Economists have mixed judgments on the financial assistance given to businesses during the pandemic.
If they are of the opinion that the programs reserved for individuals have enabled the most vulnerable to keep their heads above water, they believe that the assistance to businesses has been too generous.
For example, Miles Corak, an economics professor at New York University, says the Canada Emergency Response Benefit (CERB) has been “a big success,” but the Canada Emergency Wage Subsidy (CEWS ) was “a huge failure”. He agreed that the uncertainties faced by people and governments during this period must be taken into account in order to evaluate programs properly.
“The Canada Emergency Response Benefit made it possible to send money in time to allow people to stay in their homes, which the authorities wanted in order to save lives,” he explains. [D’un autre côté], the CEWS came too late, the program covered too many businesses and they were overprotected. »
The CERB was implemented as early as March 2020. The program allowed eligible Canadians to receive $2,000 monthly. Created a little later, the CEWS allowed companies to obtain a subsidy corresponding to 75% of the eligible remuneration paid to an employee.
Professor Corak says that by the time the CEWS was implemented, a large number of companies had already laid off their employees.
Jennifer Robson, an associate professor of political management at Carleton University, says businesses that would normally have closed for reasons other than the pandemic have been artificially kept afloat by the wage subsidy program.
“These are not companies that could hope for a return to profitability,” she argues.
Statistics Canada data shows a large number of closures in April 2020, but they have been steadily declining in the months that have followed, even reaching an even lower level than before the pandemic. Thus, around 31,000 businesses closed in August 2020, compared to nearly 40,000 in February of the same year.
According to Professor Corak, the SSUC should have raked less widely and targeted the largest companies with specific needs, those who had to keep their employees at all costs, such as airlines.
This is a view that would not be expressed by the Canadian Federation of Independent Businesses for which the CEWS has been “crucial” to small and medium-sized businesses. In April 2022, CFIB reported that only two in five of its members said they had returned to normal income.
Adrienne Vaupshas, a spokeswoman for Finance Minister Chrystia Freeland, recalls that the government’s objective was to protect jobs and ensure a strong economic recovery in the country.
“Today, we have recovered 114% of the jobs lost during the darkest months of the pandemic,” she says.
Recent Statistics Canada analyzes — based on census data — indicate that two-thirds of Canadian adults received benefits in 2020. These helped to offset income losses and reduce inequality.
According to the federal agency, “use of the Canada Emergency Wage Subsidy is associated with a lower probability of closure and less pronounced job losses”.
The SSUC has created a dangerous precedent, believes Professor Corak, who points out that by subsidizing companies too generously, we can slow down innovation.
“We are more focused on a basic income for small businesses than on a basic income for individuals. »