Pandemic bounty generous for businesses, tough for workers: expert

Ottawa — Benefits rolled out at the start of the COVID-19 pandemic enabled vulnerable Canadians to stay healthy while maintaining incomes, but business support was excessive and business groups' significant contribution to public policy. shows great influence. economists say.

Almost two and a half years ago, the federal government faced the unprecedented challenge of shutting down the economy to slow the rapid spread of her COVID-19. Its closure has led to a series of pandemic relief benefits aimed at softening the blow to workers and businesses.The two most prominent programs are the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy.

According to a recent Statistics Canada analysis based on census data, two-thirds of Canadian adults will benefit from the pandemic in 2020, and these benefits will mitigate income losses. , inequality is decreasing.

A previous analysis by the Federal Statistical Office found that, as expected, use of wage subsidy programs correlated with lower chances of closures and fewer workforce cuts.

While little time was spent creating benefits and fine-tuning the details in March 2020, economists are now looking back and evaluating the successes and failures of these programs.

Miles Collack, professor of economics at the City University of New York, who wrote an analysis of these programs, argued that any assessment would reflect the uncertainties faced by people and governments at the time, as well as the impact on people's health. It states that it is necessary to explain the urgent need.

However, Corak said that while the CERB was a "huge success," the Canadian Emergency Wage Subsidy was a "huge failure."

"The Canada Emergency Response Benefit provided funds quickly in time to keep people at home. This is what we wanted to do to save lives." He said.

On the other hand, Mr. Corak said CEWS was "too late. It wasn't targeted and it dramatically overinsured (companies)."

The CERB announced that he would soon be announced in March 2020, with $2,000 a month paid to Canadians who lost their income due to shutdowns due to the pandemic. CEWS soon followed, subsidizing the wages of corporate employees by 75% in hopes of encouraging companies to keep their employees on the job.

By the time wage subsidies were introduced, many companies had already separated from their employees, according to Corak.

Another source of his criticism of wage subsidy programs is that they subsidize the wages of all workers in affected firms, not just those at risk of unemployment, and in particular It was costly.

Jennifer Robson, associate professor of political management at Carleton University, also noted that the wage subsidy program had failed. Robson said businesses that would otherwise have closed for reasons unrelated to the pandemic are artificially surviving because of wage subsidies.

"These were not businesses to return to profitability," Robson said.

Data from Statistics Canada show a dramatic spike in business closures in April 2020, followed by a sharp decline, with monthly closures lower than before the pandemic. rice field.

About 31,000 businesses closed in his August 2020, while about 40,000 closed in February 2020.

In hindsight, Mr Corak said the wage subsidy program should have been narrower in scope and targeted at larger companies. Special needs, such as the airline industry, where it is important for companies to retain the same workforce.

The Canadian Federation of Independent Enterprises said wage subsidies were "important" for small business owners and reported a return to normal in April this year. A member noted that he was only 2 out of 5 sales.

The government's focus at the start of the pandemic is to protect jobs and ensure a strong economic recovery, said Adrian Vorpoeschas, spokesperson for Finance Minister Chrystia Freeland, in a statement. said.

"Today, he has recovered 114% of the jobs lost during the darkest period of the pandemic," he said.

In contrast to what some economists characterize as overly generous support for businesses, some low-income Canadians have been unable to access social assistance benefits because they collected the CERB. Experiencing setbacks. The Canada Revenue Agency also wants back benefits paid to her more than 400,000 Canadians whose eligibility was questioned.

In response, the anti-poverty group Campaign 2000 called for his CERB pardon.

Mr. Corak said it was reasonable to demand repayment from those who illegally collected profits, but companies should follow the same standards.

"What worries me is this asymmetry of response between individuals and businesses," he said Corak.

The CFIB is seeking more loan forgiveness for small businesses that have accessed loans through their Canadian Emergency Business Accounts. The federal government has already proposed waiving part of the loan if repayment is made by the end of 2023.

When it comes to shaping public policy, Robson said business interest groups have well-resourced public relations teams to promote their interests.

"There is no such thing for individual low-wage workers," says Robson.

Corak said that when the pandemic started, the focus was on the role of frontline workers, but over time it shifted to small businesses.

"Small business lobbying has been used to inform individual members of parliament and put pressure on the Cabinet and government to force many unseen and unheard mothers and fathers to work. I think it's been very effective in responding to people, families in a way that they didn't have it, the same voice," Kollak said.

According to Corak, the danger of wage subsidy programs is that they set a precedent for oversubsidizing companies, thereby stifling innovation.

"We are moving from basic income for individuals to basic income for small businesses," he said.

This Canadian Press report was first published on August 6, 2022.