Subscriber Survey

Subscribers divided over business outlook after CEWS, survey finds

Prime Minister Justin Trudeau at a press conference on Parliament Hill in Ottawa in July 2020. The Canadian Press/Sean Kilpatrick
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Almost 40 per cent of subscribers think their company’s financial outlook will change once the Canada Emergency Wage Subsidy (CEWS) ends in December, our latest survey has found.

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Methodology

The Logic’s subscribers were emailed a private link to an online survey on Friday, August 28, and the survey closed Tuesday, September 1. Respondents’ identities were kept anonymous and duplicates were removed as needed. Subscribers were asked “Will your company’s financial outlook change significantly once the wage subsidy ends?” Their choices were: yes, no, somewhat, I don’t know and this question doesn’t apply to me. Secondly, they were asked, “If yes, how is your company preparing for that date?” Their choices were: layoffs/staff reductions, salary reductions, reducing office space, reducing discretionary spending, reducing administrative expenses, cutting advertising/marketing spend, I don’t know and other (please specify). They were asked to check all that apply.

Thirteen per cent of subscribers who responded said their business outlook will change significantly once the wage subsidy ends. More than a quarter of respondents expect their outlook to change somewhat, and roughly a third said the end of the subsidy won’t affect them. The survey was conducted between August 28 and September 1. 

“CEWS is helping us, and has been crucial,” one subscriber said. “Our business is recovering but not sure how they’ll intersect.”

“We don’t think we will restore revenue quickly enough to match the wage supplement by the time it ends,” another said.

In July, the federal government extended its wage subsidy—which gives employers up to $847 per week per employee to pay staff salaries, provided they’ve seen revenues drop—until December to “give greater certainty and support to businesses as we restart the economy.” 

The program has paid out $31.73 billion so far to more than 300,000 applicants. 

Subscribers said their prospects on the other side of the wage subsidy depend on the speed of recovery, and whether as expected a second wave of COVID-19 hits this fall (which some experts say has already begun). One subscriber said that their firm is holding out to evaluate Q4 performance and holiday sales that could make up for revenue lost during the peak of the lockdown.

The federal wage subsidy has seen considerable uptake among The Logic’s subscribers. In July, a previous subscriber survey found that almost half of all respondents had applied to CEWS, the greatest uptake of any single financial-assistance program.

The Logic asked subscribers who expected the end of the wage subsidy to affect them how they’re preparing for its absence. Forty-three per cent of those respondents said their firms plan to reduce discretionary spending. Thirty-two per cent plan to cut administrative expenses, and 19 per cent are considering layoffs or staff reductions.

Surveyed in July, a similar number of small U.S. firms said they were planning layoffs after taking loans from the Paycheck Protection Program, a key federal stimulus designed to keep workers on payroll during the pandemic. For several of The Logic’s subscribers, staffing cuts remain tentative, depending on revenue over the next few months.

“If revenue does drop then salary reductions and/or layoffs are inevitable,” one subscriber wrote.

“If our clients don’t start spending, then yes. But, if things return to normal we will be able to keep everyone’s jobs,” another wrote.

Fourteen per cent of subscribers indicated that their firms plan to reduce office space, and 16 per cent expect to cut advertising and marketing spend. Only three per cent of respondents anticipate salary reductions.

Several subscribers wrote in to say that they are looking at alternative business models that could help them stay afloat on the other side of the subsidy. Others said they are ramping up spending, investing in revenue generation, hiring or research and development.

“Hoping our gamble comes to fruition,” one wrote.

“We are taking the position that we will take off once the CEWS ends,” another said.

About one-third of subscribers said that the end of the wage subsidy will not affect them. Several of those respondents are not currently using the program, while others indicated that their businesses are seeing high demand.

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One subscriber welcomed the end of CEWS.

“The past few months of subsidy [have] supported us through these uncertain times. We should now learn to co-exist with the pandemic and try to adapt our businesses,” they said.