At first blush, Justin Trudeau’s announcement Friday to subsidize employee wages got the principle dead right, but the application dead wrong.
It is baffling how his government determined that small and medium-sized businesses would get subsidies of three-quarters of the wages of employees, while larger firms would get nothing.
The logic defies logic. Scalps could go raw scratching heads on the matter. It is punitive and discriminatory.
If there is good news, it is that the Trudeau government has finally understood it is far better to keep workplaces glued together – even remotely from their homes – than idled together on employment insurance. It took time, plenty of tragic layoffs, roughly a million Canadians on EI, and the successes of other countries to drive that lesson into the federal fold. Out of Friday’s decision ought to come a more creative period of adjustment to the economic shock and a swifter resumption of near-normal activity.
The bad news is that it goes nowhere far enough. It appears the Liberal administration has somehow drawn an artificial line on who qualifies and doesn’t, and the rationale appears to be that larger companies can withstand COVID-19’s economic ravages while smaller firms can’t.
I doubt that can be proven. Physics suggest the big are just going to fall harder and the thump will be louder.
The large businesses – by definition, those with more than 500 employees, contributing more than half of the country’s gross domestic product – can send a lot of workers in a hurry into unemployment and punch a larger hole at once into the economy. The federal government is spending the weekend to finalize the details and determine eligibility criteria, but on the basis of his announcement Friday, Trudeau has given larger businesses good reason to worry.
Their steep economic declines can quickly buckle communities and regions, and that surely can’t be the objective of a government that has so far shown an ability to listen to reason in this most unreasonable crisis.
While there is no doubt an importance to salvage the smaller employer’s workforce, there is no doubt a national imperative to backstop the larger employer’s operations, too. They are larger engines of activity, and when they reignite, they will jolt the economy far faster and with more might.
Other countries have lessons we can learn. They have targeted all employees for subsidies, no matter the company size. They didn’t draw a line on the size of the company, but on the size of the wage. That’s how Canada ought to be considering this, too, so as not to create two classes of employee – with only one earning the recognition of the public purse, a factory worker leaving a distressed workplace to buy milk at the corner store occupied by subsidized counter help.
So, federal government, spend the weekend redrawing Friday’s mistaken line you drew in the sand. That sand is a crater about to appear, with only one cohort of worker disappearing into it.
This is not social engineering, but economic engineering. As we are learning worldwide in this unscripted crisis, if you’re in for a penny, you have to be in for a pound. You cannot do too much, but certainly can do too little.
Monday we should know if that message is understood.
Kirk LaPointe is publisher and editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.