Ottawa eases EI eligibility as part of $37-billion in new income supports

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The Liberal government announced $37-billion in new income-support measures Thursday as it drastically eased eligibility rules for employment insurance, offering coverage for the underemployed that extends well into 2021.

Ottawa outlined how it will transition people off the Canada Emergency Response Benefit, which provides $500 a week to people whose employment was significantly affected by COVID-19. CERB proved to be the most substantial federal support measure related to the pandemic, paying out $68.5-billion as of earlier this month to 8.6 million applicants.

The government said Thursday that CERB eligibility will extend for one additional month, allowing maximum coverage of 28 weeks. CERB will end Sept. 26 and its extension will cost about $8-billion.

After that, workers needing further support will have the option of applying to a temporarily revised EI program or one of three new income-support programs related to the pandemic.

The transition plan was announced during a tumultuous week in Ottawa. Bill Morneau resigned as finance minister and member of Parliament on Monday, with Chrystia Freeland taking the helm of his department Tuesday. The Globe reported this week that the Prime Minister’s Office and Mr. Morneau’s team had squabbled over the size and scope of federal support programs.

As part of Tuesday’s shakeup, Prime Minister Justin Trudeau prorogued Parliament until Sept. 23, saying he needed a Throne Speech to outline a longer-term economic recovery plan and confidence vote. The move raises the possibility of an election, and also shuts down committee investigations into the Liberal government’s WE Charity controversy.

Thursday’s announcement was the first delivered by Ms. Freeland as Finance Minister, and she was accompanied by Employment Minister Carla Qualtrough.

“Because of the COVID-19 pandemic, many workers have lost their jobs or worked greatly reduced hours, which might make them ineligible for EI. We recognize that, so we’re going to make it easier for Canadians to get EI support,” Ms. Freeland said.

“Let’s be clear: We have had some success at flattening the curve of the pandemic. But we’re not out of the woods yet.”

The EI program is subject to several temporary changes lasting one year from Sept. 27.

To qualify for regular EI benefits, which are tapped after a job loss, recipients will now need at least 120 hours of insurable work over the previous year. (Under prepandemic rules, it was at least 420 to 700 hours, depending on a claimant’s local unemployment rate.) There is now a floor of $400 in weekly benefits, and minimum coverage of at least 26 weeks.

The government says this lower threshold of 120 hours is meant to address the fact that the pandemic has prevented many Canadians from accumulating the number of insurable hours normally required to access the program.

“There is a clear logic in temporarily reducing qualifying hours given the disruption to work patterns that the pandemic has created,” Brian DePratto, senior economist at Toronto-Dominion Bank, said in a client note.

In other quarters, the reduction was criticized. “This is just too low a bar and will serve as a disincentive for many part-time workers to return to their pre-COVID employment,” Dan Kelly, president of the Canadian Federation of Independent Business, said in a statement.

As before, benefit recipients are required to be looking for work. Recipients may accept some work while maintaining some of their benefits. The provision reduces EI benefits by 50 cents for each dollar of earnings, up to 90 per cent of previous weekly earnings.

The EI program is normally paid for by payroll premiums collected from workers and employers. The government said it intends to freeze existing premiums at current levels for two years.

Beyond EI, there were a host of other changes for those needing financial support.

The new Canada Recovery Benefit is for workers who are self-employed or are not eligible for EI and cannot resume work. It will provide $400 a week for up to 26 weeks. Workers will need to repay 50 cents of every dollar earned above an annual net income of $38,000 through their income tax return.

The Canada Recovery Sickness Benefit is for workers who are ill or who must self-isolate for reasons related to COVID-19, providing $500 a week for up to two weeks.

“If you get COVID – and trust me, I did – it’s something that lasts longer than two weeks and is quite debilitating,” said Miles Corak, an economics professor at the City University of New York and formerly of the University of Ottawa, who researches the Canadian labour market and social supports. “So you wonder why they limited it so much.”

The Canada Recovery Caregiving Benefit is for workers who are unable to work because they are caring for a child, dependent or family member because schools or daycares are closed owing to COVID-19, and provides $500 a week for up to 26 weeks per household.

The three new programs are expected to cost $22-billion and the expansion of EI benefits is projected to cost $7-billion, bringing the total cost to $37-billion, including the one-month CERB extension.

As of July, roughly 55 per cent of three million jobs lost between February and April had been recouped, and the unemployment rate stood at 10.9 per cent. Employment is down about 1.34 million from precrisis levels.

“These are positive steps forward,” Sheila Block, senior economist at the Canadian Centre for Policy Alternatives, said of Thursday’s changes. “They are giving some degree of certainty to people who are facing a great deal of uncertainty in their life.”

Ms. Qualtrough said that with 12-month rules, there are now clear options in place in the event that Canada faces another spike in COVID-19 cases. “It’s a guaranteed way that if there are outbreaks, or if there’s a second wave, that immediately these systems will be able to take in Canadians who we ask to stay at home again if it comes to that,” she said.

Conservative MPs Dan Albas and Pierre Poilievre said in a statement that some of the measures, including incentives to accept available work, should have been adopted months ago. They also noted the legislation won’t be introduced and debated for weeks because of the decision to prorogue Parliament.

“It is unacceptable that the Trudeau government announced these changes days after locking out MPs and shutting down Parliament,” they said.

Similarly, NDP MP Daniel Blaikie said in a statement that his party is pleased to see new paid sick leave, which the NDP called for, but said the prorogation creates uncertainty.

“Because they shut down Parliament, Canadians now have to wait another month to see if what the Liberals are promising will ever actually happen,” he said.

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