As provincial economies gradually reopen, the Canadian Automobile Dealers Association (CADA) is calling on the federal government to modify its wage subsidy program – a measure credited with allowing about 75 per cent of dealers to begin rehiring.
“As we now start getting into a recovery phase, it’s important that businesses don’t face a cliff,” CADA CEO Tim Reuss said. “If you’re looking at a revenue loss of 29 per cent and then all of a sudden, you lose out on the 75 per cent subsidy, that would be huge for some businesses.”
The Canada Emergency Wage Subsidy, which was extended earlier this month to last at least through the end of August, covers 75 per cent of wages for eligible employers who lost a minimum of 30 per cent of their revenue compared with a year earlier due to the COVID-19 pandemic. The program covers up to $847 per worker per week.
The CADA credits the wage subsidy for helping dealers keep workers on their payrolls and for putting them in a good position to begin rehiring as provincial economies slowly reopen. A recent CADA dealer survey found that 75 per cent of dealerships were rehiring employees due to the subsidy. The survey was comprised of 579 dealers representing 1,304 locations in Canada and was conducted between May 1 and May 8.
“The clear, main driver here by far is the Canada Emergency Wage Subsidy,” Reuss said. “In the automotive industry, it’s difficult to find good people. Dealerships have built up their staffs over the years. They’ve built up, obviously, a customer base, but also an employee culture. They don’t want to lose those people because of the crisis.”
Reuss urged the federal government to restructure the program to help businesses that do not meet the 30-per-cent revenue reduction threshold, especially as economies re-open and revenue slowly rises.
“If you’re down only 29 per cent … you miss out on the full 75-per-cent” subsidy, he said. “We’re in deep discussions with the government with how to structure that. For example, let’s say there’s an additional step in there, where if your revenue is down 15 per cent, you still get a 50-per-cent [wage subsidy], or that type of thing.”
Prime Minister Justin Trudeau on May 15 said the government would make adjustments to the program, including changes to the threshold for how much qualifying companies' revenues must have declined, to ensure employers can continue getting help as business kicks back up.
“As the economy reopens, there is a danger of unintended consequences,” Trudeau said. “If part of the eligibility criteria for getting the wage subsidy is a decrease of 30 per cent of your business, we wouldn’t want people who are getting back their business to feel like they have to hold back on their growth, on their expansion, on their rehiring in order to be able to continue benefiting from the wage subsidy.”
Originally set to expire in early June, subsidies are available through to the end of August, though the legislation that created the subsidy gave the government the authority to extend qualifying periods for help to the end of September.
Take-up for the program has been below federal expectations, with less than $4 billion in benefits for 1.7 million workers as of mid-May.
The Canadian Press contributed to this report.