Economic and Social Reports
Use of the Canada Emergency Wage Subsidy program by employer businesses in 2020

Release date: June 23, 2021

DOI: https://doi.org/10.25318/36280001202100600006-eng

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Abstract

This Insights article presents information on how employer businesses used the Canada Emergency Wage Subsidy (CEWS) from April to October 2020. The analysis shows that employers’ use of the program varied by industry and business employment size. Businesses’ CEWS uptake rate was highest in the industries that experienced the largest declines in employment, such as the arts, entertainment and recreation industry, and the accommodation and food services industry. The uptake rate was highest among businesses with 10 to 49 employees, which recorded the sharpest employment losses. It was lowest among businesses with 1 to 9 employees, which experienced the smallest employment loss. CEWS recipients (businesses that received support from CEWS) were larger on average before the COVID-19 pandemic and experienced a greater employment decline than active non-recipients (businesses that did not apply for CEWS).

Authors

Huju Liu and Michael Willox are with the Economic Analysis Division, and Yuqian Lu is with Social Analysis and Modeling Division, Analytical Studies Branch, at Statistics Canada.

Introduction

The purpose of this article is to provide information on how employer businessesNote  have used the Government of Canada’s Canada Emergency Wage Subsidy (CEWS) program, how use differed by industry and business size, and the characteristics of businesses that have used CEWS. This information can help Canadians better understand the impact of the COVID-19 pandemic on Canadian businesses and how they used government financial support.

The CEWS program plays an important role in the federal government’s COVID-19 Economic Response Plan, which was introduced in mid-March 2020 in response to the economic fallout from the COVID-19 pandemic. The CEWS program accounted for $83.5 billion, or 37%, of the plan’s estimated total spending for the 2020/2021 fiscal year (Department of Finance Canada 2020). Smaller programs such as the Canada Emergency Business Account and Canada Emergency Commercial Rent Assistance were also designed to support businesses. They represented 6% and 1%, respectively, of total spending in the plan for the same fiscal year. The objective of the CEWS program is to provide a wage subsidy to eligible employers so they can avoid layoffs and terminations by keeping employees on their payrolls and rehire employees who have already been laid off or furloughed.Note  The program initially supported employers with a subsidy covering 75% of eligible employees’ wages for businesses that experienced a significant decline in gross monthly revenue.Note  As a result, employer businesses’ use of CEWS is intrinsically related to the pandemic’s economic impact.Note 

The analysis presented in this article uses recipient information collected from the CEWS program from April to October 2020. This was then linked with Statistics Canada’s near-real-time monthly payroll administrative data, which cover all employers in Canada. Using this linkage, this article analyzes businesses’ CEWS uptake by industry and business size (i.e., which industry or size category was more likely to receive support from CEWS), differentiates between businesses that received support from CEWS and those that did not, and tracks businesses over time to compare employment before and during the early stages of the pandemic. The analysis shows that businesses that used the CEWS program were typically in the industries and size categories that suffered the most significant job losses, and the businesses that used CEWS were larger on average before the pandemic and experienced a greater decline in employment than businesses that did not use CEWS.

The analysis herein can complement other published statistics that mainly focus on businesses that received support from CEWS—for example, detailed data on CEWS claims by province or territory, industry, and size (Canada Revenue Agency, n.d.), and the CEWS regional and community-level database (Statistics Canada 2021). It can also complement other published survey-based statistics such as those from the Canadian Survey on Business Conditions, in which businesses were asked whether they received financial support from CEWS, along with other government programs.

The linked Canada Emergency Wage Subsidy and monthly payroll dataset

The data used for this analysis include information for almost 360,000 employer businesses that received financial support from CEWS from April to October 2020.Note  The CEWS program data contain the number of eligible employees, the total CEWS claim amount, and information on whether one or more employees were retroactively rehired during the application period, among others. However, the CEWS data do not include information about businesses prior to the pandemic. To be able to follow businesses over time before and during the pandemic and compare the characteristics of businesses that received support from CEWS with those of businesses that did not, the CEWS data were linked to Statistics Canada’s monthly payroll data.Note  The payroll data used in this analysis include monthly information on the number of employees for every employer business in Canada from April 2019 to October 2020. The seven-month period during which the datasets overlap (April to October 2020) enables recipient businesses in the CEWS data to be identified in the payroll data going back to April 2019, 12 months before the onset of the pandemic in Canada. Linking these two datasets means recipient and non-recipient employer businesses can be compared for up to 12 months before and 7 months after the onset of the pandemic in Canada (the pre-pandemic and the early pandemic periods, respectively).

