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Canadian News August 27, 2020

Canadian Government Looks to Extend Economic Aid

Expansion includes four more weeks of the CERB and three additional benefit programs to help Canadians during COVID-19.

By  Sara Lavenduski

In an effort to move into the next phase of pandemic recovery, the Canadian government has announced new economic aid expansions. Notably, the Canada Economic Response Benefit (CERB), implemented as a key part of the COVID-19 Economic Response Plan, will end on Sept. 26, after a final four-week extension. Those receiving the CERB who are eligible for Employment Insurance (EI) will be transitioned over to what’s being billed as a more generous EI program than in years past.

Canadian Parliament

Deputy Prime Minister and Finance Minister Chrystia Freeland along with Minister of Employment, Workforce Development and Disability Inclusion Carla Qualtrough made the announcement regarding the C$37 billion aid package earlier this week. Expansion of the CERB will offer Canadians more time to look for employment as the country begins to reopen, they said.

On Sept. 27, EI will accommodate approximately 400,000 more recipients who will receive a taxable benefit of C$400 a week, available for at least 26 weeks. This is part of the effort to transition Canadians from the CERB (which is ending) to EI. In addition, EI insurance premiums will also stay the same for two years.

The government is also allowing more people to qualify for EI by providing a one-time credit of 300 insurable hours to those who worked at least 120 hours over the past year. In addition, those claiming EI special benefits, like maternity, parental, sickness, compassionate care and family caregiver, will receive a one-time credit of 480 insurable hours.

“When Canadians needed support the most, the government introduced the CERB, which helped more than 8.5 million people pay their bills during this challenging time,” said the government in a statement. “As we safely restart our economy, many of those Canadians will still need support while they continue to look for work. That is why the government will transition people who have been receiving the CERB to a more flexible and generous EI program for those who qualify, which will provide them additional features and tools to get back into the workforce.”

Furthermore, new legislation will soon be introduced to Parliament to implement three new benefit programs. The Canada Recovery Benefit (CRB) will provide $400 per week for up to 26 weeks to self-employed workers, and those who aren’t eligible for EI who still require income support as they continue looking for work.

In addition, the Canada Recovery Sickness Benefit (CRSB) will provide $500 per week for up to two weeks, to workers who are sick or must self-isolate because of COVID-19. Finally, the Canada Recovery Caregiving Benefit (CRCB) provides $500 per week for each household for up to 26 weeks because of ongoing care for a child under the age of 12 due to school and day care closures; a family member with a disability or a dependent because of day program and care facility closures; or a child, disabled family member or dependent not attending school or a care facility because they’re high-risk.

Parliament, which is prorogued until Sept. 23, still needs to approve the extensions. Meanwhile, Canadian Federation of Independent Business (CFIB) President Dan Kelly is concerned that the “low bar” of just 120 hours of work over the past 12 months to qualify for EI is a disincentive for part-time workers to return to work.

“I expect that retail, hospitality, arts and recreation, and service sector businesses – the very sectors hardest hit by the economic effects of COVID-19 – will struggle to bring back their part-time workforce,” said Kelly in a press release. “This will slow Canada’s economic recovery.”

Canada faced a deficit of $343.2 billion before the expanded programs were announced.

Finance Minister Freeland assumed her new position (the first woman to hold it in Canada’s history) after former Finance Minister Bill Morneau resigned following reported tension with Prime Minister Justin Trudeau. Reports also developed in recent weeks that Morneau hadn’t reimbursed WE Charity, a Toronto-based group dedicated to international development and youth empowerment, with $41,000 for travel expenses he and his family had incurred back in 2017 while doing work for the organization.

Freeland played a key role in North American Free Trade Agreement (NAFTA) negotiations over the past several years; it finally went into effect in the U.S., Canada and Mexico in July.

Meanwhile, it’s still a touch-and-go situation for promo companies trying to ramp back up while keeping tabs on end-buyers doing the same thing as they adjust to new realities. Neil Piitz, president of Toronto-based Differenciate Consulting, a business consultancy for promotional products firms, has serious concerns for the Canadian economy and the promo industry in the coming months.

“The payroll subsidies and business loans have given many a false sense of security,” he says. “I think that when these offerings are scaled back and then rescinded, there will be a massive fallout because current revenues alone won’t be able to sustain existing operating costs. Now is the time for business owners to create a plan for the days ahead when the government will no longer be able to support these initiatives.”

In addition, long-term remote work is having an outsized impact on Canada’s city centers that’s lasting longer than anyone had anticipated. “The downtown cores in our largest cities are still fundamentally shut down,” says Piitz. “Working from home has had a dramatic impact on peripheral businesses in those areas and is slowing the economic rebound.” Based on recent conversations with promo firms, Piitz estimates that PPE has made up 90% of industry sales since April. Right now, he says it’s about 75% PPE sales and 25% traditional merchandise.

Mike Yager, president of Spotlight Sport & Corporate Wear (asi/332753) in Saskatchewan and Counselor’s 2019 fastest-growing Canadian company, says with the delays in school openings and sports seasons (particularly the Saskatchewan Junior Hockey League), as well as struggling restaurants and retailers, he would have had to declare bankruptcy if not for government aid and personal savings.

Yager doesn’t expect the situation to change much until 2021. He says they’re still not doing much promo, only a bit for construction companies doing summer jobs. “They’re doing well and spending money,” he says. “Others are watching their expense lines closely and cutting marketing first.” Spotlight also fulfilled a few orders for agriculture trucking, landscaping and the trades, as well as jackets for a grocery store’s staff (one of the area industries, along with liquor, hardware and real estate, that are doing relatively well). Sourcing three-ply masks in May “saved us that month,” he says.

But it’s going to be a slog. Those companies that were struggling before the pandemic will close permanently, says Yager. Compounding recovery challenges is the fact that the virus has forced millions of people to change their daily habits, like shopping online, cooking at home and attending fewer (if any) gatherings. Those practices won’t change back quickly, if ever.

“Many folks have told us they won’t have their kids in as many activities as in the past,” he says. “They’ve enjoyed not running around every night. Family time has made a comeback and people are enjoying it.”

George Cooper, vice president of U.S. and Canadian sales for Fashion Biz (asi/53716) in Burnaby, BC, says hospitality and tourism are still struggling to put workers back on the job. Thankfully, his own company has been able to bring back almost all its workforce in recent weeks.

But Cooper has his doubts about what months of medical equipment sourcing will mean for promo in the long run as companies transition back to traditional orders. “I’m concerned that there’s been too much concentration on PPE marketing and sales, at the expense of selling and servicing wearables and hard goods,” he says.

In neighboring Alberta, significant drops in oil and gas demand as well as manufacturing has negatively impacted the provincial economy, which now faces a record $20 billion deficit.

Fortunately, Stitchery and More (asi/337025) in Nisku, AB, was able to maintain full operations with all staff working regular hours by shifting to distancing signage and masks, along with its usual uniform items for summer workers like caps and hoodies.

“We still have at least one new customer every day, and that alone is a feather in our cap that we’re proud of,” says co-owner Allie Maloney-Peters. “We strive to offer the same service to all of our customers, whether we’ve had them for 12 years or 12 days. Honestly, we’ve been a safe place for a lot of our regular clients to pull up a stool at our counter (socially distanced, of course) and talk about their struggles and vent about the changing world. Balancing physical and mental health is critical.”