Canadians and their economy still need CERB

This week’s extension of the Canada Emergency Relief Benefit will carry a massive price tag and raise the mountainous national debt to frightening new heights.

But no one should doubt that continuing this program was absolutely the right decision for Prime Minister Justin Trudeau to make. I

t’s not just that millions of Canadians thrown out of work by the COVID-19 pandemic continue to depend on this federal lifesaver to remain financially afloat. The economy has spent three months in what amounts to a government-induced coma. It’s stuck on life support and will need to be treated that way for months to come. And that’s why offering the Canada Emergency Relief Benefit — CERB for short — for an additional eight weeks serves the best interests of the entire country.

When Trudeau rolled this program out in March, everyone knew it would entail a massive expenditure. Yet as pandemic shock waves roiled the country, more than three million people lost their jobs. Another 2.5 million had their hours cut. And because of overly restrictive eligibility rules surrounding the Employment Insurance program, far too few of those people could count on EI.

The cruel brunt of the pandemic fell with disproportionate force on low-wage workers, especially those in the service sector. And while they had to spend weeks at home, unlike so many middle-class Canadians they couldn’t continue doing their jobs and earning a salary remotely, from where they lived.

The $2,000-a-month taxable benefit CERB provided to those who had lost work in the lockdown was essential for many of the most vulnerable members of our society. It allowed them to continue feeding themselves and their children. It kept a roof over their heads, too.

At the same time, CERB spared Canada’s economy from plunging into a deep, deep recession. In fact, the money flowing from CERB more than made up for the household income that was lost because of the pandemic.

Stephen Brown, senior Canadian economist at Capital Economics, estimates Canadian households lost $38 billion between March and the end of May. CERB provided $43.5 billion in that same period. Because the people receiving those benefits tended to spend that money, rather than save it, they helped keep the nation’s economic engines running.

That spared us from a massive recession. It also blazes a trail to a economic recovery. Such a recovery, however, remains a distant speck on the horizon.

“Of the three million workers who are out of work right now, many are in sectors that are not scheduled to reopen any time soon,” cautions Deena Ladd, executive director of the Workers’ Action Centre.

Those numbers speak to an ongoing need. Without this week’s extension, the first CERB recipients would have been left with no financial support as of early July. Now they have a few more precious weeks to job-hunt, plan for retraining or move to find new employment. Just as important, the extension gives Trudeau’s government time to plan for what will follow a program that, while necessary today, is financially unsustainable in the long-run.

One matter demanding immediate attention is Canada’s Employment Insurance system. Too many people who become unemployed in this country don’t qualify for EI payments. Reviewing and expanding the eligibility rules is in order. Levels of unemployment higher than we’ve know for decades will likely be with us for a long time.

When CERB ends, as it must, there has to be something to replace it that’s superior to the EI system we know today.