In addition to the business characteristics such as employment and industry that are available from the payroll data, the linked dataset enables three types of businesses to be identified based on their activity status during the early pandemic period: (1) CEWS non-recipients, which are active businesses that had employees on their payroll during the pre-pandemic and early pandemic periods but did not receive support from CEWS from April to October 2020;Note  (2) CEWS recipients, which are active businesses that had employees on their payroll during the pre-pandemic and early pandemic periods and received support from CEWS during the period of April to October 2020; and (3) inactive businesses, which are businesses that had workers on their payroll before the pandemic but did not have any workers on their payroll during the seven-month early pandemic period. Inactive businesses were ineligible for CEWS and therefore were not included in the following analysis on CEWS use.Note 

To better understand businesses’ CEWS use, three measures are defined. The first is the CEWS uptake rate, which is calculated by dividing the number of CEWS recipient businesses by the number of active businesses (recipients plus non-recipients). The second measure is the CEWS replacement rate, which is calculated by dividing the total number of employees eligible for CEWS by the pre-pandemic employment among CEWS recipients only.Note  The CEWS replacement rate therefore shows the CEWS employee coverage rate among CEWS recipients, compared with their pre-pandemic employment level. The third measure is the rehiring rate among CEWS recipients, which is defined as the number of CEWS recipient businesses that rehired at least one employee for at least one CEWS application period divided by the total number of CEWS recipients.

Canada Emergency Wage Subsidy use by industry

Among active businesses, the CEWS uptake rate was about 36% across all industries (Chart 1). However, it varied across industries, with the highest rates recorded in accommodation and food services (66%); arts, entertainment and recreation (56%); and manufacturing (55%). The lowest rates were found in utilities (17%); agriculture, forestry, fishing and hunting (18%); and finance and insurance (19%).

Chart 1 Canada Emergency Wage Subsidy uptake and replacement rates by industry

Data table for Chart 1 
Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1. The information is grouped by Industry (appearing as row headers), CEWS uptake rate , CEWS replacement rate and Change in total employment, calculated using percent units of measure (appearing as column headers).
Industry CEWS uptake rate CEWS replacement rate Change in total employment
percent
Agriculture, forestry, fishing and hunting 18 95 5
Mining, quarrying and oil and gas extraction 36 80 -10
Utilities 17 85 -3
Construction 36 86 -6
Manufacturing 55 84 -8
Wholesale trade 48 85 -7
Retail trade 39 71 -11
Transportation and warehousing 23 78 -7
Information and cultural industries 42 82 -7
Finance and insurance 19 80 -4
Real estate and rental and leasing 20 72 -11
Professional, scientific and technical services 33 89 -4
Management of companies and enterprises 24 73 1
Administrative and support, waste management and remediation services 34 73 -12
Educational services 47 63 -14
Health care and social assistance 38 65 -5
Arts, entertainment and recreation 56 52 -36
Accommodation and food services 66 64 -31
Other services (except public administration) 36 76 -14
All industries 36 75 -10

This variation in uptake rate across industries is strongly related to industry-level employment changes from the pre-pandemic period to the early pandemic period.Note  For example, the utilities industry, which had the lowest uptake rate, experienced a modest decline of 3% from its pre-pandemic employment. The agriculture, forestry, fishing and hunting industry had the second-lowest uptake rate, and its employment experienced a 5% gain. In contrast, the arts, entertainment and recreation industry and the accommodation and food services industry had the largest declines in employment from their pre-pandemic levels, of 36% and 31%, respectively.Note 

Among CEWS recipient businesses, the replacement rate was 75% across all industries, suggesting that this proportion of pre-pandemic employment was covered by CEWS (Chart 1).Note  However, like the uptake rate, it varied widely among industries, reflecting employment changes among CEWS recipients between the two periods.Note  For example, CEWS recipients had the lowest replacement rate in the arts, entertainment and recreation industry (52%) and the accommodation and food services industry (64%). At the same time, CEWS recipients in these two industries experienced the largest declines in employment between the two periods, of 39% and 33%, respectively.

