COVID Relief Fund Too Generous For Businesses, Too Harsh For Workers, Experts Say

COVID-19 The benefits deployed at the start of the pandemicallowed vulnerable Canadians to stay healthy while maintaining their income. However, business support is overkill, and economists show that business groups have a tremendous impact on public policy.

Nearly two and a half years ago, the federal government faced the unprecedented challenge of closing the economy to slow the rapid spread of COVID-19. The closure has benefited from a series of pandemic bailouts aimed at mitigating the blow to workers and businesses. The two most prominent programs are theCanada Emergency Response Benefit(CERB) and theCanada Emergency Wage Grant.(CEWS).

According to a recent analysis by Statistics Canada based on census data, two-thirds of Canada's adults will benefit from a pandemic in 2020, which will alleviate income losses. We are reducing inequality.

Read more:Number of Canadians who have benefited from COVID. According to the 2021 census

As expected in a previous analysis by the Federal Bureau of Statistics, wage use Turned out. The subsidy program was associated with less likely closure and less employee savings.

In March 2020, we had little time to create benefits and fine-tune the details, but economists are now looking back at the successes and failures of these programs.

Miles Korac, a professor of economics at New York University who wrote an analysis of these programs, explains the uncertainty faced by people and government at the time and the urgent need to keep people healthy. Say you need.

However, Corak said the CERB was "terribly successful" while the Canada Emergency Response Subsidy was a "major failure."

"Canada Emergency Response Benefit got money quickly in time to keep people home. That's what we wanted to do to save lives," he said. Said.

Meanwhile, Corak said the CEWS was "too late, untargeted and dramatically uninsured (company)."

CERB was announced shortly in March 2020, with $ 2,000 a month for Canadians who lost their income due to a pandemic outage. Shortly thereafter, CEWS followed, and CEWS subsidized 75% of the company's employees' wages in the hope that it would encourage the company to retain its staff.

Corak states that by the time wage subsidies were introduced, many companies had already separated from their employees.

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Another source of criticism of the wage grant program is simply the wages of all workers in the affected company. It was that it was subsidized. Those who are at risk of losing their jobs, especially those who are expensive.

Jennifer Robson, an associate professor of political administration at Carlton University, also pointed out that the wage subsidy program had failed. Robson said companies that would have been closed for reasons unrelated to the pandemic are artificially floating for wage subsidies.

"These weren't the businesses we intended to regain profitability," Robson said.

Statistics Canada data show that the number of business closures surged dramatically in April 2020, but then plummeted, with monthly closures at lower levels than before the pandemic. I did.

Approximately 31,000 companies closed in August 2020 and approximately 40,000 companies closed in February 2020 it was done.

Read more: Women with college degrees are more likely to access CERB than male graduates: StatCan

Later on, Corak has scoped wage subsidy programs for large companies with special needs, such as the aviation sector, where it is important for companies to retain the same employees. increase.

The Canadian Federation of Independent Businesses states that wage subsidies are "important" for small business owners, and in April this year only two of their five members returned to normal sales. He said he had reported.

In a statement, spokesman for Finance Minister Chrystia Freeland, Adrian Vopshas said the government's focus during a pandemic was to protect employment and ensure a strong economic recovery. Said there is.

"Today, we have recovered 114 percent of the work lost during the darkest months of the pandemic," Vaupshas said.

In contrast to what some economists characterize as overly generous support for businesses, some low-income Canadians go to social aid benefits for collecting CERBs. I experienced a clawback. The Canada Revenue Agency also wants to regain the benefits paid to more than 400,000 Canadians whose eligibility has been questioned.

Correspondingly, the Anti-Poverty Group Campaign 2000 seeks CERB amnesty.

Corak said it is reasonable to ask someone who has made a fraudulent profit to repay, but companies must follow the same criteria.

"My concern is the asymmetry of this correspondence between individuals and businesses," Corak said.

CFIB is seeking more loan exemptions for SMEs that have accessed their loans through their Canadian Emergency Business Account. If repayments are made by the end of 2023, the federal government has already offered a partial loan exemption.

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

Korac said that at the beginning of the pandemic, the focus was on the role of frontline workers. But over time, this has shifted to small businesses.

"The small business lobby provided information to individual MPs, and many invisible, unheard-of mothers, fathers, workers, and families did not have it. I think it was very effective in putting pressure on the Cabinet and the government to respond in a way, the same voice, "said Kolac.

The danger of wage subsidy programs is that they provide companies with excessive subsidies, thereby setting a precedent for impeding innovation, Kolac said.

"We are heading towards small business basic income, not individual basic income," he said.

© 2022 The Canadian Press