The Trudeau government has made a solemn promise: no one will be “left behind” when its emergency pandemic wage support program comes to an end.
That’s due to happen less than three weeks from now, on Aug. 29, and how successful the government is at making the transition to a long-term support program will be crucial to keeping the economic recovery going.
The government has sketched out a general answer. It plans to overhaul the outmoded Employment Insurance program and create what Prime Minister Justin Trudeau calls “a better, 21st century EI system.”
Sounds good, but at this point millions of people who have been relying on the lifeline provided by the Canada Emergency Response Benefit (CERB) still don’t know how that’s going to work.
What they do know is that under the current EI system, most of them will be worse off. CERB pays $500 a week to anyone who lost their job because of COVID-19, but according to new calculations by David Macdonald of the Canadian Centre for Policy Alternatives, fully 82 per cent of those now receiving CERB now would suffer if the EI system isn’t changed.
Some 2.1 million people wouldn’t qualify for any assistance under the current version of EI. Many others would get a lot less than they receive now through the CERB; about 800,000 would see their weekly payment plunge to an average of $312 — almost $200 a week less than they get now. They would indeed be “left behind.”
Just as important, pushing hundreds of thousands of people into poverty would risk stalling the recovery that’s now underway. About half the jobs that were lost in the depths of the lockdown in April have already come back, and we can expect unemployment to keep falling. But if the purchasing power that was pumped into the economy through CERB is suddenly cut off, that could plunge the country into a prolonged recession.
So the tap can’t be just turned off on Aug. 29, as the government recognizes. CERB was always meant to be an emergency response (hence the name) so transitioning people who still need support to a new, improved income support system is clearly the right approach.
But exactly what that new system will look like will be crucial. It will have to be robust enough to support those who need it as the economy claws its way back to normality, but it must also be financially sustainable over the long haul.
Some elements of a new system are obvious. CERB had to be created in large part because most people who were thrown out of work weren’t covered by EI. They were self-employed, or contract workers, or hadn’t worked enough hours to qualify for benefits in their region.
A 21st-century income support system must address those gaps. It will have to cover gig workers and the self-employed, and the number of hours needed to qualify will have to be lowered and made more standard across the country.
The level of benefits must also be addressed. Many people (more than 8 million in total) have had a taste of CERB-level benefits of $500 a week. Under EI, the maximum benefit is 55 per cent of weekly earnings, to a maximum of $573 a week. But most people get substantially less than that.
Benefits should be increased, at least in the medium term, as the economy recovers. Many people won’t be able to find work, at least safe work, for some time to come and the system must respond to that. The CCPA suggests raising benefits to 75 per cent of previous income, or mandating a minimum level of $500 a week. That’s a useful starting point.
The new program must also be more flexible and quicker to start paying out benefits. One suggestion is to have the first payment made on the basis of a simple attestation, as is done with CERB, so paperwork delays don’t slow payouts. Trust, in other words, then verify.
These are the kind of changes the government must make, and quickly. The economic well-being of millions hangs in the balance.
https://www.thestar.com/opinion/editorials/2020/08/10/new-income-support-system-must-go-beyond-tinkering-with-ei.html
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