While it would have been better to provide the details of the expanded wage subsidy for SMEs at the announcement yesterday, it was critical that government share its intention to do so immediately.
I've heard from many small biz owners that they put their layoff plans on hold as soon as the announcement was out. Others have been holding on, hoping the announcement would come.
For others, it will be too late as they've already laid off staff. While some may bring them back on payroll, I suspect most won't be in that position.
A wage subsidy, even at 75%, won't stop all layoffs. There are many other costs that will continue for small firms. Lots of them have zero business income right now with no idea when the shut down will end.
But for tens of thousands of small businesses, the wage subsidy will help them keep some or all of their staff paid. They will struggle to find their 25%, but some will use any reserves, borrowing or personal assets to do it. Others still have a small income stream.
I believe millions of Canadians will keep their jobs as a result of this approach. This will reduce their financial and personal stress at a time where there is a lot of natural stress everyone is feeling.
This measure will help prepare us for a recovery after the emergency is over. If employees are still connected to their employers, most will return the next day. If on EI or using the new CERB (which are both important), it will take months to get people back to work.
But for this to work, the wage subsidy has to be simple, paid quickly, and be widely available. CFIB took a leap of faith this would happen in our positive public comments on Friday. Thousands of SMEs are counting on govt to get this right.
I know that there are many political and Dept of Finance officials working all weekend to get this right. Here is my advice based on 26 years of working with SMEs:
1. Do not restrict it to certain types of employers. All employers, including sole props, partnerships, CCPCs (corps), coops, non-profits and even larger firms should qualify.
2. Requiring evidence of a drop in sales seems reasonable, but do that after the fact. Keep that threshold reasonable as each firm will have to make tough choices at a different % sales or revenue loss. Don't require paperwork to prove it up front, audit later.
3. A per employee cap is reasonable (perhaps $5K per employee per month) but do not put a cap per employer. It should cover their full payroll.
4. Make sure one can apply online and get paid quickly. Cash flow is a critical element of getting this new subsidy right and many employers will run out of $ soon. Please assign staff from other areas/depts to answer questions from biz owners.
The CFIB policy team and I are available 24/7 to finance officials if they need our help in program design or execution advice.
And I'd welcome the advice of our members and all SMEs in getting this program right.
5. Special thinking needs to go into how to properly support the self-employed. The UK wage support program was recently expanded to include the self-employed. The CERB is a good start.
6. The subsidy should apply to workers who remain on payroll and are (a) still able to safely work, regardless of location, (b) partially working, or (c) not working at all.
