Bruce Campion-Smith
May 6, 2020
As businesses reopen, federation urges gradual rollback of aid programs
As the fallout from the COVID-19 pandemic sent a tsunami sweeping through the economy, Ottawa quickly rolled out financial assistance to the millions of suddenly unemployed Canadians.
With businesses slowly reopening and the prospect of people getting back to work, now comes the hard part for policy-makers - deciding how and when to dial back those emergency benefits.
Some politicians are already pushing for change. Conservative Leader Andrew Scheer said this week that the emergency benefits will serve as a "tranquilizer" on the economy, deterring people from taking available jobs.
Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said he's not "panicked" about the benefit discouraging people from returning to work, "but ask me in two weeks once more businesses are reopened and I think this will be a significant issue."
Kelly predicts a "very messy recovery" and said a combination of factors risk keeping people away from jobs. For example, weeks of public health messaging have left many wondering about the risks of leaving the house, he said. Other challenges for parents are the lack of child care and schools being closed.
The government's main support to individuals has been the Canada Emergency Response Benefit (CERB), which pays $500 per week over 16 weeks. As of Sunday, 7.5 million Canadians had applied for the benefit and it had paid out $27.7 billion.
Kelly said the government will have to adjust that program as the economy moves into the recovery phase. His association is also urging Ottawa to extend its wage subsidy beyond June 6.
"I think there's going to need to be a phased approach to weaning the economy off of the benefits because the economy is not going to bounce back instantly," Kelly said.
The benefit was designed to encourage people to stay home, noted Rob Gillezeau, an assistant professor of economics at the University of Victoria.
"We actively wanted to keep people away from work. That was the policy goal," he said. "It definitely makes sense to revise it again as we shift into the reopening period."
Gillezeau and other experts say the government should remove the restriction that bars anyone earning more than $1,000 a month from collecting it. Instead, the benefit could be gradually clawed back based on income, he said.
"It means a lot of people in the working poor will get the benefit, so it's not actually making it less generous, it's making it more generous," he said.
David Macdonald, a senior economist at the Canadian Centre of Policy Alternatives, agrees that the hard cap on earnings should be lifted and instead be scaled to income.
But he took issue with the suggestions that the benefit is encouraging "greedy workers" to stay home, noting that the payments fall short of covering living expenses in most cities.
"In almost all cases, they would make far more from working than on the CERB," Macdonald said. "The main reason they're not going to return to work isn't the economic incentive. It's the health incentive - or disincentive."
Macdonald said the focus should be on employers and their responsibility to provide a safe workspace, with precautions such as barriers and personal protective equipment to safeguard employees.
"Everyone is happy to blame workers making minimum wage but no one wants to turn their attention to employers who aren't creating safe work environments," he said.
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This article was written by Bruce Campion-Smith from The Toronto Star and was legally licensed by AdvisorStream through the NewsCred publisher network.
