Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic

Project Summary

Background

Globally, the COVID-19 pandemic is causing large-scale loss of life and severe human suffering characterized by financial incapacitation and loss of livelihood. Not surprisingly, this is the largest public health crisis in living memory, with its impacts extending beyond the confines of the healthcare sector (Government of Canada, n.d.). It has led to, among other things, production stoppages, travel restrictions, consumption collapses, and stock exchange crashes caused by uncertainties. Even with the presence of vaccines, nations across the globe are now striving to strike a balance between allowing social activity and business to resume while simultaneously containing a spike in the infection rate. Governments are cognizant of the fact that moving gradually to the reopening phase is a critical step in restoring the economy and helping individuals solve personal finance issues caused by the epidemic. People cannot continue to suffer due to monetary problems, yet they must not be exposed to the risk of contracting the virus. It is a delicate balancing act that has seen several countries lifting lockdowns and easing the COVID-19 protocols. On top of that, major economies in the world are providing their citizens with monthly stipends and other benefits to cushion them from the negative economic effects of the pandemic.

Canada is one of the global economies that has given stimulus payments to its citizens to help them cope with the pandemic. In December 2020, the government announced a stimulus package worth 100 billion Canadian dollars – the largest economic relief package since the Second World War (Ziv, 2020b; BBC News, 2020). The significant spending pushed the country’s debt deficit to 381 billion Canadian dollars by March 2021. The government expects to roll out the payment in phases over three years, and its justification is the loss of over 858,000 jobs due to the ongoing health and economic crisis (Government of Canada, n.d.). Notably, the rate of the current job loss is more than twice the one experienced at the peak of the 2007/2008 financial crisis, implying that Canadians have been hard hit by the pandemic (Government of Canada, n.d.). The government believes that without the stimulus package, it runs the risk of nurturing a lost generation of young people incapable of returning fully into the workforce, even after the pandemic is over (Ziv, 2020a). However, although the stimulus package is well-intentioned, it seems to have significant unintended negative consequences on businesses, especially small enterprises most of whom have lost their employees.

When the government announced the COVID-19 financial assistance program, most individuals in active employment quick their jobs. They saw it better to stay at home and receive free money from the government rather than continue working for their employers for the minimum wage (Zou et al., 2020). Even in cases where employees could make adjustments to work remotely, hence reducing the chances of contracting or spreading the virus, they still preferred to abandon their jobs rather than continue working. It was also difficult for these small-scale employers to find replacements for their employees because they cannot offer better incentives than the government. In this regard, many businesses had to close down due to the absence of sufficient labor (Government of Canada, n.d.). Others tried complete mechanization but the process was either too expensive for them, or it required a significant amount of time to succeed. In the future when the pandemic is over, the owners of these businesses would have to face and confront new challenges, including a lack of enough employees and a laissez-faire attitude cultivated during the pandemic when the government offered monetary aid directly to individuals, removing from them the incentive to work.

Purpose of the Study

The purpose of this study is to examine the impact of the government’s stimulus package on small enterprises. The research will put things into perspective by focusing on the current status of businesses in Newfoundland. The author hypothesizes that small businesses in Newfoundland have suffered significant consequences related to employee turnover due to the stimulus money provided by the government Canadian citizens in the area. Examining this issue is important because it measures the unexpected negative effect of the large stimulus package by the government. Possibly, Canadian citizens can get used to direct payments from the government, and this will prevent many people who can work from doing so. It may also set a negative precedent for the future economy by preventing individuals from going to work and relying instead on the government for financial assistance. Notably, although COVID-19 has led to many job losses, it did not affect all working persons. Many people could remain employed by simply shifting their approach to work or by forming offices at home.

Ideally, the large subsidies should target individuals and businesses who lost productivity due to the virus. Currently, such a targeted approach is impossible because no proper records exist within the government that shows the nature and extent of job losses. Such data may become available only in the future after a comprehensive review of all the effects of COVID-19 in the economy. Another possible shortcoming of targeting only a section of the public rather than the entire population in direct government payments is that it will create a window for corrupt practices. Individuals responsible for the distribution of the stimulus package could have maybe considered close family and friends only rather than those affected by the pandemic. Defining the beneficiaries of the stimulus package as individuals and businesses that lost their livelihoods due to COVID-19 could have also complicated the process and the distribution of the benefits. Thus, targeting the entire population was better as it enhanced fairness, reduced complexities, and eradicated the likelihood of corrupt practices in the dissemination of the benefits.