How did CEWS recipients differ from non-recipients? On average, CEWS recipients were larger than non-recipient businesses before the pandemic (Table 1). During the pre-pandemic period (April 2019 to March 2020), average monthly employment was 20.5 for CEWS recipients and 15.1 for non-recipients. This is also true across most industries. In the arts, entertainment and recreation industry and the accommodation and food services industry, CEWS recipients were about three times as large as non-recipient active businesses before the pandemic. A few exceptions include utilities, finance and insurance, educational services, and health care and social assistance. Some of these industries—such as utilities, educational services, and health care and social assistance—are usually dominated by large public institutions, which are not eligible for the subsidy.

Moreover, CEWS recipients experienced a decline in employment from the pre-pandemic period (April 2019 to March 2020) to the early pandemic period (April to October 2020) across almost all industries, while non-recipient active businesses experienced a smaller decline or positive growth (Table 1). On average, across all businesses, CEWS recipients experienced a decline in average monthly employment of 6.9%, while non-recipient active businesses experienced growth of 1.4%. In the hard-hit accommodation and food services industry, CEWS recipients experienced a large decline of 23.8%; non-recipient active businesses experienced a decline of 11.5%. The only industries where CEWS recipients experienced employment growth were agriculture, forestry, fishing and hunting; utilities; construction; and professional, scientific and technical services.


Table 1
Characteristics of Canada Emergency Wage Subsidy recipients and non-recipients by industry
Table summary
This table displays the results of Characteristics of Canada Emergency Wage Subsidy recipients and non-recipients by industry . The information is grouped by Industry (appearing as row headers), Non-recipients and Canada Emergency Wage Subsidy recipients (appearing as column headers).
Industry Non-recipients Canada Emergency Wage Subsidy recipients
Average monthly employment (April 2019 to March 2020) Percentage change in average monthly employment (from the period from April 2019 to March 2020 to the period from April to October 2020) Average monthly employment (April 2019 to March 2020) Percentage change in average monthly employment (from the period from April 2019 to March 2020 to the period from April to October 2020)
Agriculture, forestry, fishing and hunting 4.8 8.1 10.5 9.0
Mining, quarrying, and oil and gas extraction 15.7 4.1 64.4 -8.0
Utilities 180.4 4.1 26.6 7.0
Construction 5.2 3.7 14.2 0.0
Manufacturing 27.1 1.6 43.3 -7.0
Wholesale trade 14.9 0.6 25.2 -6.0
Retail trade 18.7 -2.1 24.9 -11.0
Transportation and warehousing 10.1 1.2 26.1 -5.0
Information and cultural industries 26.1 4.4 43.8 -2.0
Finance and insurance 36.4 4.0 17.7 -1.0
Real estate and rental and leasing 4.8 2.5 14.7 -5.0
Professional, scientific and technical services 6.9 2.1 11.4 1.0
Management of companies and enterprises 51.7 5.2 72.1 -7.0
Administrative and support, waste management and remediation services 15.1 4.6 28.1 -5.0
Educational services 189.8 -5.3 19.5 -13.0
Health care and social assistance 22.8 -1.8 13.0 -9.0
Arts, entertainment and recreation 8.3 -1.1 27.7 -12.0
Accommodation and food services 9.9 -11.5 26.5 -24.0
Other services (except public administration) 5.4 -1.6 10.3 -8.0
All industries 15.1 1.4 20.5 -6.9

Canada Emergency Wage Subsidy use by business size

Some distinct patterns in use rates also appear when businesses are distinguished by employment size (as measured by average monthly employment in the pre-pandemic period). The CEWS uptake rate is not monotonic with employment size (Chart 2). It was highest among businesses with 10 to 49 employees, at 62%, and lowest among businesses with fewer than 10 employees, at 29%. However, among businesses with more than 10 employees, the uptake rate decreased with employment size.

This pattern is generally consistent with employment changes from the pre-pandemic period to the early pandemic period across employment size groups.Note  For example, among businesses with fewer than 10 employees, where the uptake rate was the lowest, employment experienced the smallest decline (5%). In contrast, employment experienced the largest decline (15%) among businesses with 10 to 49 employees, accompanying the highest uptake rate. Among businesses with more than 10 employees, the decline in employment became smaller as employment size increased.

