After billions of payments to millions of Canadians affected by the COVID-19 pandemic, the Canadian Emergency Response Benefit is coming to an end.
Those who have continuously received the benefit since mid-March are now in their last four-week coverage period, which ends August 29, and many will have already received their last payment of $ 2,000. The final eligibility period ends on September 26.
What comes next is a tricky dance for policy makers. CERB paid approximately $ 62.75 billion to 8.5 million unique applicants. Adoption far exceeded Ottawa’s estimates, and sustaining these payments for a long period of recovery was likely unsustainable. Last month the federal government projected a deficit of $ 343 billion for the current fiscal year.
At the same time, the labor market is far from being completely cured and millions of people still need some level of financial support. The federal Liberal Party will have to figure out how to help those working in hard-hit industries, while encouraging people to take on the jobs that arise.
Details of the transition are spreading. Prime Minister Justin Trudeau said last Friday that some CERB beneficiaries will soon switch to the country’s employment insurance program, which was sidelined as the pandemic struck to provide broader support for affected workers.
However, the programs will change. In the coming weeks, a new “side benefit” will be unveiled for those who do not qualify for EI, such as on-demand or contract workers, Trudeau said. He also pointed to a broader EI overhaul: “We intend to cover all Canadians looking for work with a better 21st century EI system.
As it stands, EI is not up to the task of dealing with the fallout from the coronavirus.
Who is eligible for EI?
To qualify for regular benefits, claimants must have paid EI premiums, lost a job through no fault of their own, and worked between 420 and 700 hours of insurable hours, depending on the local unemployment rate. Hours must have accumulated over the shortest period: the previous 52 weeks or the time since the start of a last claim.
Employment Minister Carla Qualtrough said last Friday that a revamped EI system was ready to accept around four million claims in September.
How do EI payments compare?
For most people, regular EI benefits are 55% of average weekly insurable earnings, up to a maximum of $ 573 per week. For this reason, a change in CERB – which pays the equivalent of $ 500 per week – could result in less generous benefits.
For example, a full-time retail worker earning $ 500 per week before the pandemic would have her income fully covered by CERB. If she switches to EI and remains unemployed, her benefits will drop to $ 275 per week. “People need to be prepared for this and know it’s coming,” said Tammy Schirle, professor of economics at Wilfrid Laurier University in Waterloo, Ont.
Who is not eligible for Employment Insurance?
Many people. About 1.1 million Canadians were unemployed at some point in 2018, and 64% of them had contributed to the EI program. Still, only 42 percent of all unemployed were eligible for coverage. Many of them had not worked enough insurable hours to qualify or had not had a valid termination of employment, such as leaving to return to school.
Since 2010, the self-employed can participate in special Employment Insurance benefits, which include sickness and parental benefits, but participation is low. According to an analysis by Stéphanie Lluis, professor of economics at the University of Waterloo, in 2018, around 10% of self-employed workers contributed.
“Therefore, designing parallel benefits for the self-employed will be crucial,” she said.
In February, about 2.9 million people in Canada were self-employed, or 15% of all workers. They have been huge benefactors of CERB.
Ottawa’s financial snapshot found that 40 percent of self-employed workers said they applied to CERB in May, compared to 12 percent of private sector employees and 5 percent in the public sector. The ranks of the self-employed include many on-demand workers. Those who depend exclusively on income from odd jobs are not eligible for regular EI benefits.
How to change employment insurance?
Professor Schirle suggests relaxing some of the conditions for EI. For example, beneficiaries must be “ready, willing and able to work every day”, which might be less feasible during a public health crisis. In a March report, the Canadian Center for Policy Alternatives suggested lowering the eligibility threshold to 360 insurable hours for regular and sickness benefits. It can happen eventually.
Ms Qualtrough said the government is considering “flexibilities” for eligibility criteria, such as the number of hours worked. “We’re trying to relax them,” she says.
What about the parallel benefit?
Under CERB, beneficiaries can earn up to $ 1,000 during the four-week eligibility periods, but forfeit their $ 2,000 benefit if they exceed the income threshold. “The current parameters of CERB are quite strict,” said Professor Lluis.
Instead, she suggests that the bridging benefit use something like the Working While on Claim component of EI. Under WWOC, you can keep 50 cents of your benefits for every dollar earned, up to 90% of your previous weekly earnings. This would encourage people to take up work opportunities without sacrificing financial support.
Trudeau said the parallel benefit will include access to training and allow people to “work more hours and earn more money while receiving the benefit.”
The big questions
Overall, what is to come is unclear. How inclusive will EI become? Will all self-employed people receive support? How will the parallel advantage compare to EI?
“If you were that person making $ 500 a month, you’re going to pay a lot of attention to whether EI claimants are better off than alternative EI, or whether they end up with the same benefits, ”the professor. Schirle said.
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