From CERB to EI: Canada Revises Pandemic Income Support Programs

Photo Caption: Prime Minister Justin Trudeau with volunteers at the Ottawa Food Bank Farm. Canada is replacing CERB with EI and three new one-year programs. (Featured Image Source: Twitter/@JustinTrudeau)

Summary

• Canada Emergency Response Benefit program end date extended from August 27 to September 27.
• This will be replaced by a new version of employment insurance that will cover 400,000 more Canadians.
• Insurance premiums for workers and businesses kept intact at 2020 levels for next two years.
• Three more new one-year income support benefits proposed for those not covered under EI.

The short era of the Canada Emergency Response Benefit (CERB) will now last a month longer than planned. The CERB program, which has so far provided 8.5 million people with income support of C$ 2,000 per month amid the COVID-19 pandemic, will now go on till September 27.

Thereafter, the CERB will be replaced by a modified version of employment insurance or EI program. For those not eligible, there are three new temporary recovery benefits in the offing.

All About the New EI

The modified EI program is expected to cost the Liberal government C$ 37 billion and cover an additional 400,000 Canadians.

The benefit will let Canadian citizens, who have 120 hours of insurable work or beyond, to claim a temporary and one-time credit of 300 insurable hours for EI regular benefits and 480 insurable hours for EI special benefits. These benefits will include maternity, parental, sickness, compassionate care, and family.

The EI premium rate for employees has been kept unchanged for the next two years: C$1.58 per $100 of insurable earnings for two years.

The rates have also not been increased for employers. They will continue to pay C$ 2.21 per C$ 100 of insurable earnings.

Those availing EI will also get taxable benefit rate of at least C$ 400 per week or C$ 240 per week for extended parental benefits. Also, those receiving EI benefits in different provinces and territories will be provided skills training and employment supports.

For Those Not Eligible for EI

Under the proposed Canada Recovery Benefit (CRB), self-employed or those not eligible for EI will get C$ 400 every week for up to 26 weeks.

The second program – Canada Recovery Sickness Benefit (CRSB) — will entitle Canadian workers, who are sick or need to be in isolation due to COVID-19 fears, C$ 500 per week for up to two weeks.

The third program, Canada Recovery Caregiving Benefit (CRCB), will provide C$ 500 per week for up to 26 weeks per household to eligible Canadians and run till September 2021. This benefit will be for people with a child, a family member with a disability, or a dependent who is not attending school, daycare, or other care facilities due to COVID-19 risk.

The Trudeau government is now expected to introduce new legislations to implement these new programs.

Federal Support in Canada So Far

Canada has a projected budget deficit of C$ 343 billion in 2020 – nearly 16 percent of its economic output. This deficit includes C$ 212 billion in direct support to individuals and businesses affected by the pandemic through programs such as CERB and Canada Emergency Wage Subsidy and the modified EI program.

The Liberal government’s unprecedented fiscal debt due to the pandemic had made further monetary dole outs like CERB difficult.

National employment levels have recovered but are still nowhere near the pre-pandemic figures. As of July, the country has reclaimed total 1.37 million jobs and is nearing the halfway mark in recovering the three million job losses during the initial onset of coronavirus. Analysts however feel the recovery in employment numbers may soon plateau.

It will also be a challenge for federal officials to wean off Canadians from the monthly aid that has been depleting the public coffers. Pushing off individuals from benefits program may cause public dissatisfaction and the revised EI program seems to be an effort towards that.

There is also the Canada Emergency Wage Subsidy that will be in place till year-end. CEWS encourages companies to qualify for the wage subsidies program, helping businesses restart and pay staff.

COVID’s Impact on Canadian Economy

The country appears to be slowing down the spread of the pandemic. As of August 21, there were 124,372 total cases, 110,648 recoveries and the active case count stood at 4,660. There have been 9,064 deaths. Quebec and Alberta have the highest number of active cases.

The pandemic’s effect on the Canadian economy were the worst in March and April, decimating 3 million jobs and over 88,000+ business closures.

Among the worst hit were travel, tourism, hospitality, retailers, accommodation, restaurants and services industry as demand fell and businesses struggled to survive.

Jobs in tourism fell by 42 per cent between February and April, accounting for 27 per cent of all job losses in Canada.

Also, overall average hours fell by 15 per cent between February and April 2020, according to Statistics Canada.

The latest data from Statistics Canada show significant improvement on the employment front, the situation is still far normal.

The Bank of Canada does not expect the economy and the business ecosystem to complete recovery before 2022.