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Prime Minister Justin Trudeau said last Friday that some CERB recipients will soon move over to the country’s Employment Insurance program.

Jesse Johnston/The Canadian Press

After billions in payments to millions of Canadians affected by the COVID-19 pandemic, the Canada Emergency Response Benefit is coming to an end.

Those who have continuously received the benefit since mid-March are now in their final four-week stretch of coverage, which ends Aug. 29, and many will have already received their last $2,000 payment. The final eligibility period ends Sept. 26.

What comes next is a delicate dance for policy-makers. CERB has paid some $62.75-billion to 8.5 million unique applicants. The uptake wildly exceeded Ottawa’s estimates, and keeping those payments flowing over a lengthy recovery period was likely untenable. The federal government last month projected a deficit of $343-billion for the current fiscal year.

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At the same time, the labour market is nowhere close to fully healed, and millions of people still need some level of financial support. The federal Liberal Party will need to figure out how to help those in hard-hit industries, while also encouraging people to accept work that pops up.

Details of the transition are trickling out. Prime Minister Justin Trudeau said last Friday that some CERB recipients will soon move over to the country’s Employment Insurance program, which was sidelined as the pandemic hit to provide broader support for affected workers.

What you need to know about managing your finances during the pandemic

Still, programs will be changing. In the coming weeks, a new “parallel benefit” will be unveiled for those who don’t qualify for EI, such as gig or contract workers, Mr. Trudeau said. He also signalled a broader overhaul to EI: “We intend to cover every Canadian who is looking for work with a better, 21st-century EI system.”

As it stands, EI isn’t up to the task of handling the coronavirus fallout.

Who qualifies for EI?

To qualify for regular benefits, claimants must have paid EI premiums, lost a job through no fault of their own, and worked between 420 to 700 hours of insurable hours, depending on the local unemployment rate. The hours must have accumulated over whichever is shorter: the preceding 52 weeks, or the length of time since the start of a last claim.

Minister of Employment Carla Qualtrough said last Friday that a retooled EI system is ready to accept around four million applications in September.

How do EI payments compare?

For most people, regular EI benefits are equal to 55 per cent of average insurable weekly earnings, to a maximum of $573 a week. For that reason, a switch from CERB – which pays the equivalent of $500 weekly – could result in less generous benefits.

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For example, a full-time retail worker earning $500 a week before the pandemic would have her earnings fully covered by CERB. If she moves to EI and remains unemployed, her benefits would drop to $275 a week. “People need to be prepared for that and know that it’s coming,” said Tammy Schirle, an economics professor at Wilfrid Laurier University in Waterloo, Ont.

Who doesn’t qualify for EI?

A lot of people. About 1.1 million Canadians were unemployed at some point in 2018, and 64 per cent of them had contributed to the EI program. Still, only 42 per cent of all unemployed people were eligible for coverage. Many had not worked enough insurable hours to qualify, or did not have valid job separations, such as quitting to go back to school.

Since 2010, the self-employed have been able to participate in EI special benefits, which include sickness and parental benefits, but participation is meagre. In 2018, an estimated 10 per cent of the self-employed made contributions, according to an analysis from University of Waterloo economics professor Stéphanie Lluis.

“Therefore, designing parallel benefits for the self-employed will be crucial,” she said.

In February, roughly 2.9 million people in Canada were self-employed, equivalent to 15 per cent of all workers. They have been huge recipients of CERB.

Ottawa’s fiscal snapshot noted that 40 per cent of the self-employed said they had applied to CERB as of May, compared to 12 per cent of private-sector employees and 5 per cent in the public sector. The ranks of the self-employed include many gig workers. Those who rely exclusively on gig income are ineligible for regular EI benefits.

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How to amend EI?

Prof. Schirle suggests loosening some of EI’s conditions. For instance, recipients must be “ready, willing and capable of working each day,” which could be less feasible during a public-health crisis. In a March report, the Canadian Centre for Policy Alternatives suggested lowering the qualifying threshold to 360 insurable hours for regular and sickness benefits. That may wind up happening.

Ms. Qualtrough said the government is looking at “flexibilities” for qualifying criteria, such as the number of hours worked. “We are looking to relax them,” she said.

What about the parallel benefit?

Under CERB, recipients can earn up to $1,000 during the four-week eligibility periods, but forgo their $2,000 benefit if they exceed the income threshold. “The current parameters of CERB are quite strict,” said Prof. Lluis.

Instead, she suggests the transitional benefit use something like EI’s Working While on Claim component. Under WWOC, you can keep 50 cents of your benefits for every dollar earned, up to 90 per cent of your previous weekly earnings. This would encourage people to accept work opportunities without sacrificing financial support.

Mr. Trudeau said the parallel benefit will include access to training, and allow people to “work more hours and earn more money while receiving the benefit.”

The big questions

By and large, what’s coming is fuzzy. How inclusive will EI become? Will all self-employed workers receive support? How will the parallel benefit compare to EI?

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“If you were that person who was earning $500 a month, you’re going to be paying a lot of attention to whether people in EI are better off than this parallel EI, or if they end up with the same benefits,” Prof. Schirle said.

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