Canada’s employment minister says federal officials are looking for ways to fill gaps in a key, but decades-old, safety net for unemployed workers to catch those left out from upcoming changes to pandemic-related aid.
Speaking to the Senate finance committee, Carla Qualtrough said policy discussions are ongoing about how to ensure the employment insurance system covers people as they transfer back to it from the Canada Emergency Response Benefit created in late March.
The $2,000-a-month CERB was put in place because officials believed the volume of jobless claims flooding EI would have crashed the decades-old system, which wasn’t designed to support as severe a drop in employment as what the country saw over March and April.
Nor did EI cover many of the three million people who lost their jobs as businesses were ordered closed to slow the spread of COVID-19, and some three million more who had their hours slashed.
“We are looking at how to ensure that as we transition people back to the employment insurance system that people are indeed covered,” Qualtrough said.
“Employment insurance has been shown to be ineffective in terms of this kind of crisis and in terms of actually reflecting the way people work now.”
The CERB, now budgeted at $60 billion, has paid out $43.51 billion to 8.41 million people as of June 4, before the Liberals promised to extend benefits to 24 weeks from 16. Included in the payments is $20.56 billion from the EI account to 3.96 million EI-eligible workers who exhausted benefits and couldn’t find work due to the pandemic.
At its height, the CERB paid out $17 billion a month when eight million people were on it, but numbers have declined as 1.2 million recipients returned to work or went back on payrolls with help of the federal wage subsidy program.
On Monday, Prime Minister Justin Trudeau pushed businesses to turn to the underused wage subsidy program as companies are allowed to reopen.
“But even as things start to improve for many people, we also have to remember that some industries have been hit harder than others,” Trudeau said. “And if you work in one of those sectors, it might take longer to find a job.”
In a letter to Finance Minister Bill Morneau on Monday, the Business Council of Canada called on the Liberals to expand training programs for displaced workers in the harder-hit sectors Trudeau referenced, and “begin responsibly winding down” the CERB so “it does not function as a disincentive to work” by allowing an income-tested clawback so low-wage workers can keep some payments.
The letter also called for a review of EI and an extension of the wage subsidy to the end of the year for sectors like tourism and travel.
Qualtrough told senators the government is doing everything possible to retool pandemic-related aid programs like the CERB to help get workers and companies back on the job, such as codifying the need to look or take work as part of the CERB application.
Although the government does not know what the country’s labour market will look like in the coming weeks and months, she said officials are certain some people won’t have jobs to return to.
“It is not a rosy picture and we want to make sure we continue to support people,” Qualtrough said.
Statistics Canada’s labour force survey for May showed that lower-wage jobs rebounded at a faster rate than the national rate as restrictions meant to slow the spread of the novel coronavirus started to ease. Qualtrough said the finding suggests low-wage workers will go back to a job instead of remaining on federal aid.
In a speech Monday, Bank of Canada governor Tiff Macklem said job growth may be sharp over the coming weeks, but that pace won’t last. Ongoing physical distancing rules may mean workplaces can’t be as productive as they once were and many services will remain difficult to deliver, acting as a drag on the economy’s productive capacity, he said.
Speaking during a webcast with Canadian Clubs, Macklem also said that some women may not be able to return to work without child care, meaning that employers “need to be flexible” as reopenings continue.
He added that other groups have been particularly affected by job losses, including young workers and recent immigrants.
“Unfortunately in recessions it is typically the most vulnerable members of society that suffer the most. This recession is a deep one and it’s certainly no exception.”
Jordan Press, The Canadian Press
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