Statistics Canada has provided the most authoritative look to date at the reach and effect of the Canada Emergency Wage Subsidy program, enacted to preserve jobs from the turbulence of the pandemic economy.
The Statscan data paint a picture of a program that reached into every corner of the economy (although farther into some than others) and was intensively used by those companies that did tap it.
The agency found that 36 per cent of businesses across all sectors used the program, which provided employers with payroll rebates of up to 75 per cent. But that take-up rate varied significantly across sectors. In accommodation and food services, 66 per cent of businesses used CEWS; at the other end of the spectrum, 17 per cent of utilities companies accessed the program. As one might expect, those uptake rates were closely related to the degree of employment losses by industry. Harder-hit sectors used the program more.
The very smallest businesses were less likely to have used CEWS, Statscan found. For businesses with fewer than 10 employees, 29 per cent used the program. That rose to 62 per cent for businesses with 10 to 49 employees, with that percentage declining for larger businesses.
Statscan also examined what it called the CEWS replacement rate, calculated by dividing the number of eligible employees by the number of employees a CEWS-receiving company had before the pandemic struck. That measure shows how intensively companies used the program. For all CEWS recipients, the replacement rate was 75 per cent – three out of every four employees – but that proportion varied significantly between industries.
Lastly, Statscan looked at how many CEWS recipients had rehired employees. The agency found that 23 per cent of recipients had rehired at least one employee for at least one four-week application period between April and October, 2020. As with uptake rates, the propensity to rehire correlated strongly with a sector’s employment losses. Accommodation and food services had the highest rehiring rate, at 37 per cent.
Average monthly employment for businesses that used CEWS dropped 6.9 per cent for the April-to-October time period; average monthly employment for companies that didn’t receive wage subsidies grew by 1.4 per cent in that same time. That measurement doesn’t indicate, of course, how many more jobs would have disappeared at CEWS-receiving firms had they not received subsidies.
University of Toronto economist Michael Smart said the Statscan report is the most comprehensive analysis yet of CEWS, and underscores its scale. “This program has a bigger impact on how the private economy works than any other single thing the government does in Canada.”
Prof. Smart said the rehiring metric, in particular, does a good job in shedding light on what impact CEWS had on employment. But he said there remain lots of unanswered questions, including how many jobs were preserved as companies decided not to lay off employees once the program was introduced.
Taxing questions
One of the key carbon-pricing flashpoints on the Prairies has been the burden placed on grain farmers that have to pay the levy on the gas used to dry their crops. There have been abundant anecdotes of individual (although large-scale) operations paying thousands of dollars in carbon charges for grain drying.
Last year, Agriculture and Agri-Food Minister Marie-Claude Bibeau said those charges weren’t having a “significant impact” on the operating costs of grain farmers, following the release of a cost study from the department. That study said that grain farmers in Alberta, Saskatchewan, Manitoba and Ontario paid $33-million in carbon charges in 2019 related to grain drying. As a percentage of operating income, those millions were quite small, ranging from a low of 0.05 per cent in Alberta to 0.38 per cent in Ontario.
At the time, the opposition Conservatives contended that those estimates were too low. However, a report last week from the Parliamentary Budget Officer backs up those numbers. The PBO estimated that carbon charges on grain drying would total $42-million in 2021-22, rising to $101-million by 2025-26, as the costs of carbon pricing rise each year.
The PBO estimate is actually slightly more conservative than that of Agriculture Canada, since it’s based on the higher carbon price of $40 a tonne for fiscal 2021 rather than the $20 a tonne in 2019. The discrepancy stems from different methodologies: Agriculture Canada made its calculations by extrapolating from usage data supplied to it, whereas the PBO used broader economic models.
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Gas lines: The European Union’s expected announcement next month of details of its plans to create a carbon border adjustment mechanism – essentially, a carbon tariff – will be a key test of how such climate regulations and international trade agreements will interact, writes Jon Johnson, a senior fellow with the C.D. Howe Institute. “The EU initiative provides Canada an excellent opportunity to monitor how a border carbon adjustment mechanism plays out before adopting any such mechanism of its own,” he writes.
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