‘Jobs at risk’: Experts fear wave of layoffs, business closures following end of federal wage and rent subsidy programs

‘Jobs at risk’: Experts fear wave of layoffs, business closures following end of federal wage and rent subsidy programs
For almost a year and a half as the COVID-19 pandemic raged on, federal wage and rent subsidies kept more than 600,000 people gainfully employed.

Now that those subsidies are being replaced by programs with more rigid qualifying standards, economists, business owners and industry groups worry some of those jobs could soon disappear.

“Are all those people going to lose their jobs Sunday? No. But it’s fair to say there will still be some jobs at risk,” said David Macdonald, senior economist at the Canadian Centre for Policy Alternatives, after federal Finance Minister Chrystia Freeland announced Thursday that the Canada Emergency Wage Subsidy and Canada Emergency Rent Subsidy is ending Saturday.

At the same time, Freeland announced an extension of the Canada Recovery Hiring Program until May 22. She also unveiled the Tourism and Hospitality Recovery Program, and the Hardest-Hit Business Recovery Program, to help businesses in the worst-hit sectors. But critics say the qualifying standards for the new programs will make it too hard for many struggling businesses to collect.

Small businesses such as restaurants and gyms, which are still subject to capacity restrictions in some parts of the country, desperately need help, said Ryan Mallough, Ontario regional director for the Canadian Federation of Independent Business. If they don’t get it, they’ll be asking themselves some tough questions, he said.

“Can we afford to keep our staffing levels where they are? Can we afford to provide the same level of services that we do now?” Mallough said business owners are asking themselves.

Many, Mallough added, will be weighing whether to shut down for good.

“This will make some of those decisions very real, very quickly,” Mallough said.

Mark Agnew, senior vice-president of policy at the Canadian Chamber of Commerce, said the programs which are ending helped prevent the complete collapse of many businesses across the country.

“These subsidies have been crucial for our members,” said Agnew, adding that government support is still vital for many businesses.

“There are still a lot of places with capacity restrictions,” he said. “We agree with the idea of more help for the hardest-hit sectors.”

Erik Joyal, president of Ascari Hospitality Group, said Freeland’s announcement was a mixed blessing.

“It’s great to get sector-specific help. But if they make the bar so high that only 20 or 30 per cent of businesses qualify, it’s not going to accomplish what they wanted it to. The devil is in the details,” said Joyal.

Requiring businesses to show a 40 per cent drop in revenue order to qualify for the hospitality and tourism subsidy means many who need it won’t get the money, Joyal said. (The hardest-hit-sector program requires businesses to show a 50 per cent revenue drop.)

“A 30 per cent drop in revenues in an industry with a five per cent profit margin is a death knell. Forty is too rigid a standard,” said Joyal, adding that the wage and rent subsidies had been a crucial lifeline for Ascari’s restaurants and bars during the pandemic.

“The wage and rent subsidies are the only things that kept a lot of places alive. If they weren’t there, 80 per cent of independent restaurants across the country would have been gone,” Joyal said.

There’s no doubt the rigid qualifying standards mean some restaurants will shut down for good, said Olivier Bourbeau, federal vice-president for Restaurants Canada, an industry association.

“We’ve been asking for sector-specific aid since the start of the pandemic, so in that sense, (Thursday) was a good announcement. But unfortunately, they’ve just set the bar too high for a lot of places to qualify. A lot of places will close,” said Bourbeau.

Bourbeau added that the very idea of having to collect subsidies is deeply frustrating for restaurant owners, who tend to pride themselves on their entrepreneurial spirit and independence, Bourbeau said.
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