What will follow CERB?
Low wages, lack of child care make return to work an impossible situation for many
Emily Quaile feels stuck.
Abartender and server at Union Local 613, an Ottawa restaurant, she’s been out of work since the restaurant closed due to COVID-19. She has been receiving the Canadian Emergency Response Benefit (CERB) since mid-April and has been spending a lot of time with her young child.
But now, the restaurant is open and Quaile has been asked if she wants to come back to work. She doesn’t know what to say — she can’t find child care, but is afraid that refusing work could penalize her, perhaps costing her the CERB benefit.
Quaile is one of many workers facing a tough decision. CERB has been extended for another eight weeks. But it won’t be around forever, prompting questions about what happens when it’s gone.
Experts say CERB has exposed gaps in the existing employment insurance (EI) system, a system that’s slow and doesn’t make room for workers in the modern gig economy. They say this might be an opportunity to fix it. But they’re not sure how or if that’s going to happen.
David Macdonald, senior economist with the Canadian Centre for Policy
Alternatives, said CERB is “a far better system” than EI.
For one, he said the EI application processing system is slow, taking sometimes more than a month to process. When COVID-19 hit, the system couldn’t handle the flood of applications.
On top of that, it became clear that many Canadians didn’t qualify for EI. These include self-employed people and gig workers, which have made up an increasing number of the workforce over the past decade.
Then there are seasonal workers, minimum-wage and insecurely employed workers, and workers who rely on tips — these workers wouldn’t make a lot on EI, if they manage to qualify at all, Macdonald said.
Quaile is one of those. As a server in Ontario, she makes $12.20 an hour, which is $1.80 less than minimum wage. The rest of her income comes in tips. But those tips don’t contribute to EI. And if she goes back to work now,
she’ll be making less in tips because of the restaurant’s reduced capacity.
Macdonald said there’s a perception that people aren’t going back to work because of CERB. He doesn’t believe that’s true.
“Largely the impediment is that (businesses are) not willing to increase wages,” he said. “If you don’t pay people very much, it’s gonna be hard to find people to work in your industry.”
Tammy Schirle, a professor of economics at Wilfrid Laurier University, said while there are lots of anecdotes from employers to support the idea that CERB is preventing employees from going back to work, she’s not sure that’s the case.
“It’s not obvious to me that it’s any more challenging now than it ever was to get people into those types of low-paying, lowhours types of jobs,” she said. “I don’t like to overrepresent what those anecdotes might mean without good data to back it up.”
Schirle said she’s most concerned about the group of people who, if they went back to work, would make between just over $1,000 and a little over $2,000. Those who would make even $1,001 won’t qualify for a CERB top up, she said, and those who would make, say, $2,200, won’t have a financial incentive to return to their job.
“It would have been nice to see some modification of the program that would allow for people to keep more of their earnings,” Schirle said.
Quaile agrees that CERB has spotlighted issues with the existing EI system, namely that it only provides people with what she calls a poverty-level income. She also believes it’s not CERB preventing people from going back to work, but that the jobs themselves aren’t offering enough.
“If the minimum wage and the working conditions are so poor that they compete with a poverty-level subsistence benefit, where’s the fault?” she said.
Macdonald said while CERB may not be a perfect program, he believes it illustrates the need for a “modern EI system,” though he hasn’t seen moves by the government to make that happen. He said he’s concerned the government is taking a “wait and see approach,” and may continue extending CERB instead of creating a new, sustainable system.
“Extending CERB also extends the uncertainty of what happens at the end of CERB,” he said.
Schirle said when the extension is over, she estimates roughly a quarter of the people accessing CERB will not be eligible for EI — self-employed people, gig workers, part-time workers and others who haven’t worked enough hours to qualify.
“The EI program was structured for a very standard employment relationship,” she said. “It was not made for shortterm contracts, combining gig work with part-time employment and these other sorts of things.” Over the next couple of months, Schirle hopes to see a program that will benefit these workers, such as an addition to the EI program.
But that’s easier said than done. Schirle said these types of programs are hard to build in a way that still incentivizes people to work, and while it’s true CERB has exposed some gaps in the current EI program, CERB isn’t a permanent fix.
“It is not meant to be a permanent program and it should not be a permanent program. It would be a disaster, I think, as a permanent program.”
She said adapting the current EI system, or creating a new one, would be a big undertaking. The new system would need to find ways to cover people who are self-employed, or who quit instead of being laid off, for example, she said, adding that’s it not as simple as a basic income.
“I think it is fair to say that there is an obvious problem here, but the solution is nowhere near obvious at all.”