Pandemic bounty generous for businesses, tough for workers: expert

Benefits rolled out at the start of the COVID-19 pandemic allowed vulnerable Canadians to stay healthy while maintaining income, but business support was excessive and the impact of business groups on public policy. is very large, 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 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 and reduce inequality. Decreasing.

A previous analysis from the Federal Statistical Office also found that, as expected, use of wage subsidy programs correlated with lower chances of closures and fewer employee 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, an economics professor at the City University of New York who wrote an analysis on these programs, said any assessment would explain the uncertainty people and governments faced at the time and the urgent need to keep people healthy. says it needs to.

That said, Corak said that while the CERB was a “huge success,” the Canadian Emergency Wage Subsidy was a “huge failure.”

“Canada Emergency Response Benefit provided funds quickly in time to keep people at home, which is what we wanted to do to save lives,” he said.

On the other hand, Mr Corak said CEWS was “too late, not targeted enough and dramatically overinsured (companies)”.

CERB was quickly announced in March 2020, paying $2,000 monthly to Canadians who lost their income due to the pandemic shutdown. He was soon followed by CEWS, in which he subsidized the wages of company employees by 75% to encourage them to keep their employees.

By the time wage subsidies were introduced, many companies had already parted ways with their employees, Kollak said.

Another source of criticism of the wage subsidy program has been that it subsidizes the wages of all workers in affected firms, not just those at risk of unemployment, and is particularly costly.

Jennifer Robson, an associate professor of political management at Carleton University, also said 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 weren’t profitable businesses,” Robson said.

Data from Statistics Canada show a dramatic spike in the number of business closures in April 2020, but a steep decline since then, with monthly closures lower than before the pandemic.

About 31,000 businesses closed in August 2020, compared to about 40,000 in February 2020.

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

The Federation of Independent Businesses of Canada said wage subsidies were “important” for small business owners, noting that in April this year only two of its five members reported a return to normal sales. .

Chrystia Freeland’s spokesperson, Adrian Vorpeshas, ​​said in a statement that the government’s focus at the start of the pandemic was to protect jobs and ensure a strong economic recovery.

“Today, 114% of the jobs lost during the darkest period of the pandemic have been restored,” Vaupshas said.

Some low-income Canadians are experiencing pullbacks on social assistance benefits for collecting CERBs, in contrast to what some economists characterize as overly generous support for businesses . 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 an amnesty for CERB.

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

“It’s this asymmetry of responses between individuals and businesses that worries me,” said Corak.

The CFIB is seeking more loan forgiveness for small businesses that have accessed loans through their Canadian Emergency Business Account. The federal government has already proposed to forgive part of the loan if it is repaid by the end of 2023.

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

“For individual low-wage workers, there is nothing like that,” Robson said.

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

“Small business lobbying has kept individual MPs informed and put pressure on the Cabinet and government so that many unseen and unheard of mothers, fathers workers and families have the same voice. I think it was very effective that we didn’t have ,” Corak said. .

Corak said the danger of wage subsidy programs is that they oversubsidize companies, thereby setting a precedent that stifles innovation.

“We are moving towards a basic income for small businesses, not a basic income for individuals,” he said.

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

Nojoud Al Mallees, Canadian Press

Pandemic bounty generous for businesses, tough for workers: expert

Source link Pandemic bounty generous for businesses, tough for workers: expert

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