COVID-19’s impact on the Canadian economy continues to grow in intensity.
On April 9th, unemployment figures for the first two weeks of March were released by Statscan. The numbers were powerful. Canada lost just over 1,000,000 jobs. National unemployment hit 7.8%, with unemployment in Ontario hitting 7.6%. The hardest hit sectors have been hospitality, tourism, airlines, and bars and restaurants. Small businesses with meagre cash flow and low capital have also been clobbered by the dramatic falls in customer turnover. The manufacturing sector has also been hit hard, not because of a lack of demand or need for its productive potential, but because of firms being cautious and employees preferring to be safe. The public sector has also been affected with municipalities across Ontario laying off tens of thousands of employees – all overwhelmingly part-time, casual, and student workers from recreation facilities, arenas, and libraries.
The Federal Government has responded to the crisis with policy changes almost by the day. An ambitious wage subsidy is the biggest piece, along with a $2,000 a month CERB (Canada Emergency Response Benefit) for four months for workers negatively impacted by the disease (laid off or lost income). A 75% wage subsidy has also been announced for workers who were laid off or to prevent new layoffs. The wage subsidy came after the federal government was criticized that its original 10% subsidy was far too low and incomparable to some of the wage subsidy announcements made by countries abroad, especially in Europe. In Denmark and the UK, for example, early responses to the outbreak of COVID-19 included wage subsidies that matched or exceeded 80%. The enhanced wage subsidy was well received, and companies that don’t qualify for it can still apply for the original 10% wage subsidy and a myriad of other programs (EI supports, business loans and credits, etc.). Airlines such as Westjet and Air Canada have announced that they will take advantage of this wage subsidy to rehire thousands of workers they were forced to terminate due to the complete collapse of air traffic.