John Williamson: Fix the flaws in CERB to keep momentum in the economy | Financial Post
Right now the federal government has created an enormous incentive for Canadians to give up on work in order to receive emergency funding
Prime Minister Justin Trudeau speaks in the House of Commons as legislators convene to give the government power to inject billions of dollars in emergency cash to help individuals and businesses through the economic crunch caused by COVID-19, on April 11, 2020. PHOTO BY BLAIR GABLE/REUTERS
Anyone who’s ever had the misfortune to run out of gas knows it’s a lot easier to keep pushing a car that’s rolling than it is to get one started from a dead stop. The same holds true for the Canadian economy in the midst of the coronavirus pandemic crisis.
Due to lock-downs, social distancing and self-isolation, the Canadian economy is on the verge of coming to a complete halt. And if that ever happens, it will be much harder to get it working again. We need to preserve whatever economic momentum we still have.
To do this, major changes are required to the federal emergency aid program for Canadians who are out of work and small businesses that are closing their doors. This situation is made all the more pressing by last week’s news that one million Canadians lost their jobs in March.
In order to qualify for Ottawa’s new Canada Emergency Response Benefit (CERB), workers must have seen their income fall to precisely zero over the previous two weeks due to the pandemic. This means anyone who has experienced a severe drop in earnings but is still managing to earn a modest amount cannot receive $500 per week under the CERB program.
By some estimates, more than 800,000 unemployed and suddenly underemployed Canadians are ineligible for emergency relief assistance. They might include a self-employed language instructor who can no longer instruct regular classes but is still offering a few weekly lessons over the internet. Or a worker whose regular work week has been cut to just a shift or two. Or a mother at home who manages to squeeze in a couple of Instacart deliveries while still looking after the kids. In each of these cases, actual earnings might be less than $500 a week.
As currently structured, CERB has nothing for these people because they’re still earning some money. In fact, the federal government’s program perversely encourages them to stop working in order to qualify for guaranteed federal cash.
The same difficult dilemmas hold true for a great many entrepreneurs. In my riding, I’ve talked to restaurant owners trying to decide whether to open for take-out only — which is barely profitable even before you factor in the hefty fee taken by food delivery apps — or shut down entirely and apply for CERB. It’s a tough choice: fight to save a business in the face of so much financial uncertainly or let it go to receive government help and pay some pressing bills.
Incentives matter and right now the federal government has created an enormous incentive for Canadians to give up on work in order to receive emergency funding. This sends entirely the wrong message and sets the country up for a far longer and more difficult recovery when the COVID-19 crisis finally passes.
It is clearly in the national interest to keep as many businesses open and workers attached to their existing jobs as we can, even if there is little work to be done. The solution is straightforward. The federal government needs to broaden the criteria for CERB and eliminate its currently binary nature. Canadians should not have to choose between earning some income and no income at all. Similarly, the choice for small businesses shouldn’t be “lights out” to receive government help versus “lights on” but no income assistance.
A graduated system of support is not a revolutionary concept. Employment Insurance already allows claimants to do some work without putting their benefits at risk. Under the “Working While on Claim” program, EI recipients can keep 50 cents of every dollar earned while on the benefit — up to 90 per cent of their weekly earnings. EI claimants are thus able to maintain their connection with the working world while still receiving federal assistance. We need to do the same thing on an economy-wide scale for all Canadians facing the coronavirus economic shock.
Another crack in the emergency benefits program: We also need to recognize the unique situation of university students, who have not yet started summer jobs and thus cannot claim that they lost their job because of the pandemic.
On Saturday, I asked in the House of Commons, along with other opposition MPs, for CERB to be fixed, and the government assured us it would be. So Parliament will need to convene again, and soon, to pass these reforms in law.
It is vital right now that to the extent possible we keep workers connected to the labour market and businesses connected to their customers. Whatever momentum we can maintain today will be repaid many times over when this crisis finally ends and our economy is ready to roll again.
Originally published in Financial Post
John Williamson is MP for New Brunswick Southwest and Conservative labour critic.