CEOs agree federal wage subsidy is a sound investment: KPMG
...but executives are split on who should receive the subsidy and the redesign of the program
TORONTO — Most Canadian business leaders surveyed (76%) believe the recently redesigned Canada emergency wage subsidy (CEWS) is a good investment to get Canadians back to work and help the economy rebound, according to a KPMG client survey.
“Our clients have told us that the federal wage subsidy program is helping them not only to retain their employees, but also to cope with pandemic-related costs and rehire workers who have been laid off,” said Lucy Iacovelli, Canadian managing partner of KPMG’s national tax practice, in a statement. “While there has been an upturn in the economy, many Canadian business leaders are still uncertain about what the coming months will bring, and welcome continuing support during this fragile recovery period.”
Three-quarters (76%) of respondents rely on the wage subsidy to keep employees on the payroll; 53% said reduced employee wages helps deal with other costs due to COVID-19; with 23% said it has helped them to rehire workers.
KPMG’s 2020 CEO Outlook found Canadian business leaders are adjusting to pandemic realities by shifting their business strategies to meet emerging demands, industry changes and more digital ways of working. For example, 84% of CEOs are focusing more capital investment to buy new technology, up from 67% pre-COVID-19.
Under new rules, the subsidy varies depending on revenue decline, with a maximum combined subsidy of up to 85% per cent for eligible employers. The program has been extended until Nov. 21 and could be extended up to Dec. 31.
Half of respondents (50%) agree offering two different subsidy levels (a base and top up amount) is the right approach. However, 48% believe the subsidy should only be available to those businesses or sectors significantly impacted by the downturn.
Opinion is also divided on the redesign of the program with 44% of respondents giving it a positive rating, 24% rating the program as average, and 17% holding a negative view.
KPMG’s CES survey was in mid-August, garnering nearly 300 responses from senior leaders and clients representing a broad range of industries and sectors, including energy, manufacturing and automotive.