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Many Canadians will max out on CERB in July. What happens next?

Coronavirus outbreak: Liberals ‘looking very carefully’ at how to move forward with CERB, emergency measures, Trudeau says
Prime Minister Justin Trudeau said Tuesday the government is figuring out how to move forward with time-limited emergency benefits it rolled out to help Canadians who lost work during the pandemic, like the CERB.

Questions are mounting about how the federal government will continue to support Canadian workers who remain unemployed as emergency benefits offered during the coronavirus pandemic run out.

On April 6, applications opened for the Canada Emergency Response Benefit (CERB), which provides eligible applicants with $2,000 every four weeks. The program applied retroactively to March 15 and is available until early October.

But people can only claim the benefit for a total of 16 weeks — or four eligibility periods — and the end of the program’s fourth period is fast-approaching early July.

Canada added 290,000 jobs in May; best 1-month gain
Canada added 290,000 jobs in May; best 1-month gain

Policy analysts and experts are already examining what happens next and making recommendations about what the federal government can do to provide continued support to those who need it.

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July 4 marks first expiry date

For those who have been receiving the CERB continuously since mid-March, they will exhaust their benefits on July 4. The next date that claimants might max out is on Aug. 1.

Once that happens, CERB recipients who qualify for the federal employment insurance program will presumably be able to transition to the EI system, experts told Global News, noting that EI benefits aren’t as generous as the CERB.

But the problem is, many workers likely won’t qualify for EI. Some workers might not meet the eligibility criteria  — including a requirement that they worked a certain number of hours prior to applying. Others might not have contributed to the EI program, perhaps because they’re self-employed, and therefore can’t receive benefits.

What happens to them?

As it stands now, those claimants’ financial aid will run dry and they won’t receive any other federal income support.

That’s “a really big concern,” according to Jennifer Robson, an associate professor at Carleton University who researches poverty, inequality and social policy.

Global News asked the office of the federal minister responsible for the CERB how many people will be in that position come July 4 and August 1, but the office didn’t provide the numbers in its response. A spokesperson for Employment Minister Carla Qualtrough did not respond to an email requesting the figures a second time by deadline.

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READ MORE: RCMP warn Canadians about CERB fraudsters and scams

By Robson’s rough calculations, based on the government’s online updates on the CERB program, she estimates about a quarter of the 8.41 million unique CERB applicants will hit the eligibility wall in early July.

“That number of people who are in that same spot will just continue to climb over the summer unless we see a really dramatic turnaround in labour market activity,” Robson said.

READ MORE: Canada’s unemployment rate reaches record 13.7%

Statistics Canada reported that the country’s economy shed about three million jobs over March and April — at the height of the pandemic. While the economy added 289,600 jobs in May, Canada’s unemployment rate reached a record high of 13.7 per cent.

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“We saw some very modest signs of recovery in May … very modest and very uneven,” Robson said. “We’ve got a long way to go.

“You cannot, I think, frankly, for the next little while pretend somehow that everything is back to normal and that millions of Canadians who are still not able to be back at work at pre-COVID levels, that they’re not going to need some form of income support.”

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Extend CERB with modifications or expand EI program: think tank

On Monday, a working group on household income and credit support at the C.D. Howe Institute released a brief report with recommendations on how the federal government could continue to financially support Canadians through the economy’s recovery.

To help the unemployed who can’t access EI, Ottawa could proceed one of two ways, the report said. The government could extend the CERB with “new phase-out modifications” or expand the EI program by “reforming eligibility criteria to take on the role of the CERB.”

“Basically, we don’t want two programs set up an easy to to be used in a parallel way for a long time,” said Parisa Mahboubi, a senior policy analyst at C.D. Howe, who sits on the working group.

Coronavirus outbreak: Liberals looking for support for bill reforming COVID-19 benefits
Coronavirus outbreak: Liberals looking for support for bill reforming COVID-19 benefits

Extending the CERB with tweaks to create work incentives would be a better short-term policy option, said the group. An extended emergency benefit could include an income-tested claw-back or a temporary working bonus for low-wage workers, they said.

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Alternatively, the government could expand existing income support programs — EI in particular — and adjust the eligibility criteria to include people who are ineligible for CERB.

Which option would be the most appropriate depends on the length of the crisis, the recovery period and the number of CERB recipients needing financial support for longer, the group added.

‘Now is the time’ to modernize EI, economist argues

As far the Canadian Centre for Policy Alternatives (CCPA) is concerned, Ottawa should take this opportunity to update the EI program into a “modern” system.

“The system as it existed prior to the CERB was really built in the 1970s and still runs on 1970s computers,” said David Macdonald, senior economist at the CCPA, a policy research institute based in the national capital.

“It was built for a male breadwinner, nine-to-five model. … It’s not built for gig work. It’s not built for more insecure work. It’s not built for women in the workforce.

“Now is the time to start to create a better EI system. That needs to happen now, not in July.”

A more “modern” system could include some of the features of the CERB, Macdonald said, like its ability to handle a large volume of applicants, its speedier delivery and its “more generous application” to gig-economy workers and people working a small number of hours.

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However, given it’s nearly mid-June, it might administratively make sense for Ottawa to extend the CERB for an extra month rather than “rebuild an entire system in the next 30 days,” Macdonald said.

READ MORE: Loophole in CERB could leave seniors vulnerable to scammers, MP warns

The federal government gave itself the power to amend the maximum number of weeks that a worker can receive CERB payments through regulation, according to the bill approved by Parliament that introduced the emergency response benefit.

Robson argued that a failure to provide longer-term income support to some could have some serious effects on outgoing CERB claimants.

“If we do nothing, then what we’re essentially doing is condemning those people to either scraping together some kind of terrible work, maybe seeing some sort of rise in the underground economy, or essentially letting them fall through to provincial social assistance at a time when provincial governments are already under extraordinary fiscal pressure,” she said.

Feds say they’ll issue update ‘soon’

The federal NDP has called for the CERB to be extended. The leader of the Bloc Québécois said on Monday he also wants the benefit maintained, particularly to support seasonal industries.

Global News asked Qualtrough’s office if the federal government is considering extending the CERB’s 16-week maximum or any other options to provide longer-term income support to the unemployed.

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Coronavirus outbreak: Scheer says it’s ‘outrageous’ Trudeau isn’t concerned about fraudsters taking advantage of CERB
Coronavirus outbreak: Scheer says it’s ‘outrageous’ Trudeau isn’t concerned about fraudsters taking advantage of CERB
In a statement, Qualtrough’s press secretary Marielle Hossack said the government is aware that many workers’ CERB benefits will dry up in the coming weeks and it will “continue doing what it takes to make sure [Canadian workers] are supported.”

“We will have more to share soon on our continuing efforts to support Canadian workers and make sure help is available during this difficult time,” Hossack wrote.

Asked about the fate of the CERB on Tuesday, Prime Minister Justin Trudeau said the government is discussing this issue internally and with the opposition parties.

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“We’re looking very carefully at how we will move forward with the package of measures that we’ve put forward in a way that makes sense to both encourage people to get back to work, encourage companies to get going again, while at the same time supporting and protecting those people who cannot work because of the pandemic,” Trudeau said.

READ MORE: Fraudulent CERB applications could land Canadians with $5K fine, jail time

On Wednesday, the government is set to table a bill that seeks to impose penalties for fraudulent CERB applications and tweak the CERB’s designated four-week eligibility periods to make them more flexible.

That bill, a draft version of which was obtained by Global News, doesn’t seek to extend the 16-week maximum for the CERB. The prime minister said the government is open to amendments to the bill.

-With files from Global News’ Bryan Mullan