The end of CERB: A look at how and when the coronavirus aid may wrap up

Click to play video: 'At what cost? The financial impact of extending CERB'
At what cost? The financial impact of extending CERB
WATCH: At what cost? The financial impact of extending CERB – Jun 16, 2020
A day after the federal government announced an eight-week extension, questions are being raised about how and when the federal government will end the Canada Emergency Response Benefit (CERB) program amid the novel coronavirus pandemic.

Moshe Lander, an economist at Concordia University, said the government has three options to transition from the CERB program.

The “most likely” option is to phase the program out slowly, Lander said.

This means recipients would see a slow decrease in the CERB payment amounts over the course of several months, or even a year’s time.

At least then there’s stability for people to transition their way out of it where it’s phased out,” Lander said. “And maybe [the government] allows you to still qualify for some form of CERB even after you go back to work so that we don’t have this binary choice of either collect CERB or go to work.”
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Click to play video: 'What you need to know about CERB’s extension'
What you need to know about CERB’s extension

Another option, Lander said, is to turn CERB into a permanent program, like Employment Insurance (EI) or the Canada Pension Plan (CPP).

“You could imagine that five years, 10 years out, one of our payroll deductions is a CERB deduction,” he said, “The way we have EI or CPP, those types of things.

The third option, albeit less likely, Lander said, is to cut the CERB program “cold turkey.”

That, of course, would be very, very disruptive,” he said, adding that this could result in many people being left without a way to pay their rent or mortgages.

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Bolstering existing programs

Mikal Skuterud, an economics professor at the University of Waterloo, said as the economy continues to open, he would like to see a greater push toward the Canada Emergency Wage Subsidy program (CEWS).

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CEWS offers businesses affected by COVID-19 a subsidy for employee wages of 75 per cent for 24 weeks.

The program was developed in hopes of helping businesses re-hire workers who had been laid off due to the pandemic.

“I’d almost prefer that the government says to employers, ‘Listen, even if you can’t use your workers right now and your restaurant’s closed, we will pay you 80 percent of your wages just to retain them on staff,'” Skuterud said. “And so I think we’re going to have to move in that direction or at some point.”

But, Skuterud said there will be people whose jobs no longer exist.

For those people, Skuterud said the government should bolster the current EI program, and work on fixing existing gaps — especially those that allow self-employed people to fall through the cracks.

Click to play video: 'Federal government extends CERB by 8 weeks'
Federal government extends CERB by 8 weeks

But, Lander said while improving EI would be a good step to take, it’s a “temporary fix.”

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He said the government should also bolster retraining programs, to help people find new, viable jobs.

“What is the next wave of jobs that’s coming? And what are the skills that are needed to succeed in those jobs?” he said.

When will the transition happen?

The eight-week CERB extension was announced by Prime Minister Justin Trudeau on Tuesday.

Speaking to reporters on Tuesday, Trudeau said as demand for CERB decreases, the government is looking at “international best practices” and will “monitor the economy and the progression of the virus to see what changes, if any, need to be made to the program so that more people are properly supported.”

But, he did not indicate if or when there would be a transition from CERB.

Skuterud said these are “really tough decisions,” that are going to “take time to figure out.”

“The target is constantly moving, too,” he explained. “So you’ve got to anticipate where we’re going to be in eight weeks.”

Skuterud said he was “surprised” the CERB would be extended, and would be “even more surprised” if it were extended again after this period.

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He said he is “quite concerned” because the longer an employee is temporarily laid off, the less they are to return to work.

“We know that,” he said. “There is lots of evidence from other recessions.”

Skuterud said this extension is likely the government trying to “buy time” to devise a plan to successfully transition from the program.

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Liberals to release Canadian economic, fiscal ‘snapshot’ on July 8

But, Lander said he expects the program will be extended again, saying it would be “implausible” the government wouldn’t renew it.

“What the government doesn’t want to do is commit right now saying ‘we’re going to extend this a year,'” he said. “That would be fiscal suicide for them at this point.”

In eight weeks time, Lander said fall will be fast approaching, and Canada could see a second wave of COVID-19.

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And, Lander said he expects the government will continue to provide CERB through the holiday season.

“I think that this CERB is with us at least until 2021,” he said.

There’s a lot of optimism that by that point, we’ll either have the mass rapid testing or we’ll have the vaccine in clear sight, which is going to allow us to get back to something that’s normal,” he said.

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