Unemployment claims reach nearly one million as businesses battered by coronavirus pandemic

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Nearly one million Canadians applied for unemployment benefits since the beginning of last week as sweeping business shutdowns related to COVID-19 deliver an unprecedented blow to the country’s work force.

A source familiar with the data confirmed that the government received an estimated 929,000 Employment Insurance claims from March 16 to 22 – a week in which a dramatic escalation of social-isolation requirements across the country forced many businesses to sharply curtail their operations or shut down entirely. The Globe and Mail is not identifying the source because they were not authorized to share the information.

Those EI filings represent about 5 per cent of all employees in the country – and imply that the national unemployment rate may have nearly doubled. The layoffs could surge again as the country’s two most populous provinces, Ontario and Quebec, institute new rules requiring businesses deemed non-essential to close as of midnight Tuesday.

“It’s unprecedented in terms of the scale,” University of Calgary economics professor Trevor Tombe said. He noted that in the worst month of the Great Depression, the biggest job declines were about half of what the country has suffered in the past week.

In Ottawa, MPs gathered to debate an emergency economic aid plan that would provide billions of dollars to help businesses and displaced workers weather the shutdowns forced by COVID-19 and the efforts to contain the spread of the disease.

“We recognize that the demand is massive across the country,” Prime Minister Justin Trudeau said in his daily news conference on Tuesday morning. “We are working very, very hard to be able to flow money to people very rapidly.”

To help with the heavy volume of EI claims, the Department of Employment and Social Development is “actively hiring” additional staff, said Jessica Eritou, a spokesperson for the office of Minister of Families, Children and Social Development Ahmed Hussen.

She added that the department is also moving employees from other areas of the department to work on EI applications. “For example, we have closed our Passport Canada offices to redeploy our staff to help respond to increased demand,” she said.

The EI figures are early evidence of just how severely the Canadian economy is slowing in response to the pandemic. On Monday, Canadian Imperial Bank of Commerce forecast that the economy would contract by more than 18 per cent annualized in the second quarter of the year – roughly double the hit in the worst quarter of the 2008-09 Great Recession. On Tuesday, U.K.-based Capital Economics released an even more dire prediction for Canada: a 35-per-cent annualized pace of contraction in the second quarter.

Small and medium-sized businesses have been increasing pressure on Ottawa to immediately expand coronavirus relief measures. Seventy-one per cent of small companies surveyed in recent days by the Canadian Federation of Independent Business said they fear closing within the next three months.

Thousands of entrepreneurs are asking the federal government to boost wage supports to 80 per cent to keep staff in place to speed up economic recovery when social-distancing measures are lifted. Online small-business lenders, meanwhile, are offering to let Ottawa use their services to more quickly disburse loans than the Business Development Bank of Canada (BDC), which has been charged with distributing much of Ottawa’s $10-billion Business Credit Availability Program (BCAP).

A BDC spokesman said the organization is considering expanding its relief-program eligibility criteria. Export Development Canada, which is also disbursing some of Ottawa’s $10-billion BCAP funding, said on Tuesday that it would offer a guarantee on bank loans of up to $5-million for exporters while expanding credit insurance coverage and waiting periods.

A group called Save Small Business is using its website to track entrepreneurs’ struggles to collect revenue and pay workers and bills – with 8,000 of them asking for significant changes to aid. The group has sent a letter to Finance Minister Bill Morneau and Small Business Minister Mary Ng asking them to enact a program similar to assistance plans in Denmark and Britain by boosting wage subsidies to 80 per cent; waiving utility bills and the first $10,000 of commercial leases for the next three months; delaying sales-tax collection and provincial employer-health tax; and pushing credit-card companies to waive some interest.

The government’s current plan, with its focus on loans, would only prolong the woes of entrepreneurs facing the harsh consequences of social distancing, said Jon Shell, managing partner of Social Capital Partners and one of the letter’s lead authors.

“They’ll be facing bills that will take them years to pay off, if at all,” he said.

Nicole Smith, founder of vacation-photo-booking platform Flytographer in Victoria, has had to lay off a third of her 18 staff. She’s among many entrepreneurs calling on Ottawa to focus instead on wage support. “It’s easy to implement, encourages consumers and businesses to keep spending, and helps us keep our highly skilled talent,” Ms. Smith said.

The Prime Minister said that “nothing is off the table" for delivering more help to workers and business owners, adding that his government would announce further supports “in the coming days.”

“I never viewed their initial announcement as the end of it – it was just the first step," Prof. Tombe said. "I think we ought to give them some space to think about and roll out these plans.”

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