Scope of the Study

The study’s scope remains limited by both the geographical area and the content. Geographically, this study will be restricted to Newfoundland, Canada’s most easterly province. It was necessary to focus the study on this geographical location for several reasons. First, the author is familiar with the area and can successfully navigate it. Whenever possible, researchers should conduct studies within geographical areas they are familiar with to reduce the associated costs and increase the likelihood of success. Second, many small businesses in Newfoundland have collapsed due to a lack of employees. Some of the workers who were still employed even when the COVID-19 pandemic landed quit their jobs to stay at home ostensibly to reduce exposure to the virus. Others did not see a need to continue working for minimum wages under strict COVID-19 protocols yet the government was providing direct payments to individuals to cushion them from the pandemic. The two issues and other unidentified factors caused small businesses in Newfoundland to lose their production capacity, and are still struggling to date.

Notably, not all the affected Newfoundland businesses had to close. Some successfully innovated within a short period and mechanized as many business processes as possible to reduce dependence on the human workforce. Others, especially those without the financial strength or technical prowess to innovate were forced out of business because large employee turnovers incapacitated them. Therefore, it is expected that even after the pandemic, many small enterprises in Newfoundland and other parts of Canada will struggle to find employees. In this regard, the government may have to allow more immigrants from other parts of the world such as Africa where there are high unemployment rates yet individuals are willing and able to work at the prevailing minimum wage levels. Without a doubt, reviving and sustaining the Canadian economy post-COVID-19 will depend on business operations and continuity. If small businesses cannot get back to providing their essential products and services to the economy, corporations might start failing as well due to the interconnectedness of the economic players. Moreover, a lack of a proper economic plan post-COVID-19 could increase the cost of labor in Canada to unmanageable highs.

The second aspect of this study’s scope relates to its contents. As noted earlier, the focus of the research is the impact of government COVID-19 relief payments on small businesses in Newfoundland. The study’s limited scope and purpose will allow for a more thorough investigation using limited resources including time and money. The author recognizes that although the entire country has suffered due to COVID-19, a single study cannot possibly outline all the sufferings without generalizations. Limiting the geographical and content scope of the research was both necessary and inevitable for various reasons. First, doing so gave the research a realistic aspect because it is impossible and even impractical to attempt to conduct a study with unlimited coverage. As noted, research without a limited scope is expensive, time-consuming, and unnecessary. The researcher had limited time and resources that could only allow them to restrict their research to focus on the effects of the government stimulus package on small businesses in Newfoundland. Second, focusing on a limited scope allows for a thorough treatment of the selected research issue. In this case, it would be easier to provide more details about small businesses in Newfoundland under COVID-19 using the available resources than it would have been possible if the scope was not limited.

Literature Review

COVID-19 has had far-reaching economic ramifications in Canada and throughout the world. Not only did the epidemic lead to massive job losses, but also lead to labor shortages in some parts of the world. A survey module used by von Gaudecker et al. (2020) was administered in late March 2020 to analyze how working hours changed under the social distancing regulations introduced by governments to prevent COVID-19 spread. The authors studied the Netherlands, which they consider a “prototypical Western European country, both in terms of its welfare system and its response to the pandemic” (von Gaudecker et al., 2020, p. 1). The outcomes of the von Gaudecker et al. (2020) examination show that total work hours declined, and more so for self-employed individuals, small businesses, and those with lower educational degrees. In countries such as the United States and Canada, where citizens receive direct stimulus payments, incentives not to work increase, further shortening the work hours. Notably, the social distancing rules imposed by governments around the world forced businesses to innovate and to find other ways of delivering their bottom lines without involving office work.

