Finance Minister Bill Morneau announced Wednesday a plan to backstop much of the Canadian economy through wage subsidies to prop up struggling businesses — and the workers they employ — during the COVID-19 crisis.
Finance Minister Bill Morneau announced Wednesday a plan to backstop much of the Canadian economy through wage subsidies to prop up struggling businesses — and the workers they employ — during the COVID-19 crisis.
The wage support program, called the Canada Emergency Wage Subsidy (CEWS), is designed to discourage companies from laying off workers at a time when social and economic life has ground to a halt, crippling nearly every industry and pushing millions onto government income replacement programs.
The CEWS is also designed to encourage employers who already have laid off workers to put them back on the payroll, now that they can count on direct payments from Ottawa to cover a significant portion of most wages for the next three months.
“My message to Canada’s employers is this: get ready to rehire,” Morneau said.
Prime Minister Justin Trudeau said Wednesday this generous wage subsidy is needed at time when the economy is facing unparalleled economic disruption.
“Canada hasn’t seen this type of civil mobilization since the Second World War. These are the biggest economic measures in our lifetimes to defeat a threat to our health,” Trudeau told reporters.
What is the government offering?
The federal government will offer a 75 per cent wage subsidy to all businesses that have lost 30 per cent of their revenue as a result of COVID-19 pandemic.
To qualify, companies will have to show that their revenue in March 2020 was 30 per cent less than it was in March 2019.
There may be some exceptions for start-ups and new firms.
A senior government official, speaking to reporters at a technical briefing on a not-for-attribution basis, said there may be some “flexibility” on the revenue comparisons to address the needs of companies that weren’t around in March 2019.
The program will be in effect for three months and companies will have to reapply each month — demonstrating, for example, that revenues in April 2020 are also 30 per cent less than they were in the same month the year prior.
The 75 per cent wage subsidy will cover annual earnings up to $58,700 — or $1,129 a week in pre-crisis earnings. So the maximum subsidy for each employee would be $847 a week.
The program is retroactive to March 15.
Federal Finance Minister Bill Morneau spoke to reporters from Toronto 2:03
Morneau said Ottawa is hoping employers “do the right thing” and pay the additional 25 per cent of pre-crisis wages to their workers.
However, if an employer is unable to do that at this time, given the ongoing economic challenges, they can simply pay the employee the amount they receive from Ottawa — without an additional top-up.
“This money is for workers. Employers will need to attest that they’re doing everything they can to pay the remaini