Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Employment, Workforce Development and Disability Inclusion Minister Carla Qualtrough listens to a question during a news conference on Aug. 20, 2020 in Ottawa.

Adrian Wyld/The Canadian Press

For weeks, the Liberals have labelled their Conservative rivals as heartless for suggesting that the structure of the Canada Emergency Response Benefit was discouraging Canadians from returning to work.

Employment Minister Carla Qualtrough continued to do so on Thursday, even as she unveiled a new benefit that would replace the CERB once it winds up next month, while extending emergency income supports for an additional year.

“Fundamentally, we believe Canadians are honest and that they want to work. There are other parties who think Canadians would prefer to stay at home,” she said after reporters asked her whether the original design of the CERB was a disincentive for workers to return to their jobs. “But we think that recent labour market data shows just the opposite – when jobs are available, Canadians will take them because they want to work and provide for their families.”

Story continues below advertisement

Economists agree with Ms. Qualtrough’s assessment of labour market data: So far there is no evidence the CERB created a wave of workers refusing to work. Mikal Skuterud, an economics professor at the University of Waterloo, said the proportion of jobless Canadians (excluding those on temporary layoffs) looking for work in July was only slightly lower compared with July, 2009, during the height of the economic fallout from the financial crisis.

But even as the Liberals critique assertions of disincentives, their recasting of emergency benefits is an implicit acknowledgement that the original CERB pulled in that direction.

Critics of the CERB took aim at three main issues: that it was too generous, with the $500 weekly benefit competing with full-time pay for a minimum-wage worker; that it did not require recipients to look for work; and that it penalized recipients who worked more than a few hours, since benefits were stopped entirely for anyone earning more than $1,000 a month.

Solving the economy: Liberals say Canada needs a green, inclusive, equitable recovery. Can Chrystia Freeland deliver?

Bill Morneau facing ‘tough’ odds in candidacy for secretary-general at OECD

The Liberals’ changes to emergency benefits deal with all three. Weekly benefits for the successor to the CERB, the Canada Recovery Benefit (CRB), are $400, a 20-per-cent reduction. For those eligible to receive Employment Insurance, the government has also set a $400 floor; anyone with an annual income of less than $37,900 would receive higher payments than under regular EI rules that replace 55 per cent of lost income.

Derek Holt, head of capital markets economics at Bank of Nova Scotia, said the current income supports are a necessary and desirable measure, but added that he is concerned that generous benefits may end up competing with wages in the longer term.

Unlike its predecessor, the CRB requires recipients “to look for and accept work when it is reasonable to do so.”

And, most significantly, the new benefit, slated to last 12 months, removes the steep financial penalty that kicked in for recipients working part-time. Under the CERB, recipients could earn up to $1,000 a month without penalty (a change from the original incarnation, which allowed for no earnings at all). Even one additional dollar of earnings resulted in the entire $2,000 benefit being clawed back, an obvious disincentive for lower-wage workers unable to fully return to work.

Story continues below advertisement

The new benefit, which mirrors EI rules, is far less restrictive. Recipients face no clawback at all until their annual earnings exceed $38,000. After that, they have to eventually repay 50 cents of benefits for every dollar of earnings. For someone receiving $400 for the maximum possible 26 weeks, benefits would not be entirely clawed back until their annual earnings exceeded $58,800 – far higher than the $36,000 ceiling under the CERB.

Tammy Schirle, professor of economics at Wilfrid Laurier University in Waterloo, Ont., said the new clawback structure is an improvement, particularly since many lower-wage workers won’t see their benefits reduced at all as they return to the work force.

She said the 12-month lifespan of the CRB is also a plus, since it will give Canadian workers some clarity and certainty over income supports should there be follow-on waves of the coronavirus.

But both Prof. Schirle and Prof. Skuterud sounded a note of caution about making such programs permanent, saying that could create noticeable disincentives for Canadians to return to work. (Ms. Qualtrough said Thursday that “it’s too early to tell” whether the changes announced this week will be made permanent.)

Prof. Skuterud said that the disincentive impact of the CERB was likely muted by the fact it was temporary – turning down a job for a few additional weeks of payments might not make long-term financial sense. A permanent program paying out the same level of benefits might well discourage a return to work, he noted. “It’s really important that they be temporary, and people understand that they are temporary.”

Tax and Spend is a weekly series that examines the intricacies and oddities of taxation and government spending.

Story continues below advertisement

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies