TORONTO – Canadian businesses risk a “double whammy” of potential labor shortages and declining consumer spending due to COVID-19 benefits expiring on Saturday, an economist says.

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On Thursday, Prime Minister Justin Trudeau and Deputy Prime Minister and Finance Minister Chrystia Freeland announced that, on Sunday 24 October, the Canada Recovery Benefit would be replaced by the Canada Worker Lockdown Benefit.

The new worker lockdown benefit, available through May 7, 2022 and retroactive to October 24, will give $300 weekly to people whose workplaces are closed due to a government-imposed lockdown.


The Canada Emergency Wage and Rent Subsidy will also be replaced by the Hardest Hit Business Recovery Program, available as of May 7, 2022, which will provide equal pay and rent support, but only for businesses that can prove they need 50 percent Revenue loss has been experienced. The first 12 months of the pandemic.

The new Hospitality and Tourism Recovery Program applies to businesses such as hotels, bars, travel agencies and festivals, and requires applicants to show an average monthly revenue loss of at least 40 percent for the first 13 qualifying periods of the Canada Emergency Wage Subsidy . Revenue deficit of the same amount in the current month.

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Freeland reminded Canadians during the announcement on Thursday that the measures and benefits were always meant to be “temporary.” The changes in benefits come with a price tag of $7.4 billion.

“We are moving from very broad-based support that was appropriate at the height of our lockdown to more targeted measures that will provide assistance where it is needed while judiciously managing government finances,” she said.

More than 200,000 business owners rely on the Canada Emergency Rent Subsidy and more than 450,000 have benefited from wage subsidies. More than two million Canadians have applied for Canada Recovery Benefits and as of October 10, the government had paid them $27 billion.

Stephen Brown, senior economist at Capital Economics, told Granthshala’s Your Morning Friday that Canadians and profit-losing businesses could feel the impact on two fronts.

“When we talk about how it’s going to affect the economy, there’s really two parts to it – for these people.” [who were on CRB] They’re going to see their incomes drop, and that’s a lot of people – getting 800,000 CRB last month – and on top of that, people who were getting employment insurance will also see it come to an end,” “So from September to November, more than a million people are likely to lose access to these benefits and that’s a significant hit to household income,” Brown said.

Brown said that eliminating current benefits he described as “too generous for the long term”, and replacing them with benefits under more stringent requirements “may help address some of these shortcomings.” What we’re getting.”

“A lot of restaurants in particular are struggling to make rent at the moment and that may be because these benefits are changing incentives for people to get back to work,” he said. “If that’s the case then we can easily see some of these labor shortages.”

Brown said economists analyzing how the end of certain benefits might affect the economy would have to look at several variables.

“This is called ‘negative risk,’ and one of the difficult things for economists is precisely the role these programs play in supporting the economy,” Brown explained. The expectation is because of consumer spending.

“But we don’t know the scale of this decision yet, if we remove these benefits now, will it lead to a drastic drop in spending on restaurants and retailers? Also some of these businesses are seeing a decline in their profits,” he said. “So we run a little risk of a ‘double whammy’ for these businesses over the Christmas period, especially if we get to see a new wave of the coronavirus. Because even though we have these plans in place to help them, they Doesn’t cover all risks.”

  • Read more: Feds to spend $7.4 billion on new COVID-19 benefits

Canadian Labor Congress president B Bruske told Granthshala news channel that the government should continue to provide benefits and pandemic support.

“We believe the individuals who actually work in those businesses need their support to continue as well,” Bruske said Friday. “The Canada Recovery Benefit that currently benefits more than 821,000 workers in Canada will expire tomorrow, and is meant to provide those workers with the financial support they need to pay their bills, pay their rent and buy Will be left without their groceries.”

With Ontario set to lift capacity limits and present its step-by-step plan for exiting its COVID-19 framework on Friday, Bruske said some may think it will help businesses get back on their feet. This presents new challenges and is a matter of concern for the workers.

“If the capacity limit is removed, will employers enforce the mess? Are we going to make sure that masking is in place?” he said. “If you’re going into a forward-looking, public-sector type of workforce, where you’re dealing with customers coming in… these kinds of jobs, what are the numbers looking like based on what’s happening, their employers How are you reacting to these issues?”

Todd Barkley, CEO and President of Restaurants Canada, said Friday on Granthshala News Channel that the closure of past benefits and the implementation of more targeted, stringent ones will affect Canadian businesses.

“It will affect us, to a great extent actually,” he said. “Effectively what has happened here is that many restaurants across the country, based on yesterday’s announcement, have been given the death penalty.”

Barkley said so far seven in 10 restaurants in Canada are using subsidies to “survive” and 50 percent of them will no longer be able to take advantage of them based on the new criteria.

“Many restaurants are working on cutting revenue by 20, 30, 39 percent,” Barkley continued. “And because of the limit, they will no longer be able to get any kind of subsidy. That’s why I’m saying these new programs are a death sentence for thousands of restaurants and hundreds of thousands of employees across the country.

Barkley said it was encouraging to have the new benefits in the spring through winter, but added that his industry will try to work with the federal government to lower the threshold so more restaurants can take advantage of them.

“Give us a chance to survive,” Barkley said.

Bruske also said that people may be hesitant to return to work for security reasons, but also because of the lack of full-time and well-paying positions.

“We know that while some jobs are returning, full working hours certainly are not,” she said. “So while employers are only able to offer part-time or very fluctuating work hours, it also means that workers have to decide whether they can take that job or something more permanent or longer. may or may not hold for the consistent terms of their paychecks.”

Bruske said the Canadian Labor Congress is concerned that the loss of benefits will also mean job losses, and they are hoping the government will prioritize the plight of workers when parliament resumes.

“We are hoping that when the government finally convenes again in late November that things like employment insurance changes are going to be front and center on the priority list, to make sure we have funding for skills training front and center. going to happen,” she said. said. “And we organize childcare so that workers can get childcare so they can get back to work.”

With files from Sarah Turnbull of