CFIB says a third of small businesses could close

Group calls for 75 per cent wage subsidy to help businesses retain employees

March 25, 2020, 3:49 am

The COVID-19 outbreak is quickly becoming a disaster for small businesses, warns the Canadian Federation of Independent Business (CFIB).

A full 60 per cent of small firms have seen a significant drop in sales (55% in Saskatchewan), with more than one in three reporting a reduction greater than 75 per cent, according to a new study of nearly 11,000 small business owners taken over the weekend.

“More than half of small firms have begun laying off staff, with a quarter reporting they have already been forced to lay off their entire workforce,” said CFIB president Dan Kelly.

“At this rate, the only way to prevent massive additional unemployment is for government to introduce a much larger wage subsidy program.”

While last week’s economic measures were welcome initial steps, CFIB is proposing a COVID-19 Job Retention Program that would subsidize wages of employers able to retain their staff.

This would cover at least 75 per cent of wages for all employers, up to a cap of $5,000 per worker per month. CFIB proposes the program include the self-employed and small business owners.

“On top of the 930,000 new Employment Insurance applications filed last week across Canada, many small business will be forced to make additional layoff decisions in the next few days,” Kelly noted.

“Announcing a wage subsidy now will protect many jobs and keep employees connected to their employers, helping to speed the recovery when the COVID-19 emergency phase is over.”

Nearly one in three businesses say they can survive less than a month under the current conditions, up from a quarter last week (25% in Saskatchewan).

The average cost of the outbreak for affected businesses has also doubled since last week to $136,000 ($75,000 in Saskatchewan).

“In addition to these impacts, small business owners are facing a lot of uncertainty and thousands have been calling CFIB with questions,” added Marilyn Braun-Pollon, CFIB vice-president, Western Canada and Agri-business.

“The record of employment process is very onerous, especially if a business is forced to lay off all its staff at once. Businesses are looking for ways to keep their staff employed but reduce their operating costs so they can weather the massive disruption. Others want to know what the loss of their business means for them and their employees, how Employment Standards apply to this extraordinary situation and how to access the new government programs that were announced last week.”

“We’re pleased Premier Scott Moe announced a financial support plan for Saskatchewan employers and employees hit by the impacts of the COVID-19 pandemic, which includes a number of measures such as the Self-Isolation Program, as well as cost saving measures such as the three month PST remittance deferral and Audit suspension,” said Braun-Pollon.

“We also welcome the establishment of a Business Response Team, which will be a single window information webpage for businesses to help them navigate and find relevant information on programs and support.”

The survey found that more than half of small businesses across Canada were already at least partially shut down, led by firms in the service and restaurant sectors.

In addition to the urgent need for a bigger wage subsidy, governments should consider:
Simplifying and providing immediate access to EI Work-Sharing for all employers.

Ensuring that the self-employed receive some income support due to loss of income as a result of COVID-19.

Providing tax relief by deferring sales taxes, forgiving the payment of income, sales and payroll taxes for the next three months for those particularly hard hit, delaying all filing deadlines, and delaying upcoming carbon tax and CPP hikes.

“While governments are working hard on the health emergency created by COVID-19, much more needs to be done to address the related economic emergency,” Kelly concluded. “It is essential that governments move quickly to safeguard local jobs and our economy by putting in place measures that will allow businesses to survive these unprecedented circumstances.”