Estupinan et al. (2021) also conducted a study to estimate the supply shock occasioned by labor reduction under CVID-19. The focus of their study was the Indian economy, which has had a series of COVID-19 containment measures comparable to those used in other parts of the world. Estupinan et al. (2021) tried to understand the impact of the COVID-19 pandemic on the labor market by conducting an in-depth analysis of, among other things, labor supply shocks by occupation, industry, and employment status. Their preliminary assessments showed that the workers most affected by the COVID-19 measures are those who operate in the non-essential sector and could not work from home. Estupinan et al. (2021) identified jobs that could not be done from home by using a novel approach and developed an occupation-based remote labor index. They found that India’s first lockdown affected 116.18 million people and the second lockdown impacted negatively 78.93 million people, representing 25 and 17 percent of the total employed, respectively. In this regard, lockdown had a significant negative impact on jobs in Canada and other parts of the world.

Through the Proceedings of the National Academy of Sciences of the United States of America (PNAS), Bartik et al. (2020) explored COVID-19’s impact on small businesses in the country. They surveyed more than 5,800 small businesses across the United States between March 28 and April 4 2020 and realized several themes. First, Bartik et al. (2020) noted that although small businesses often employ a few individuals, they had already carried out mass layoffs while others had closed. Surprisingly, this was just a few weeks into the crisis. Second, Bartik et al. (2020) remarked that the small business closure risk was directly associated with people’s perception or estimation of the length they expected the crisis to last. The longer the crisis was expected to last, the lesser the closure risk. Notably, in most cases, COVID-19 had the most significant economic impact in the first quarter of 2020. Bartik et al. (2020) also observed that many small businesses operating in the United States are fragile financially. Lastly, and most importantly, with their fragile monetary situation, small businesses hoped for some relief aid from the government (Bartik et al., 2020). The situation in the United States is similar to the Canadian one in that small businesses hoped the government would support them when the pandemic was starting, oblivious to the possible negative consequences of such aid.

COVID-19 relief packages in most parts of the world arrive late in 2020, a time when some sectors of the economy were starting to recover. Therefore, not many studies are dedicated to examining the relationship between COVID-19 relief packages and employers. However, according to Nagele-Piazza (2021), the impact of a stimulus package on employers will depend on that piece of legislation’s nature and content. If the relief package is extensive enough, employers may receive significant payments that help them with the difficult COVID-19 situation. However, it also reduces the employer’s ability to get ready and willing employees. Part of the reason is that government payments to individuals directly reduce a person’s incentive to work (Nagele-Piazza, 2021). Moreover, if the work entails going to an office or workstation, potential employees may decline such opportunities and prefer to stay home to reduce exposure to the coronavirus. Therefore, stimulus packages encourage individuals to stay home by catering to their needs during the epidemic period.

Primary Data Methodology

The author will conduct the proposed study by surveying small businesses in Newfoundland. This quantitative analysis will involve at least 1,000 business owners or representatives found in different parts of the region. The author believes that 1,000 is an ideal number because it is large to offer statistically significant data while remaining small enough for easy and timely completion. Since this is quantitative research, the sample size must be able to capture a more accurate picture of the current situation. Notably, quantitative research aims to generalize the findings back to the population from which the author drew the sample. Such generalizations will offer significant insights into contemporary trends, thereby facilitating decision-making and improvement. In situations where generalization back to the population is ideal, the bigger the data, the more appropriate it is. However, the researcher is also taking sufficient precautions to ensure that they only include data that they can sufficiently handle given their statistical analysis knowledge, experience, and resources. Overwhelming data could lead to poor analysis and less reliable conclusions and recommendations.

The author will recruit 1,000 participants using stratified random sampling to increase the representativeness of the sample. The author will divide the research area into five regions, namely north, east, west, south, and central. After that, the author will identify specific historical counties or cities that fall under these five regions and recruit 200 small business owners or representatives from these. Each region will produce the same amount of representatives to ensure that the findings are significantly representative to allow for generalization back to the population later. The author will identify potential candidates for inclusion in each of the five regions by looking through local business directories and contacting random businesses with requests to participate in a study investigating the impact of government relief on small businesses. Notably, the author defines small businesses as any organization with less than 10,000 Canadian dollars in profit per month. The author will not consider the number of employees in determining the status of the organization as this can be misleading information.

