An owner of Tripcentral.ca (the Canadian travel agency) Richard Vanderlubbe, has had to reduce active staff to around 15% of the total workforce. Although receiving the wage subsidy and business loan, it had to close all physical locations since the coronavirus pandemic’s start.
The economy of Canada gradually reopens, the government is easing these programs. However, Vanderlubbe and other businesses which were hardly affected by the COVID-19 pandemic call for additional support until all restrictions are removed. Moreover, failure to do so could choke many of them at the eleventh hour.
As we know, the worst-affected businesses by the pandemic are related to tourism, events and recreation. Therefore, they made up below 5% of the economy in the previous year. However, they employed around 1.5 million of Canada’s 18 million-strong workforce.
Significantly, their efforts differ sharply from much of the rest of the economy, which is recovering strongly. Remarkably, employment is within 1.8% of pre-pandemic levels.
According to the Coalition of Hardest Hit Business (CHHB) surveys, if the subsidies are not extended through 2021, almost 60% of the most affected businesses will not survive.
Additionally, emergency wage and rent subsidies have declined to 60% of eligible expenses in July. Moreover, analysts expect it to dip to 20% by September. The business loan program stopped receiving new applications earlier in June.
The government is ready to extend the support until the end of November if needed
Finance Minister Chrystia Freeland this week announced that the government is ready to extend the support until the end of November if needed.
Additionally, business lobby groups are requesting for the programs to remain for the most affected businesses.
CFIB CEO Dan Kelly announced that politicians are concerned, understandably, to turn the page on this because these programs are extremely expensive. Kelly added that the momentum to fix some of the programs appears to have slowed.
Moreover, official data revealed that the government has approved $86 billion Canadian dollar for wage subsidies. Meanwhile, it approved C$48.4 billion of business loans.
The business groups reported that additional aid of a few billion dollars, added more recently for the hardest-affected industries and small businesses, is insufficient.
Lori Sterling, former federal deputy labour minister, the number of bankruptcies has started to increase.
Sterling added that small businesses are likely to witness a tsunami of bankruptcies.
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