slow, with critics pointing to the requirement that businesses show a minimum 30% revenue decline to get a 75% payroll subsidy of up C$847 per week. Last week, Finance Minister Bill Morneau eased that requirement, and extended the aid until mid-December to make it more accessible and provide more certainty.

The subsidy is now proportional to revenue declines, with hardest-hit businesses getting top-up support.

Mary Conrod and her husband, owners of several small businesses in Eastern Passage, Nova Scotia, are using the wage subsidy for their deep sea fishing outfit, A&M Sea Charter. But she said her store, Seaside Casual Wear, has so far been ineligible for the wage subsidy because of the 30% rule.

“We’ll survive with the wage subsidy. Without the subsidy we couldn’t afford the wages,” Conrod said, adding she would apply for the wage subsidy for the store, if possible.

The business has been hit not only by a lack of tourists but also by costs related to COVID-19, Conrod said, such as sanitation gear and hiring additional staff to enforce social distancing.

Roughly a quarter of the C$82.3 billion ($61.4 billion) earmarked for the scheme was paid out as of July 21, government data shows, despite Prime Minister Justin Trudeau’s repeated plea to businesses to use the program.

The expanded wage subsidy program is now effectively “a broadly based economic stimulus program” that will help more companies to rehire, including in hard-hit sectors like travel, tourism and hospitality, said Goldy Hyder, president and CEO of the Business Council of Canada.

Rebekah Young, a director with Scotiabank, said the reformed wage subsidy will particularly help businesses where demand is picking up and they would have needed to rehire staff anyway.

“Especially for sectors that are able to maintain this physical distancing, it’s almost like free money on the table,” she said.

For business owners like Conrod, the wage subsidy is helping keep them afloat. “I’ve had a store for 25 years,” she said. “I hate to lose it over COVID.”

Reporting by Kelsey Johnson and Moira Warburton; Editing by David Gregorio