Ottawa Extends Federal Wage Subsidy Program To December

Ottawa is extending until December its program to subsidize wages in companies hit hard by the COVID-19 pandemic.

Speaking outside his Ottawa residence, Prime Minister Justin Trudeau said that the extension will give "greater certainty and support to businesses as we restart the economy." It is the second time that the federal wage subsidy program has been extended since April.

The program covers 75% of wages, up to a weekly maximum of $847, for eligible companies and non-profits. Companies must show a 30% drop in revenues. Last week, federal Finance Minister Bill Morneau hinted at changes to revenue-reduction thresholds.

The Liberal government originally saw the wage subsidy program as the key tool in helping cushion the economic blow from COVID-19 by helping workers stay tied to their employers so businesses could get back to normal quickly once lockdowns lifted.

The pace of spending on the program has been below expectations, with $18 billion paid to 252,370 companies as of July 6. Instead, the budget for the program dropped as more workers accessed the Canada Emergency Response Benefit (CERB) for people who lost their jobs or nearly all their hours. The $500-a-week benefit had, as of July 5, paid out almost $54.8 billion to 8.25 million people.

The budget for CERB is now at $80 billion, but it's scheduled to end in the fall. The government's fiscal and economic update last week boosted the cost of the wage subsidy program to $82.3 billion from $45 billion, in a sign of impending changes.

The July 8 fiscal update noted that small employers make up the largest share of approved wage subsidy applications, with the largest numbers of employees covered in manufacturing, accommodation and food services.