Trudeau Wage Plan Fails to Halt Layoff Intentions at Small Firms

(Bloomberg) -- Prime Minister Justin Trudeau’s plan to subsidize wages by 75% provided a slight boost to small business confidence, but the proportion of firms expecting to cut staff still climbed to a record, according to the Canadian Federation of Independent Business.

The CFIB’s business barometer index rose to 37.7 at the beginning of April, according to a flash poll of 1,602 firms, up from an all-time low 30.8 in March. The uptick in confidence follows the federal government’s introduction of a C$71 billion ($51 billion) program to provide pay relief to Canadian employers as an incentive to keep workers on the payroll.

“The small bounce back in business confidence we’ve seen since the beginning of the month is a sign that the raft of unprecedented government intervention has had some effect” Ted Mallett, CFIB’s chief economist, said in a statement.

Still, business optimism remains far below the historical average, and a record 63% of firms expect full-time employment levels to be down over the next few months. Some 500,000 workers already lost their jobs in March, according to the median estimate in a Bloomberg survey of economists. “We’re nowhere near a return to business as usual,” Mallett added.

There are other troubling signs. A quarter of Canada’s small and medium businesses say their firms are not operating at all, while the average capacity utilization is around 35%. Only a quarter of respondents plan to make capital expenditures in the next quarter, also a record.

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