In the midst of the one of the most rapid and severe economic contractions that the Canadian economy has ever weathered, information on federal government programs to help stem the fallout is becoming available. These are designed to provide liquidity to firms during this time of profound uncertainty, protect against future losses, and ensure individuals can make ends meet in the event of disruption to their employment or income.
- Although the government is taking extraordinary steps to free up liquidity for firms, the key feature of support for businesses will be the Wage Subsidy. This will pay 75 per cent of employee wages for the first $58,700 of normal salary, up to a maximum of $847 a week per employee. The total cost of the subsidy is estimated at $71 billion.
- Firms which register a 30 per cent decline in gross revenues compared to the same month last year are eligible and includes non-profits. They must reapply each month, and attest that they “are doing everything they can” to pay the remaining 25 per cent of employees’ salaries, although this is not a mandatory requirement to receive the subsidy.
- While we do not expect that this will result in a wave of immediate rehiring of workers who have been laid off, we do believe that it will help stem further job losses in coming months and provided needed support to help businesses cope during these unprecedented economic times.
- The Employment Insurance (EI) program will remain the primary vehicle for individuals who experience disruption to their employment as a result of COVID-19 to receive emergency support. However, additional support for individuals will be available from the new Canadian Emergency Response Benefit which will provide $2,000 a month to workers who have had their employment disrupted by COVID-19 and would not otherwise be eligible for EI.
- The application process for CERB will be available on April 6, 2020. It is available to those who have not already applied for EI or whose current employment is not supported by the temporary wage subsidy. The benefit will cover not only those who have lost employment due to COVID-19 but also those who are sick, quarantined, caring for someone who is sick, or taking care of children who are not in school.