While leaders split on who should receive the temporary subsidy, digital investments seen as priority in adjusting to pandemic realities
A majority of Canadian business leaders surveyed (76 per cent) believe the recently redesigned Canada Emergency Wage Subsidy (CEWS) is a good investment to get Canadians back to work and help the economy rebound, finds a new client poll by KPMG in Canada.
"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," says Lucy Iacovelli, Canadian Managing Partner of KPMG's national Tax practice. "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 per cent) of respondents say they rely on funds from the wage subsidy to keep their employees on the payroll; 53 per cent indicated reduced employee wages helps deal with other costs due to COVID-19; with 23 per cent saying it has helped them to rehire workers previously laid off.
At the same time, KPMG's 2020 CEO Outlook found that Canadian business leaders are taking action to adjust to pandemic realities by shifting their business strategies to meet emerging demands, industry changes and more digital ways of working. For example, 84 per cent of Canadian CEOs are focusing more capital investment in buying new technology, up from 67 per cent pre-COVID-19.
Who should be eligible for the CEWS? Opinion is divided.
The poll findings also reveal the business community is divided as to which companies should receive CEWS support, following the federal government's July 27, 2020 decision to broaden access. Under the new rules, the amount of the wage subsidy varies depending on revenue decline, with a maximum combined subsidy of up to 85 per cent for eligible employers. The government has extended the program until November 21, 2020, while leaving the door open to a further possible extension up to December 31, 2020.
In response to these changes, half of survey respondents (50 per cent) agree that offering two different subsidy levels (a "base" and "top up" amount) is the right approach. However, 48 per cent believe that the subsidy should only be available to those businesses or sectors significantly impacted by the downturn.
"It's clear from the results that business leaders have different perspectives on whether the program should be used to help all companies that have been impacted or just focus on those hardest hit by the pandemic," adds Ms. Iacovelli. "Recent changes have also made the application process more complex, however by extending the deadline to January 31, 2021 for all claim periods, we may see more companies applying into the fall and even retroactively."
Opinion is also divided on the redesign of the program with 44 per cent of respondents giving it a positive rating, 24 per cent rating the program as average, and 17 per cent holding a negative view.
KPMG's Canada Emergency Wage Subsidy Survey: In mid-August, KPMG's Tax practice conducted a national client survey of business leaders, company owners and executive management to share their views about the redesigned CEWS program. The survey garnered nearly 300 responses from senior leaders and clients representing a broad range of industries and sectors (including energy, manufacturing, automotive, mining, construction and real estate, travel and tourism, professional services, telecommunications and media, retail, agri-food and not-for-profit organizations). Eighty-three per cent of all respondents reside in Ontario (38 per cent), Alberta (24 per cent) and British Columbia (21 per cent). A majority of respondents (69 per cent) are from privately-owned companies. The survey closed on August 31, 2020.
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Learn more about the 2020 KPMG Global CEO Outlook: COVID-19 Special Edition and our Canadian CEO survey results here.
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