Recently, bosses and columnists in the capitalist media have been highly critical of the Canada Recovery Benefit (CRB, previously the Canada Emergency Response Benefit or CERB). They say it costs too much and encourages people not to work. But while they complain about the crumbs given to unemployed workers to survive, capitalists have no qualms about lining their pockets at taxpayers’ expense with the Canada Emergency Wage Subsidy (CEWS).
The CEWS was adopted at the beginning of the pandemic with the stated aim of helping companies avoid having to lay off their employees during the health crisis by paying part of their wages. In practice, the CEWS is a gift to capitalists. The claim that the program is supposed to help keep workers employed is shown to be false in the way it has been used.
The wage subsidy comes to the rescue of hedge funds
At a cost of $110.6 billion over two years, the CEWS is one of the most expensive government programs in Canadian history. Yet it is very difficult to know which companies have received it, when they received it and how they used all this taxpayer money. Under the guise of protecting their “confidential information”, the government refuses to make public most of the data on the companies that are receiving the subsidy.
However, by comparing data from several sources, a recent Globe and Mail investigation revealed some shocking information.
Money from the CEWS was in fact paid to large hedge funds, among others. From a list of 300 financial tycoons, the investigation was able to identify 80 that received the wage subsidy. The government is therefore subsidizing wealthy companies whose business model is literally to play the stock market like a casino. Some of these companies even boasted that they had a record year of profits in 2020.
For example, Timelo Investment Management Inc. received the subsidy despite reporting that it generated returns of almost 30 per cent during the year. JM Fund Management Inc. was not shy about dipping into public funds while it had its best returns since 2016. For the hedge fund industry in general, 2020 was the best year in a decade.
The reason these profitable companies qualify is mostly because they experienced a very brief slowdown in revenues during the first wave of the pandemic, only to see their profits rise sharply for the rest of the year.
This is the case, for example, with Fiera Capital Corporation, another large investment management firm that manages about $180 billion. When its revenues fell slightly between March and June, it was able to pocket $2.9 million in wage subsidies. But then its revenues soared again, allowing the company to pay $100 million in dividends and bonuses to its executives.
It had already been revealed that companies that received the CEWS were then able to pay dividends to their shareholders, to proceed with share buybacks, to pay bonuses to their executives, etc. Bell Canada, another example, received $122.8 million in wage subsidies and then paid dividends to its shareholders while laying off hundreds of employees.
What this shows is that companies cannot be trusted to maintain jobs. If they have the opportunity, they will always prefer to inflate their profits rather than pay wages.
A subsidy for creditors
But that’s not all. The Globe and Mail also found that the subsidy, in many cases, was used by bankrupt companies to pay off their creditors. Its investigation identified 32 companies among the wage subsidy recipients that had already initiated steps to file for bankruptcy between January 2019 and the start of the lockdown in March 2020. Another 130 businesses received the subsidy only to file for bankruptcy throughout the remainder of 2020. So the subsidy, which was supposed to “protect” jobs, went to companies that were preparing to get rid of those jobs anyway.
The only goal of a company in the process of going bankrupt is to “liquidate” itself in order to repay its creditors as much as possible. This means that, in this case, the wage subsidy was not used to save the jobs of workers in need, but simply to bail out the coffers of creditors directly. All on the backs of taxpayers!
Strangely, all this has not stopped the founder of Timelo Investment Management Inc. from going on the air to criticize CRB beneficiaries, whom he hypocritically accuses of creating instability by playing the stock market with government money.
In the same vein, La Presse recently published a terrible article in which bosses complained that young people are “demanding and difficult” because they prefer the CRB to being exploited at work. There was certainly no shortage of voices criticizing the CRB as “too generous” and “irresponsible”. These same bosses, meanwhile, are happily pocketing the wage subsidy.
In short, when the government gives money to workers, the capitalists call them “lazy” and “profiteers”. But when it is the capitalists’ turn to live off subsidies, they consider it quite natural and do not hesitate to abuse it.
No to corporate bailouts!
The government has clearly demonstrated that when it talks about “saving the economy”, it is really talking about saving the profits of big business and its friends on Bay Street.
If the government really wanted to save workers’ jobs and quality of life, it would nationalize struggling companies under workers’ control, instead of bailing out profiteering bosses who don’t care about their employees. If the private companies that receive the CEWS would rather increase their profits than pay wages, then why do we allow them to be in charge of the economy? The capitalists are demonstrating more clearly every day that they are nothing more than parasites living off the exploitation of workers.
With the pandemic, even the conservatives who used to treat grocery store and fast food workers with contempt began referring to them overnight as “heroes” everywhere you looked. In doing so, they have openly admitted that it is not the profiteering bosses who keep the economy going, but the workers themselves. Workers don’t need the bosses. If their companies are in trouble, they should be expropriated to save jobs—not bailed out with billions that end up in the pockets of the richest.
All the capitalists have to offer is economic chaos, job insecurity and exploitation. Not a penny of public money should go into their pockets. We must firmly oppose corporate bailouts, which are nothing but blank checks for the capitalists. The only way to really save jobs is to nationalize the companies under the democratic control of the workers.