Once the author has identified the 1,000 business owners or representatives that would take part in the business operation, the next step would be preparing a detailed questionnaire with the help of Survey Monkey, an online cloud-based survey development software. The tool will simplify the author’s work because it will allow the author to send the questionnaire to all the selected participants. Additionally, the tool tracks participant replies and conducts initial or preliminary data analysis. Survey Monkey also prepares graphs and tables for the researcher in real-time based on the trickling-in of the replies. Given the social distancing rules that are still in effect in Canada and other parts of the world, an online survey is the most convenient and safe way of collecting data for this research. As such, Survey Monkey is an invaluable addition to the entire process. The author will create a questionnaire that contains three parts, with the first one focusing on the company profile such as name, location, and industry. In the second part, the business representatives will provide information about the company’s history, financial performance, and the number of employees. Finally, the representatives will give their thoughts about the possible impacts of COVID-19 relief measures on small businesses.

The author will ensure uniformity by utilizing only closed-ended questions in the main part of the questionnaire. The author will also consult experienced researchers to seek their opinions about the design of the questionnaire before sending them to the participants. Seeking expert opinion will reduce the likelihood of bias while also catching rookie questionnaire design mistakes. After refining the questionnaires according to the expert suggestions, the author will send them to the identified participants and wait for the results. The researcher expects that the participants will answer the survey within a month. As such, the author will send text or email reminders to participants to answer the questions and help the research move at a fast pace. One of the important considerations regarding the design of the questionnaire is that the researcher will not include any complex or long questions. The questionnaire will not contain more than 40 questions to ensure that the participants are motivated to answer them. If the questions are too many, participants may start postponing the survey due to lacking enough time to respond. As business people or representatives, these participants are likely busy people.

Once the author has collected all the data, they will examine it and contact union leaders, political scientists, and economists for additional opinions about the possible ramifications of government stimulus programs on small businesses. The interaction with these additional ten scientists, political leaders, and economists will be in the form of mobile or email interviews. The author will then compare the findings from the survey and the interviews through an in-depth discussion. In the end, the author will make conclusions and recommendations based on the most prominent findings of the research.

Statement of Ethical Issues

The researcher will improve the validity and reliability of the study by adhering to ethical standards and expectations in data collection, analysis, and presentation. Regarding data collection, the researcher will adhere to the highest standard f practice by seeking approval before collecting data from businesses. The author will also allow participants to share only the pieces of information they are willing to give to the public without coercion or undue pressure. The researcher will be guided by the realization of the fact that the truthful pursuit of knowledge can only happen if individuals give informed consent and participate voluntarily. The researcher will also promise to cause no harm (because the release of confidential client information to the public can cause intended or unintended harm). In this regard, the author will uphold the confidentiality of all the participants, and assessments within the study will remain limited to relevant issues only. The researcher will also limit the usage of the data for purposes of the research alone, and nothing else. It is important to win participants’ trust in scientific research to ensure that they continue to willingly participate in similar studies in the future.

Regarding data analysis, the researcher will remain committed to the truthful treatment of the collected information. The author will not make any attempt to change the data to mirror certain personal expectations. Instead, the analysis will happen in a transparent way that excludes any biases or personal preferences. The author believes that it is only by examining and analyzing the data with an open mind can one discover meaningful information that can inform future decision-making. The author will collaborate with experienced researchers in the treatment of the research data to originate reliable and effective information. The author will also examine the data as the participants have presented it and seek to understand knowledge. Recall that the author will make full disclosures to all the candidates of the research at the beginning, and this will make them decide the nature of the information they are willing to share with the researcher. Making full disclosures from the beginning will also help the participant to understand the importance of the study and support it with truthful and honest feedback.

The presentation of the data will follow ethical standards and expectations too. Although the reporting of research data seems like a poorly objective undertaking, the availability of various data analysis and reporting techniques presents many options, of which some are more scientifically valid and ethical than others. The researcher understands that external factors may impact an author’s ability to do data reporting honestly and truthfully. Therefore, one of the considerations that the researcher will make while reporting or presenting the findings is describing and including the number of eligible participants. The author understands that failing to make disclosures about the number of participants who refused consent or were excluded from the study for other reasons may mislead the reader into thinking that only the included subjects are a perfect representation of the entire population. Explaining this issue will help readers to understand the circumstances under which the researcher conducted the study, and the possible challenges they experienced in the process. It will also justify the use of the given participants while also helping the reader gauge the possible accuracy of the findings.