Among CEWS recipients, the replacement rate decreased with employment size. While the uptake rate was lowest among businesses with fewer than 10 employees, the replacement rate was 92% for CEWS recipients in this size group. This means that 92% of pre-pandemic employment was covered by CEWS. The replacement rate was lowest among the largest employers (those with more than 500 employees), at 68%. This pattern partly reflects the greater decline in employment experienced by larger CEWS recipient businesses between the two periods.Note 

Chart 2 Canada Emergency Wage Subsidy uptake and replacement rates by employment size

Data table for Chart 2 
Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2. The information is grouped by Size (appearing as row headers), CEWS uptake rate (%, left), CEWS replacement rate (%, left) and Change in total employment (%, right), calculated using percent units of measure (appearing as column headers).
Size CEWS uptake rate (%, left) CEWS replacement rate (%, left) Change in total employment (%, right)
percent
1 to 9 employees 29 92 -5
10 to 49 employees 62 76 -15
50 to 99 employees 60 74 -14
100 to 499 employees 54 75 -12
500 or more employees 41 68 -8
All sizes 36 75 -10

Table 2
Characteristics of Canada Emergency Wage Subsidy recipients and non-recipients by employment size
Table summary
This table displays the results of Characteristics of Canada Emergency Wage Subsidy recipients and non-recipients by employment size. The information is grouped by Employment size
(April 2019 to March 2020) (appearing as row headers), Non-recipients and Canada Emergency Wage Subsidy recipients (appearing as column headers).
Employment size
(April 2019 to March 2020)
Non-recipients Canada Emergency Wage Subsidy recipients
Average monthly employment (April 2019 to March 2020) Percentage change in average monthly employment (from the period from April 2019 to March 2020 to the period from April to October 2020) Average monthly employment (April 2019 to March 2020) Percentage change in average monthly employment (from the period from April 2019 to March 2020 to the period from April to October 2020)
1 to 9 employees 2.6 2.4 4.1 -1.1
10 to 49 employees 20.2 -6.9 20.9 -17.7
50 to 99 employees 69.4 -3.5 68.4 -20.4
100 to 499 employees 196.8 -4.1 189.4 -19.2
500 or more employees 2,915.0 -6.2 1,607.2 -19.9

Unlike the differences observed by industry, CEWS recipients did not differ much from active non-recipients in terms of pre-pandemic employment within the same size group, except for the largest size group (Table 2). In this group, CEWS recipients were significantly smaller than non-recipients before the pandemic, with 1,607 employees versus 2,915 employees. However, CEWS recipients experienced a larger decline in employment between the two periods than non-recipients across all size groups, and the decline was smallest in the smallest size group.

Rehiring rates among Canada Emergency Wage Subsidy recipients by industry

One of CEWS’s objectives is to encourage recipients to rehire employees who have been laid off or furloughed. The rehiring rate, or the share of businesses among CEWS recipients that rehired at least one employee for at least one application period from April to October 2020, was 23%.Note  Like uptake rates, rehiring rates exhibit a strong negative relationship with changes in employment among CEWS recipients across industries (Chart 3).Note  For example, the industries with the highest rehiring rates include accommodation and food services (37%); educational services (27%); and arts, entertainment and recreation (25%). CEWS recipients in these three industries also had the largest declines in employment from the pre-pandemic period to the early pandemic period, of 33%, 24% and 39%, respectively.

Chart 3 Rehiring rates and changes in employment among Canada Emergency Wage Subsidy recipients by industry

Data table for Chart 3 
Data table for Chart 3
Table summary
This table displays the results of Data table for Chart 3. The information is grouped by Industry (appearing as row headers), CEWS rehiring rate and Change in total employment among CEWS recipients , calculated using percent units of measure (appearing as column headers).
Industry CEWS rehiring rate Change in total employment among CEWS recipients
percent
Agriculture, forestry, fishing and hunting 11 3
Mining, quarrying and oil and gas extraction 17 -14
Utilities 7 -5
Construction 21 -9
Manufacturing 25 -11
Wholesale trade 21 -10
Retail trade 26 -20
Transportation and warehousing 18 -16
Information and cultural industries 17 -12
Finance and insurance 12 -13
Real estate and rental and leasing 17 -20
Professional, scientific and technical services 14 -8
Management of companies and enterprises 16 -19
Administrative and support, waste management and remediation services 22 -18
Educational services 27 -24
Health care and social assistance 24 -14
Arts, entertainment and recreation 25 -39
Accommodation and food services 37 -33
Other services (except public administration) 22 -19
All industries 23 -18

The CEWS recipients that rehired employees were larger before the pandemic on average than those that did not rehire employees, with 24.1 employees versus 19.5 (Table 3). This is also true across almost all industries. However, rehiring CEWS recipients experienced a larger decline in average monthly employment than non-rehiring CEWS recipients, across almost all industries. Across all industries, average monthly employment declined by 11.5% for rehiring CEWS recipients, compared with 5.5% for non-rehiring CEWS recipients.


