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Federal COVID-19 wage subsidy to last through summer

Last Updated May 15, 2020 at 12:43 pm MDT

Prime Minister Justin Trudeau returns to Rideau Cottage following a daily briefing with the media in Ottawa, Thursday, May 14, 2020. THE CANADIAN PRESS/Adrian Wyld

OTTAWA – Prime Minister Justin Trudeau says a federal wage subsidy for employees in businesses hit hard by COVID-19 will last at least until the end of August.

The subsidy was set to expire in the first week of June.

“Business owners, please take confidence from this announcement. You now have some runway to catch your breath as you get restarted. So, please, bring back your employees,” said Trudeau.

The $73-billion program, which covers 75 per cent of an eligible company’s payroll up to a maximum of $847 per week per employee, was set to expire on June 6.

Eligible companies are those that saw revenues drop by 15 per cent in March or 30 per cent in April and May. Trudeau has said the government is also considering changes to the program so more businesses can access it.

“One of the things we’ll be looking at is the 30 per cent revenue decline threshold for eligibility,” he explained. “As businesses start-up, needing a decline shouldn’t be a barrier to growth.”

Trudeau also says the government will make adjustments to the program, including changes to the threshold for how much qualifying companies’ revenues must have declined, to ensure employers can access the help as business kicks back up.

The federal government has billed the subsidy as the largest economic program since the Second World War. But so far, it has paid out only $3.4 billion for some 1.7 million workers.

However, the government sees the wage subsidy as crucial to the country’s economic recovery and is hoping that more companies will take advantage of it as they rehire employees laid off when the country shut down in mid-March to prevent the spread of COVID-19.

That, in turn, would decrease reliance on the $35-billion Canada Emergency Response Benefit, which is paying $2,000 a month to Canadians who have been thrown out of work or seen their incomes nosedive due to the pandemic.

More than 7.5 million Canadians have received CERB payments so far — almost double the anticipated number of recipients. Trudeau would not say if the CERB will be extended or changed moving forward, with the first round of applicants set to see the benefit expire near the end of June.

The subsidy extension is in line with what the Canadian Chamber of Commerce had hoped for.

According to the chamber, any of the 200,000 businesses it represents are still in crisis mode. It noted this kind of extension is important because even as provinces are strating to reopen their economies, it will still be a long time before it’s business as usual.

“It’s not a switch you flick on. You’re not going from zero back to 100, or whatever that new normal looks like,” Leah Nord, director of workforce strategies at the Canadian Chamber of Commerce, said ahead of the announcement Friday.

Since March, around three-million Canadians have lost their jobs due to closures caused by the pandemic.