Some business owners are calling on the government to consider changing up one of the primary tools it’s chosen to deliver money to Canadians facing hardship because of the COVID-19 pandemic.
They say the best way to inject money into the economy would be through a wage subsidy paid to employers so that they can keep staff employed — rather than an EI-based scheme that only helps individuals after they’re out of work.
Dan Kelly of the Canadian Federation of Independent Business said the outlook for small- and medium-sized enterprises in Canada right now is bleak. Some CFIB members were in tears on a conference call yesterday — and the results of a new survey of business owners show why.
“A third of small business owners said that if sales dropped significantly they would be able to hang on for less than a month before the business is permanently closed,” said Kelly, adding that CFIB defines a “significant” drop as less than 50 per cent.
“A third of small businesses have said that their income has dropped by 75 per cent or more, with a fairly large number saying that their business income has dropped to zero. And that was before Ontario and Quebec took additional steps to close another swath of the business community.”
A drop in the bucket
The government of Canada has offered businesses a 10 per cent wage subsidy, up to a maximum of $25,000 per company, to help them retain their employees.
Kelly calls that sum “a drop in the bucket of what is absolutely necessary right now, and certainly a fraction of what is happening in Western Europe.”
“That wage subsidy doesn’t even really cover the cost of the payroll taxes of Employment Insurance and CPP at this time,” he added. “Similar programs in England, Denmark and elsewhere in Western Europe subsidize employers that are able to keep their staff on to 75 per cent, 80 per cent, even 90 per cent of their wages. That’s the kind of approach Canada desperately needs.”
In Britain, employers can receive up to 80 per cent of the cost of wages for any employee they keep on, up to a maximum of £2500 per month (Cdn$4250).
Carolyn Fairbairn, head of the Confederation of British Industry, welcomed the move as “the start of the U.K’.s economic fightback — an unparalleled joint effort by enterprise and government to help our country emerge from this crisis with the minimum possible damage.”
Ireland today also announced a wage subsidy of up to 70 per cent. Kelly says Canada should follow the European example.
“One of the reasons we like the wage subsidy approach that’s being used in Europe is that the employee doesn’t lose their job,” he said. “Their pay also will come to them an awful lot more quickly.
“Employees need these dollars today. If we keep the employer-employee relationship intact, the employer can then keep the money funnelled to the employee, and the employee won’t have the stress of losing their job.”
Not all businesses can get the subsidy
Many Canadian business owners find the 10 per cent subsidy insufficient — while some have been dismayed to learn that they’re barred from receiving it.
The published guidelines say only companies that are incorporated can apply to have their payrolls subsidized. Toronto tax advisor Gerry Campbell says of the roughly 500 small businesses he has as clients, only about 50 are corporations.
The same is true of his own business, which is a sole proprietorship.
“Most small businesses in this country are not incorporated. When announced by [Canada Revenue Agency], I was willing to support our staff to continue to receive their wages — we are working in two groups each doing 14 days on and 14 days off — during this COVID-19 epidemic.
“Today, as a result of no subsidy, I am looking to lay 11 of my 13 employees off, effective end of next week, if there is no financial help for sole proprietorships.”
I learned two things today. 1. My law firm is deemed an essential service. 2. My business does not qualify for the government’s 10% wage subsidy because I am not a corporation. With all due respect, that is bullshit. People > Corporations <a href=”https://t.co/Wa50OCWZhD”>pic.twitter.com/Wa50OCWZhD</a>
On Tuesday, Prime Minister Justin Trudeau acknowledged the desperate situation some businesses now find themselves in. “Small businesses are temporarily closing up shop,” he said. “Hotels and restaurants can no longer accept guests. Some people are not getting paid. Others are worried about their job.”
When asked why he chose to put payments through the EI system, or through the parallel Emergency Support Program, Trudeau said his government felt impelled to act quickly to forestall an economic implosion.
“When you’re trying to help get money out to people, speed is of the essence, especially in an unprecedented situation like this one,” he said.
But the union that represents Service Canada workers is warning of lengthy backlogs in processing nearly 930,000 new claims that entered the EI system in one unprecedented week.
And economists question whether using the EI system actually would be as fast as, or faster than, simply helping employers to make payroll.
Pedro Antunes, chief economist of the Conference Board of Canada, said he hopes the government will make changes to the system in its next wave of pandemic measures.
“The government has talked about phase one in terms of this first set of measures at the federal level. We may have another phase where we see more of an approach where we try to get away from it being the government that transfers the money, to motivating employers to keep their staff and keep paying them through their own payroll,” he said.
“We’ll see how that evolves, but I think we’re probably going to see more before this is over.”