The researcher will also ensure that they accurately report missing data points. Without doing so, it is possible to manipulate the data to camouflage the missing data points, and this would affect the overall results and conclusions. Data points may be missing because participants may decide not to share such information with the public. They may also be missing due to the inapplicability of questions asked in specific situations. However, no data should ever miss because of being lost in the handling phase. Such would mean that the researcher is not keen or skilled enough to protect the collected data from loss or damage. The researcher will also ensure that they report all pertinent data as doing so ensures consistency. In some situations, researchers may be tempted to exclude some pertinent data because they are inconsistent or inexplicable. Such purposeful exclusion of pertinent data for purely aesthetic reasons can be misleading, is unscientific, and will be avoided. The researcher will be sure to include all pertinent data, including negative results as this is a truthful reflection of reality.

Researchers sometimes want to avoid reporting negative results because positive ones appear more interesting and carry an increased probability of acceptance for public use or publication. Negative results are also important to report because they show an important correlation between variables, and could inform decision-making and further research into the area. The researcher will also not allow the sponsor to influence the reporting of results. The university is this research’s sponsor because of the facilitation and guidance they provide. The researcher will also be sure to appropriately label graphs, tables, and diagrams to avoid confusion and misrepresentation of information. Such failures are dangerous because they can magnify minute differences between data points. The researcher will also desist from reporting percentages only instead of actual numbers and their percentages. Apart from that, the researcher will report differences when statistical significance is not reached to paint a clear picture of what the research entailed.

References List

Bartik, A. W., Bertrand, M., Cullen, Z., Glaeser, E. L., Luca, M., & Stanton, C. (2020). The impact of COVID-19 on small business outcomes and expectations. Proceedings of the National Academy of Sciences, 117(30), 17656-17666.

BBC News. (2020). Canada unveils the largest economic relief package since WW2. Web.

Estupinan, X., Gupta, S., Sharma, M., & Birla, B. (2021). Impact of COVID-19 pandemic on labor supply, wages and gross value added in India. The Indian Economic Journal, 3(17), 1-13. Web.

Government of Canada. (n.d.). Canada’s COVID-19 economic response plan. Web.

Nagele-Piazza, L. (2021). How the new COVID-19 relief package impacts employees. SHRM. Web.

Ziv, S. (2020a). Are Canada’s $2,000 stimulus payments more generous than the United States’ $1,200 stimulus checks? Forbes. Web.

Ziv, S. (2020b). Canada stimulus package: Second stimulus checks plus a dose of sexism. Forbes. Web.

Zou, P., Huo, D., & Li, M. (2020). The impact of the COVID-19 pandemic on firms: A survey in Guangdong Province, China. Global Health Research and Policy, 5(1), 1-10. Web.

Von Gaudecker, H. M., Holler, R., Janys, L., Siflinger, B., & Zimpelmann, C. (2020). Labour supply in the early stages of the CoViD-19 Pandemic: Empirical Evidence on hours, home office, and expectations. Institute of Labor Economics. Web.

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BusinessEssay. (2022, October 12). Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic. Retrieved from https://business-essay.com/employee-government-subsidies-for-small-business-in-canada-during-the-covid-19-pandemic/

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BusinessEssay. (2022, October 12). Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic. https://business-essay.com/employee-government-subsidies-for-small-business-in-canada-during-the-covid-19-pandemic/

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"Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic." BusinessEssay, 12 Oct. 2022, business-essay.com/employee-government-subsidies-for-small-business-in-canada-during-the-covid-19-pandemic/.

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BusinessEssay. (2022) 'Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic'. 12 October.

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BusinessEssay. 2022. "Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic." October 12, 2022. https://business-essay.com/employee-government-subsidies-for-small-business-in-canada-during-the-covid-19-pandemic/.

1. BusinessEssay. "Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic." October 12, 2022. https://business-essay.com/employee-government-subsidies-for-small-business-in-canada-during-the-covid-19-pandemic/.


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BusinessEssay. "Employee Government Subsidies for Small Business in Canada During the COVID-19 Pandemic." October 12, 2022. https://business-essay.com/employee-government-subsidies-for-small-business-in-canada-during-the-covid-19-pandemic/.