Ottawa read­ies CERB exit plan

Draft leg­is­la­tion tight­ens el­i­gi­bil­ity terms

Calgary Herald - - NP - JOHN IVISON

Even this most prodi­gal of gov­ern­ments knows it can’t keep spend­ing $3.6 bil­lion a week on the Canada Emer­gency Re­sponse Ben­e­fit.

CERB was in­dis­pens­able when it was in­tro­duced — pro­vid­ing in­come for peo­ple who had been de­prived of their liveli­hoods by COVID.

But as the econ­omy re­opens, Ottawa is look­ing at an exit strat­egy from a pro­gram that has cost $43.5 bil­lion in the past 12 weeks, sup­port­ing 8.4 mil­lion work­ers.

The first signs of that game plan are ev­i­dent in leg­is­la­tion the govern­ment is cur­rently ne­go­ti­at­ing with the op­po­si­tion par­ties.

Ac­cord­ing to a draft bill seen by Na­tional Post, C17 tight­ens the el­i­gi­bil­ity con­di­tions around CERB, and makes it a crim­i­nal of­fence to know­ingly claim money un­der false pre­tences.

Work­ers will no longer be el­i­gi­ble for in­come sup­port pay­ments if they fail to re­turn to work “when it is rea­son­able to do so”, or if their em­ployer makes a re­quest for their re­turn. Ap­pli­cants who have de­clined a “rea­son­able” job of­fer will also be deemed in­el­i­gi­ble.

Each pe­riod of el­i­gi­bil­ity will be short­ened to two weeks from four, and the amount a worker can earn with­out claw­back, will be re­duced to $500 from $1,000.

The changes, as far as they go, are sen­si­ble. There is still no re­quire­ment to look for work.

But the mes­sage is clear any­one who can work, and is able to find a job, should do so.

Nearly one third of the work­force earns min­i­mum wage lev­els — un­der $15 an hour — which is less than CERB of­fers.

The hope was that many peo­ple would re­turn to work by tran­si­tion­ing to the Canada Emer­gency Wage Sub­sidy pro­gram, where Ottawa picks up the tab for 75 per cent of wages, up to $847 per em­ployee per week.

That has not hap­pened so far. CERB has proven a safe place to ride out the storm for many work­ers.

But the emer­gency ben­e­fit is set to run out on July 6 for those who started claim­ing it on March 15.

The prob­lem is that many work­ers claim­ing CERB may find that their jobs are no longer there for them, once the lock­down is lifted.

It puts the govern­ment on the horns of a dilemma.

The C.D. Howe In­sti­tute is­sued a pa­per from one of its COVID work­ing groups on Mon­day that sug­gested the Trudeau govern­ment has two op­tions: ei­ther ex­pand Em­ploy­ment In­sur­ance to in­clude in­el­i­gi­ble CERB re­cip­i­ents; or, con­tinue CERB with mod­i­fi­ca­tions to make the transition to work more de­sir­able.

The way to do this, the group sug­gested, is to in­crease the flex­i­bil­ity of CERB us­ing lessons learned from the EI pro­gram that set pa­ram­e­ters on claw-back rates and earn­ings ex­emp­tions. The Work­ing While on Claim pro­gram sug­gests the higher the ex­emp­tion for al­low­able earn­ings, the more in­cen­tive there is to ac­cept part-time work. The is­sue may be that CERB is ad­min­is­tered by the Canada Rev­enue Agency, which does not keep real-time data on in­di­vid­ual monthly earn­ings.

How­ever, the al­ter­na­tive — us­ing the EI ac­count — could cre­ate its own prob­lems. If the ac­count moves into deficit, it would trig­ger pre­mium in­creases (un­less the govern­ment con­sciously de­cided to freeze pre­mi­ums). EI pre­mium in­creases would act like a tax in­crease on low and mid­dle earn­ers and act as a dis­in­cen­tive to em­ploy­ers to hire more work­ers.

Ottawa has to jug­gle com­pet­ing pri­or­i­ties — it must transition as many work­ers as pos­si­ble off CERB to re­duce in­come re­place­ment pay­ments and al­low labour mar­kets to read­just to the new re­al­ity.

At the same time, the need for sup­port will not dis­ap­pear by mid­sum­mer.

There was en­cour­ag­ing news last week with job num­bers that sug­gested the re­ces­sion might be over al­ready — 290,000 jobs were added in May, and the num­ber who worked less than half their reg­u­lar hours fell by a sim­i­lar num­ber.

But the un­em­ploy­ment rate at 13.7 per cent is the high­est in four decades.

It is likely that whole sec­tors have been dec­i­mated — ac­com­mo­da­tion, travel, tourism, food ser­vices — and some jobs may not come back. More re­sources will have to be devoted to train­ing work­ers in those in­dus­tries for new work.

Lib­er­als con­cede the govern­ment is likely to transition to an en­hanced EI or an ex­tended CERB, as the C.D. Howe group sug­gested.

The cur­rent leg­is­la­tion does not spec­ify the na­ture of the pro­gram go­ing for­ward — changes can be en­acted by Cabi­net with­out re­course to Par­lia­ment in any case. “We can’t get too far ahead of our skis,” said one of­fi­cial.

But the hope is that by tight­en­ing the el­i­gi­bil­ity cri­te­ria on CERB, it might en­cour­age some peo­ple to mi­grate to the wage sub­sidy pro­gram.

There is a sense that we’re all in the clean up stage after a tor­nado has torn through town. While there’s al­ways the prospect of a downed power line, the im­me­di­ate dan­ger has passed. The govern­ment’s emer­gency ben­e­fit has pro­vided in­come re­place­ment for mil­lions of peo­ple but it can’t do so in­def­i­nitely.

Ottawa’s new leg­is­la­tion is recog­ni­tion of that fact.

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