OTTAWA — Business groups in Canada are warning that ending federal pandemic-relief programs too soon could send shock waves through the economy.
Cutting off wage and rent subsidies as planned on Saturday will force many businesses to reduce their hours, lay off staff or shut down for good, they say.
"It would be absolutely devastating," said Bruce Miller, president and CEO at The Works Gourmet Burger Bistro Inc.
"We're just starting to pay back the mountain of debt that we all have. Now is not the time to walk away from us."
The federal government introduced the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy to help businesses cope with pandemic restrictions, rehire workers and resume normal operations.
Business groups say cutting off the financial aid amid an unpredictable fourth wave, growing labour shortages and ongoing restrictions such as capacity limits and proof-of-vaccination rules could trigger an economic crash.
"We'll see restaurants close across Canada and fewer people working if the subsidies end," Miller said.
Restaurants Canada said 80 per cent of restaurants are operating at a loss or barely scraping by.
Without subsidies, the industry group said many won't survive the fall and winter.
“Most have been losing money or barely breaking even since coming out of initial lockdown last year, and at least 10,000 establishments have already closed," Restaurants Canada president and CEO Todd Barclay said in a statement earlier this month.
“The rest need government support to help them survive the fall and winter so they can continue feeding our recovery.”
Meanwhile, the Canadian Federation of Independent Business said only 40 per cent of businesses are back to normal sales as the deadline for financial aid programs approaches.
The group said only businesses with significant ongoing losses are continuing to receive the subsidies. Without the pandemic support, the group warned that there could be another wave of business closures.
Corinne Pohlmann, senior vice-president of national affairs and partnerships with CFIB, said the emergency pandemic support has been a lifeline for many businesses.
Ending the subsidies at such a critical time in the country's economic recovery would hurt both businesses and workers, she said.
"It would be a huge misstep," Pohlmann said. "Businesses need certainty. So many are still dodging constant curveballs."
The CFIB is also asking Ottawa to scale back the Canada Recovery Benefit, an income support program for workers who do not receive employment insurance benefits.
The business group said the program is contributing to the labour shortage by creating a disincentive for some part-time employees to work.
Pohlmann said that's because unlike the employment insurance program, which is a percentage of previous earnings, the income benefit for workers is a flat amount.
"For people who normally worked 10 to 15 hours a week, they can actually earn more by remaining on the benefit," she said. "We need to change the program to ensure it doesn't incentivize workers to stay home."
However, a recent report by the Business Development Bank of Canada suggests the phaseout of CERB and programs like it won't fix the issue of labour scarcity.
BDB's report said that while sectors like accommodation and food services, retail, and manufacturing have lost thousands of jobs during the pandemic, professional and business services, education, public administration, and health care actually gained workers. In fact, a full 20 per cent of workers who lost their jobs during the pandemic are now working in an entirely different field.
— With files from Amanda Stephenson
This report by The Canadian Press was first published Oct. 20, 2021.
The Canadian Press