‘The only way to prevent massive additional unemployment is for government to introduce a much larger wage subsidy program’
Nearly one in three small businesses across Canada say they can survive less than a month under the current conditions caused by the COVID-19 pandemic, up from one-quarter last week, according to a survey.
The average cost of the outbreak for affected businesses has also doubled since last week to $136,000, found the Canadian Federation of Independent Business (CFIB) survey of nearly 11,000 small business owners taken over the weekend.
Sixty per cent of small firms have seen a significant drop in sales, with more than one in three reporting a reduction greater than 75 per cent, says CFIB. And more than half of small businesses were at least partially shut down, led by firms in the service and restaurant sectors.
"More than half of small firms have begun laying off staff, with a quarter reporting they have already been forced to lay off their entire workforce," says Dan Kelly, CFIB president. "At this rate, the only way to prevent massive additional unemployment is for government to introduce a much larger wage subsidy program."
CFIB is proposing a COVID-19 Job Retention Program that would subsidize wages of employers able to retain staff. This would cover at least 75 per cent of wages for all employers, up to a cap of $5,000 per worker per month.
"On top of the 930,000 new employment insurance applications filed last week across Canada, many small businesses will be forced to make additional layoff decisions in the next few days," says Kelly. "Announcing a wage subsidy now will protect many jobs and keep employees connected to their employers, helping to speed the recovery when the COVID-19 emergency phase is over."
CFIB also suggests governments consider:
- simplifying and providing immediate access to EI Work-Sharing for all employers
- providing tax relief by deferring sales taxes, forgiving the payment of income, sales and payroll taxes for the next three months for those particularly hard hit, delaying all filing deadlines, and delaying upcoming carbon tax and CPP hikes
Nearly three-quarters (74 per cent) of Canadian families reported feeling some degree of stress brought on by the crisis, with 30 per cent reporting extreme stress, according to a separate survey.
Involuntary job loss, as a result of broader economic and financial disruptions, can also cause a dramatic increase in criminal behaviour, according to research by an economist at Case Western Reserve University in Cleveland, Ohio.
