There are two sets of changes coming to employment insurance, and both are going to have a major impact on Canadian politics.
The first will be launched next week, when the Liberal government starts the process of cramming COVID-19 emergency benefits together with EI – and a lot of folks who had been receiving $500 a week from the Canada Emergency Response Benefit, or CERB, will learn their payments will be reduced.
The second is something that is now in Prime Minister Justin Trudeau’s plans for 2021: a major reform that will expand EI permanently to include gig workers and more of the self-employed.
That second, broader move to expand employment benefits is likely to be a major part of Canada’s postpandemic politics.
Mr. Trudeau’s team is considering big social initiatives, arguing that the COVID-19 crisis has shown Canadians why they need greatly expanded supports – taking a crisis that saw Canada run a $350-billion deficit as an opportunity to expand government programs permanently. His Conservative opponents, under a new leader, will presumably oppose a lot of that.
But before that fight, the Liberals will have to navigate the immediate politics of merging CERB into EI.
CERB is supposed to wrap up at the end of September, but for people who have been receiving it from the beginning, back in March, benefits run out Aug. 29.
Recipients who aren’t back to work are supposed to move onto employment insurance, but under current EI rules, most of them would be ineligible. About 4.7 million received CERB at the beginning of August, but labour force surveys suggest only about 40 per cent would be eligible for EI, according to David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.
Mr. Trudeau has promised a “parallel benefit” for most CERB recipients who don’t qualify. The plan, according to insiders, is to have that benefit administered separately for now but to move it to EI systems in a few months.
But it’s complicated.
For starters, a lot of people getting CERB never paid into EI, but they are receiving $500 a week – more than a lot of people who paid EI premiums would get from employment insurance. Under current rules, EI recipients get a minimum benefit of about $275 a week and a maximum benefit of about $573, depending on the employment income.
So expect the government to try to cut things down the middle. It wouldn’t be equitable for recipients of the post-CERB “parallel benefit” to receive more than those who paid EI premiums. So the government will make the parallel benefit lower than CERB – perhaps $350 or $400, no one will say definitively – and raise the minimum EI benefit to match.
That by itself will create winners and losers, and political headaches for the government. But there are also many, many other rules to match up. How long will benefits last? How much income can you earn before you lose them? Those details matter, and Daniel Blaikie, the NDP critic for employment insurance, notes that Mr. Trudeau’s Liberals are waiting till just weeks before many people run out of benefits. “People’s houses are on the line,” Mr. Blaikie said.
But all these temporary moves to mash CERB into EI raise other questions. A lot of CERB recipients who aren’t eligible for EI are self-employed or gig workers, such as Uber drivers. They received benefits in a pandemic, without paying in – but Mr.` Trudeau plans to do a major EI reform to bring such uncovered workers into the system.
That would be a vast expansion. EI typically pays benefits to about 40 per cent of the unemployed. In February, before the pandemic lockdown, 442,590 received EI benefits. Covering everyone would mean more than a million on EI when the economy is strong.
But that is where Mr. Trudeau is headed: From a crisis-era merger of emergency benefits, to a permanent, major expansion of employment benefits.
That is just one part of what Liberal insiders are touting as a major policy agenda to come. But it’s an illustration of the postpandemic politics to come. This crisis has pushed Canada deeper into debt, running deficits not seen since the Second World War. Mr. Trudeau will almost dare his Conservative opponents to start talking about fiscal restraint, while he proposes to expand government supports permanently.
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