Trust is an issue
One problem small businesses face in making their case is that big businesses have already squandered a lot of public trust by misdirecting public subsidies in the past.
The 2008-2009 financial crisis produced many stories of big corporations using taxpayer bailouts not to preserve jobs, but to buy back stock or line the pockets of executives and shareholders.
Canada also has examples like Bombardier, which in 2017 gave over US$32 million in bonuses to half a dozen senior executives after receiving billions in loans from the federal and Quebec governments, and after announcing that it would lay off 14,000 workers.
“Here’s a company that basically went begging to the province and the federal government for money, saying that if you don’t give us all this money, we’re going to lay off all these workers,” David Baskin, president of Bay Street investment firm Baskin Wealth Management, told CBC News.
The executives’ behaviour embarrassed the very politicians who had signed off on the bailouts. Quebec Finance Minister Carlos Leitao declared himself “shocked.” Bombardier’s top brass ended up having to defer the bonuses to 2020.
A risk of fraud
In order to avoid that kind of situation, some European economists have argued that wage subsidy plans there will need tight controls to prove that the money is actually going to payroll. There is a risk of fraud — of small business owners creating “ghost” employees, or simply pocketing the money and laying people off anyway.
But the government of Canada has made it clear that it is not overly concerned about fraud in EI claims at the moment, and most economists agree that speed is more important than tight accounting controls right now.
“That’s the kind of approach Canada desperately needs,” said Kelly.
“I think if the government does that as a temporary measure, it will in fact be temporary. What worries me is that the only option that employers right now have is to lay off staff, and once those employees are put on Employment Insurance, a good chunk of those employees are not going to come back or are going to come back to employers really slowly, as we try to put the puzzle back together.”
An Internship Can Lay the Foundation for a Great Career
With 2022 “graduation season” behind us, I’d be remiss if I didn’t offer some advice on how an internship (“co-op” back in the day) provides an opportunity to gain transferrable skills and experience, and start building your professional network and kickstart your career.
An internship is so much more than memorizing coffee orders. Your internship experiences—I recommend doing several—can be immensely valuable, offering you a chance to build skills to showcase on your resume and LinkedIn profile and, most importantly, establish professional relationships with professionals in the industry you aspire to become a part of.
As an intern, your goals are:
- Learn what you want and need to know. (TIP: Create a list of what you want to gain from your internship. On your first day, share your list with the person coaching you.)
- Make a positive impression. (Make a strong enough impression, and—fingers-crossed—you’ll likely receive a job offer.)
- Begin building your professional network.
Creating a great impression starts with being relentlessly punctual. Woody Allen said it best, “Eighty percent of success is showing up.” Show up on time, or better yet early. Arrive for meetings before they begin. Complete tasks by their deadlines. Employers value reliable employees. Internships are usually 3 – 4 months long, so give your internship no less than 100%.
“Every job is a self-portrait of the person who did it. Autograph your work with excellence.” – Ted Key, American cartoonist
Take on every task and assignment you’re given with an unwavering commitment to excellence. It’s never beneath you to do what’s asked of you. If you’re asked to make coffee, make the best coffee your colleagues have ever tasted. If asked to create an Excel template, put extra effort into ensuring it’s accurate, aesthetically pleasing, and comprehensive. Continually delivering exceptional results is how you create a reputation (READ: Personal brand) that advances your career forward.
Act when you see a need. (e.g., sign for a package and deliver it directly to the recipient, offer to cover reception during lunch) Don’t wait to be told. Checking your Instagram account while waiting to be given something to do is never a good look. Interns who never sat idle and proactively sought out where they could be of help, or pitched in without being asked, are the ones I remember. Deliver more than expected, do what no one else is willing to do, and you’ll be appreciated and remembered.
As an intern, it’s expected you’ll ask questions… lots of questions.
Asking good questions is the sign of an intellectually curious, diligent person, which is a turn-on. Think—in advance—of questions to ask. Spend time formulating your questions. When meeting with a peer or superior, think of thoughtful questions you can ask to demonstrate you have prepared for the meeting. If you’re in a meeting with management, don’t focus on your answers but on what’s missing. With me, asking the questions no one else is asking (e.g., “How does A relate to B?”, “How has the company dealt with these issues in the past?”) earns lots of points. Elephant-in-the-room questions often steer a group’s thinking and conversation in a more productive direction—this is how you become an influencer.
TIP: When you hear someone ask a great, conversation-altering question, write it down and reflect on what made it great.
Ask at least one authentic question in every meeting you attend. By following this advice, you’ll become comfortable asking questions in a group setting, hone your ability to ask questions that lead to real insight, and reveal your intellectual curiosity.
