Justin Trudeau pleads for businesses to ‘please rehire’ as government’s COVID-19 wage subsidy sees slow uptake

That was Prime Minister Justin Trudeau’s message to businesses Tuesday. The federal government has doubled the length of time it is willing to subsidize up to 75 per cent of their wage costs. Now, Trudeau said, businesses should hire back workers for when COVID-19 health restrictions are lifted.

“To employers looking to start up again, please rehire your workers. Use the wage subsidy for their paycheque. That’s what it’s there for,” Trudeau said.

The prime minister’s plea comes days after The Canadian Press revealed Air Canada plans to lay off at least half of its 38,000 employees on June 7. The company had previously announced it would hire back 16,500 workers laid off in March under the federal government’s wage subsidy, and the union representing the airliner’s employees told the Star it wants the company to keep using the subsidy — now available until Aug. 29 — as negotiations continue about the layoff plan.

In an emailed response to questions from the Star, Air Canada spokesperson Peter Fitzpatrick said the company plans to keep using the subsidy for employees, but that “unfortunately, the impact of COVID-19 on the airline industry globally is such that even when the economy does reopen, we do not anticipate our business will return to normal any time soon.”

The government has touted the wage subsidy as one of its marquee aid programs for the pandemic crisis, designed to keep workers on company payrolls. But data published by the Canada Revenue Agency suggests it has been used less than expected.

Less than $3.4 billion of the program’s original $73-billion budget — meant to cover up to $847 per week, per employee for the first half of the program’s lifespan, from March 15 to June 6 — was paid out as of May 11, two weeks after applications for the program opened. That money is supporting wages for almost 1.7 million workers, according to the government data.

By contrast, almost 8 million people applied for the Canada Emergency Response Benefit, a $2,000 payout for people who lose work during the pandemic, costing the government more than $35 billion as of May 11.

Dan Kelly, president and chief executive officer of the Canadian Federation of Independent Business, said more companies would already be on board with the subsidy if the government didn’t take so long to create it. The program was promised almost a month before applications opened online April 27. Almost 2 million Canadians lost their jobs in April after about 1 million jobs were lost in March, according to Statistics Canada.

“I firmly believe that had this been announced near the start of the crisis… many employers would have delayed some of the rounds of layoffs that they were otherwise forced to do, and as a result kept more people on their payroll,” Kelly said.

Another factor in the slow uptake of the wage subsidy might be that companies hardest hit by the pandemic downturn don’t plan to return with the same workforce when restrictions are lifted, said Perrin Beatty, president and chief executive officer of the Canadian Chamber of Commerce. Some sectors, such as aviation and hospitality, might not see the return of pre-pandemic activity for a long time, as international travel restrictions and social distancing guidelines are likely to remain in force until effective treatments are found for COVID-19, Beatty said.

Business will be slower and some companies simply won’t need as many workers as before the pandemic, even if the government offers to pay most of their wages, he said.

“The economic damage has been sufficiently severe that the business is not going to look like it did back in February,” Beatty said.

“They’re not going to maintain people on the payroll that it’s unlikely they’ll ever be able to put back to work in the foreseeable future.”

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Maéva Proteau, press secretary to federal Finance Minister Bill Morneau, said laid off workers can apply for emergency aid from Ottawa, while business can still use the wage subsidy and other programs — like the new government loan program for large businesses — to survive the pandemic downturn.

“We will continue to strongly encourage all businesses to keep employees on payroll with the help of existing emergency programs and will continue to support workers in the airline sector,” she said by email Tuesday.