By Doug Nesbitt
The Canada Emergency Wage Subsidy (CEWS) is now law and the program will last three months retroactive to March 15. The legislation passed at a sitting of parliament on April 11. It is the single biggest trickle-down economics program in Canadian history.
All private businesses, as well as charities and NGOs, are eligible for a 75 percent wage subsidy for all employees, up to $847/week per employee.
All major political parties, business associations, and even major unions have sold the wage subsidy as a program that puts workers first during the present COVID-19 crisis.
The government estimates the entire wage subsidy will cost the public $73 billion, with no obligation on the part of employers to pay workers their full-time wages. Leaving the matter of full-time pay to the discretion of business owners and managers, Trudeau’s Bay Street Finance Minister Bill Morneau intoned, “We are trusting you to do the right thing.”
Conditions? What conditions?
There are no conditions placed on businesses regarding existing cash reserves or the level of profits made during the wage subsidy period. Neither are there any employer obligations to stop firings, pay and hour cuts, or the end of executive bonuses. Employers are not even required to keep workers at home to slow the spread of the coronavirus. There are no conditions placed on employers who have failed to protect their workers in the workplace.
While workers will pay federal tax on their government-subsidized wages, planned state assistance for employers includes an exemption from contributing to Employment Insurance or the Canadian Pension Plan.
Consider the case of Air Canada which qualifies for wage subsidies and has rehired 16,500 employees. While all these workers are to be paid through the CEWS with no obligation by Air Canada to provide full-time employment, the corporate giant’s record cash reserve of $7.38 billion in 2019 will go untouched.
There are of course some conditions. To qualify, businesses must see a minimum 15% decline in revenues in the first month, and 30% decline in revenues for the following two months. However, businesses are free to calculate monthly declines in relation to an average of January and February 2020 revenues, or those of the equivalent month in 2019.
Criminal penalties do exist for employers who abuse the wage subsidy, but catching such crimes remains in the hands of a Canada Revenue Agency that won’t collect billions in dodged taxes from corporations and the wealthy.
The initial bailout package brought in by Trudeau on March 18 included a 10% wage subsidy for small businesses (1-99 employees). Right away, there was a push from businesses and opposition politicians to raise that subsidy.
On March 27, a remarkable letter was sent to Prime Minister Justin Trudeau demanding a 75% wage subsidy for small and medium-sized (100-499 employees) businesses. This was signed by NDP leader Jagmeet Singh, Dan Kelly of the notoriously anti-labour Canadian Federation of Independent Businesses, and the leaders of Canada’s three largest private sector unions: Jerry Dias of Unifor; Ken Neumann of United Steelworkers; and Paul Meinema of UFCW Canada.
Later that day – the very same day! – Trudeau announced the 75% wage subsidy for small and medium-sized businesses. At first, few details were given. But soon “medium-sized” businesses now included those up to 1000 employees. Then the business size limits were eliminated altogether and the 30% percent decline in revenues requirement was lowered to 15% for the first month. After this, we learned qualifying employers could skip out on EI and CPP contributions.
By early April, the Conservatives were piling on, pressing Trudeau to accelerate the delivery of the business wage subsidy from an originally planned six-week delay. The draft legislation was distributed to the opposition parties a week before the sitting of parliament to iron out any disagreements. On April 11, the legislation was introduced, passed through the House of Commons and the Senate before receiving Royal Assent. All in a single day.
What happened to Employment Insurance?
By contrast, there has been no parallel effort from organized labour and political allies to reform the Employment Insurance system. This was not the case during the Great Recession of 2008-9 when labour pressed for the expansion of EI eligibility, hammered on the program’s deficiencies and identified the federal political parties responsible (both Tories and Liberals).
In the absence of any pressure, the waiving of a week-long wait for EI Sickness Benefits has exhausted the scope of the Liberals’ EI reforms – all while happily sparing wage-subsidy collecting employers from making EI contributions.
With EI coverage hovering around only 40 percent of the unemployed, the simple demand of expanding eligibility could have been made. Not a word has been uttered by the labour or the political opposition about the $60+ billion in EI money pinched by the federal Finance Ministry since the mid-1990s to cover corporate tax cuts and produce phony budget surpluses. Neither has any challenge been issued against declining contribution rates to appease business interests, the sweeping penalties that disqualify unemployed workers, brutal cuts to weeks of payment, or the miserable 55% wage replacement rate.
Can we abandon EI?
Even outspoken former Ontario Federation of Labour president Sid Ryan is backing the business wage subsidy program while giving up on EI reform, stating on Facebook: “This is not the time to be battling over how to fix the broken EI system that only covers 35% of workers.” A few days later, Ryan declared “Its (sic) time to blow up the failed EI system and put in place a proper unemployment system that every worker in Canada benefits from with generous payments.”
One has to wonder about the level of fantasy required to imagine that EI can be scrapped and replaced by something better for workers when labour can’t even mount a fight to demand EI reforms during the greatest unemployment crisis in Canadian history. Even the Canada Emergency Response Benefit (CERB) fails to cover the gaps left by EI, leaving nearly 900,000 people out in the cold.
Even if we accept the $2000/month CERB is a necessary stop-gap measure given EI’s inadequacies, there remains no push to reform EI over the coming months. The CERB will be gone in four months, the CEWS in three. What will happen then? It is incumbent on organized labour to press for a reversal of the EI cuts that have been used so effectively to undercut the power of labour and impoverish working people. Are we just going to go back to the regressive status quo? If EI reform is to be abandoned, what’s the plan?
Having secured the CERB and CEWS with no reforms to EI, establishment forces are already preparing for the next fight: who will pay for the CERB and CEWS? There is no question that the corporate elite and the wealthy will seek to make the public pay the costs.
One right-wing think tank is already calling for a 20 percent cut to federal government worker wages and pensions – an idea aided by the numerous right-wing media and political attacks on Service Canada workers for daring to exercise their right to refuse unsafe work because of management neglect. The Tories won’t be far behind the right-wing think tanks, and the Trudeau Liberals won’t be far behind them.
CEWS has blown a $73 billion hole in the budget, not to mention the CERB’s $21 billion pricetag and the equally large bill for direct business bailouts. Organized labour will soon find itself facing a series of union-busting rollbacks from employers and more austerity public budgets. It wasn’t that long ago when the Harper Tories, Trudeau Liberals and the Ontario Liberals allowed billions to be lost in the auto bailouts while autoworkers also took massive concessions.
The key alternative for labour is a determined demand that cash-bloated corporations, banks, and wealthy individuals pay the public back. They are the ones who have enjoyed the fruits of 40 years of exploding inequality financed by rollbacks to worker rights and wages, cuts to healthcare and public programs, as well as the gutting of EI and the social safety net.
This, however, would require breaking with the trickle-down economics of the business wage subsidy program, and pressing demands for redistributive reforms to benefit the larger working majority, not just the more protected sections of unionized workers.