The most valuable benefit of an internship is it offers the ideal setting to establish professional relationships you can leverage throughout your career, whether job hunting or seeking advice. Since internships don’t last long, interns tend to focus solely on their work and only form connections with their immediate colleagues and fellow interns. Don’t be that intern! Cultivate as many professional relationships throughout the company as possible.
Don’t be shy to introduce yourself to Senior Managers, Directors, and VPs—they were once in your shoes. Invite colleagues whom you notice management hold in high regard to lunch. Ask them questions. (Who doesn’t like to talk about themselves and their successes?) Offer to help where you can.
TIP: Observe great relationship-builders and learn from them. I recommend reading The Connector’s Way: A Story About Building Business One Relationship at a Time, by Patrick Galvin.
An internship is hard work that’ll pay off. Only doing what’s expected of you won’t get you noticed; you’ll be just another intern. Go above and beyond, from arriving on time to doing exemplary work (Yes, that includes getting coffee orders right.) and maximizing your internship opportunities.
Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers advice on searching for a job. You can send Nick your questions at email@example.com.
Russia To Take Over Whole Sakhalin-2 Project – OilPrice.com
A newly set up state Russian company will take over the rights and obligations of Sakhalin Energy Investment Co., the joint venture running the Sakhalin-2 oil and gas project, Reuters reported today.
This could mean a forced exit from the project for Shell and Japan’s Mitsui and Mitsubishi, which are minority shareholders in Sakhalin Energy Investment Co.
Shell already said it would leave the project a few months ago and has since then been looking for buyers for its stake in Sakhalin-2. According to earlier reports, a sale could be made to a group of Indian companies.
The Japanese companies, however, have not announced intentions to leave the project. In fact, earlier this year, Japan’s economy, trade and industry minister, Koichi Hagiuda, said that the Sakhalin-1 and Sakhalin-2 projects “are essentially important for energy security because the projects allow Japan to procure supplies below the market price, especially amid current high energy prices.”
Despite its participation in Western sanctions against Russia, Japan continues to buy liquefied natural gas from Sakhalin-2. Although it has stated its intention to step up the intake from alternative sources, a complete suspension of Russian energy imports seems unlikely at this point.
Japan has also signaled it had no intention of leaving the energy projects in Russia that it participates in, but following the latest news, it might be forced to do so.
Reuters noted in its report that Mitsubishi was discussing the presidential decree that contained the ownership change with its partners in Sakhalin-2.
The project, per Reuters, accounts for 4 percent of the global annual supply of liquefied natural gas. Its main buyers are Japan—until recently the world’s biggest LNG importer—as well as China and South Korea, which also buy oil from the Sakhalin-2 development.
According to some analysts, the exit of the Western and Asian partners will eventually lead to tighter LNG supply due to the lack of expertise and parts. At the same time, selling the gas would become harder because of the state’s control of the project, Saul Kavonic from Credit Suisse told Reuters.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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Gold prices remain down but making a move back to $1800 as ISM manufacturing PMI falls to 53 – Kitco NEWS
(Kitco News) – The gold market continues to push back towards $1,800 an ounce as the U.S. manufacturing sector sees weaker than expected growth in June, the Institute for Supply Management (ISM).
Friday, the ISM said that its manufacturing Purchasing Managers Index dropped to a reading of 53%, down from May’s reading of 56.1. The data missed expectations as economists were looking for a decline to 54.6%.
The report said this is the lowest PMI reading since June 2020.
““The U.S. manufacturing sector continues to be powered — though less so in June — by demand while held back by supply chain constraints,” said Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, in the report.
The gold market has been seeing solid technical selling pressure after falling through $1,800 an ounce in overnight action; however, the disappointing economic data from the U.S. is helping the precious metal retrace some of its losses. August gold futures last traded at $1,795.70 an ounce, down 0.64% on the day.
Looking at some of the components of the index, the report said that the New Orders Index dropped to 49.2%, down from the previous level of 55.1%. At the same time, the Production Index increased o a reading of 54.9%, down from May’s reading of 54.2%.
The report also highlighted a further contraction in in the labor market. The Employment Index dropped to a reading of 47.3%, down from May’s reading of 49.6%.
It’s not just manufacturing that is losing momentum. The report highlighted a drop in inflation pressures, which could be seen as a negative for gold. The report said that the Prices Index fell to 78.5%, down from May’s reading of 82.2%.
Although the latest disappointing economic data raises the risk that the U.S. economy falls into a recession; however, Andrew Hunter, Senior U.S. Economist at Capital Economics, said that the U.S. economy has room to slow without triggering a recession.
“While the ISM index lends support to concerns that aggressive Fed tightening will drive a sharp slowdown in the economy, the details suggest that slowdown could result in a faster drop-back in inflation than many are now assuming,” he said.
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