Table 3
Characteristics of rehiring and non-rehiring Canada Emergency Wage Subsidy recipients by industry
Table summary
This table displays the results of Characteristics of rehiring and non-rehiring Canada Emergency Wage Subsidy recipients by industry . The information is grouped by Industry (appearing as row headers), Canada Emergency Wage Subsidy recipients, Non-rehiring and Rehiring (appearing as column headers).
Industry Canada Emergency Wage Subsidy recipients
Non-rehiring Rehiring
Average monthly employment (April 2019 to March 2020) Percentage change in average monthly employment (from the period from April 2019 to March 2020 to the period from April to October 2020) Average monthly employment (April 2019 to March 2020) Percentage change in average monthly employment (from the period from April 2019 to March 2020 to the period from April to October 2020)
Agriculture, forestry, fishing and hunting 10.3 9.1 11.7 10.4
Mining, quarrying, and oil and gas extraction 62.9 -6.7 71.6 -13.4
Utilities 26.6 8.3 26.8 -8.2
Construction 13.9 0.8 15.2 -1.5
Manufacturing 42.9 -5.9 44.6 -9.7
Wholesale trade 24.6 -5.3 27.4 -9.9
Retail trade 25.2 -9.7 24.0 -12.9
Transportation and warehousing 20.7 -4.3 50.8 -7.8
Information and cultural industries 44.2 -0.1 42.2 -10.1
Finance and insurance 16.5 0.2 26.6 -5.9
Real estate and rental and leasing 13.7 -4.0 19.8 -8.2
Professional, scientific and technical services 11.0 1.2 13.8 -1.7
Management of companies and enterprises 67.5 -6.6 96.7 -9.2
Administrative and support, waste management and remediation services 28.0 -3.9 28.6 -8.2
Educational services 19.1 -11.4 20.5 -17.1
Health care and social assistance 12.7 -7.5 13.8 -12.4
Arts, entertainment and recreation 22.1 -10.8 44.5 -16.6
Accommodation and food services 25.1 -23.1 28.8 -24.9
Other services (except public administration) 9.7 -7.1 12.5 -10.7
All industries 19.5 -5.5 24.1 -11.5

Conclusion

This article presented information about employer businesses’ use of the Canada Emergency Wage Subsidy (CEWS) program during the early pandemic period (from April to October 2020). It found that 36% of active employer businesses received support from CEWS during this period overall. However, use varied across industries. It was highest in accommodation and food services (66%); arts, entertainment and recreation (56%); and manufacturing (55%). It was lowest in utilities; agriculture, forestry, fishing and hunting; and finance and insurance.

CEWS use also differed by business size. It was highest among business with 10 to 49 employees (62%) and lowest among business with fewer than 10 employees (29%). These patterns of CEWS use by industry and size are negatively related to employment changes from the pre-pandemic period to the early pandemic period by industry and size.

While the overall uptake rate was relatively low, the replacement rate (i.e., the percentage of pre-pandemic employment among CEWS recipients covered under the CEWS) was high—75% on average across all industries. Among CEWS recipients, 23% rehired at least one employee. It is possible that many employees who were not rehired by CEWS recipients received support from other government programs, such as the Canada Emergency Response Benefit. CEWS recipients that did not rehire any employees may still face a great deal of uncertainty with respect to demand and recovery.

The analysis also showed that CEWS recipients were larger employers on average before the pandemic, and they experienced a larger decline in employment because of the pandemic. Future analysis will be devoted to understanding what business characteristics, in addition to employment and industry—such as productivity, liability, innovation and diversity—are associated with business survival and use of government support, and how government support is helping businesses weather the pandemic.

References

Canada Revenue Agency. n.d. CEWS Claims—Detailed Data. Available at: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-statistics/stats-detailed.html.

Department of Finance Canada. 2020. Supporting Canadians and Fighting COVID-19: Fall Economic Statement 2020.

Statistics Canada. 2021. Canada Emergency Wage Subsidy Regional and Community-level Database. Available at: https://www150.statcan.gc.ca/n1/pub/11-26-0003/112600032021001-eng.htm.

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