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UPDATE: Liberals to replace CERB with new benefit, simplified EI program at cost of $37B

(UPDATE: Aug. 20 @ 11:52 am): The federal Liberals are rolling out a $37−billion income−support plan for workers whose earnings have crashed during the pandemic.

The details released today outline what will happen to some four million workers receiving the $500−a−week Canada Emergency Response Benefit, which is set to wind down starting next month.

The CERB will be extended another four weeks, and a new benefit that pays $400 a week for up to 26 weeks will replace it for those ineligible for employment insurance.

Anyone eligible for EI will get the same minimum for at least 26 weeks and will need to have worked 120 hours to qualify, well below current EI requirements, since many Canadians have been unable to work to the pandemic.

<who> Photo credit: Canadian Press

There will also be $500−a−week sickness benefit and caregiving benefit for anyone who has to stay home because they’re ill, or because school or daycare is closed.

The three new benefits are expected to cost $22 billion and will be brought in through legislation once the House of Commons returns after being prorogued this week.

The CERB extension is expected to cost a further $8 billion, and $7 billion more to the EI system, and can be done through powers that Employment Minister Carla Qualtrough already has to create temporary EI measures.

Government officials estimate about one million people will need the new workers’ benefit that replaces the CERB, and three million will go onto the simplified EI program.

A guide to the new EI and the government's three new benefits for workers

The federal government is switching up its relief programs for unemployed Canadians after doling out $69.37 billion to 8.61 million people across the country whose jobs were impacted by COVID−19.

Here’s a look at how the new programs will work:

What is happening to the Canada Emergency Response Benefit and Employment Insurance?

The government is extending the CERB by an additional four weeks, thus offering a maximum 28 weeks of benefits. After that maximum is reached the government will launch a "simplified" EI program and three new kinds of benefits on Sept. 27.

Those on CERB will be able to transition to EI if they qualify under new parameters.

How many hours do you have to work to qualify for the new EI?

Canadians will now qualify for EI after working as few as 120 insurable hours, the equivalent of about 3.5 weeks, in the last 52 weeks.

EI claimants will receive a one−time credit of about 300 insurable hours for claims, if they have lost their job, or 480 insurable hours, if they have taken leave for a sickness, pregnancy or parental, compassionate care or family caregiver reasons.

Those credits will be available for one year and retroactive to March 15 for claimants who wanted to switch from CERB to EI maternity, parental, compassionate care, family caregiver or work−sharing benefits, but were stopped because they did not meet the hourly requirements.

How much money will people receive?

New EI claimants will receive at least $400 per week or $240 per week for extended parental benefits, if this is higher than their benefits would otherwise be.

Previous EI claimants were given 55 per cent of their average weekly earnings, up to a maximum $573 per week in 2020.

What is happening to the EI premium rate?

The EI premium rate is being frozen for two years at $1.58 per $100 in insurable earnings for employees and $2.21 per $100 in insurable earnings for employers.

What if I’m self−employed or don’t qualify for EI?

The first of the three new benefits is the Canada Recovery Benefit for workers who are self−employed or not EI−eligible and still require income support because their work has not yet returned due to COVID−19.

This benefit will provide $400 per week for up to 26 weeks, while claimants continue to look for work.

They will be able to earn income from employment or self−employment while receiving the benefit, but need to repay 50 cents of every dollar earned above an annual net income of $38,000 through their income tax return.

The benefit will be available Sept. 27 and paid in arrears.

What if I get sick or have to isolate for COVID−19?

The government will offer the new and temporary Canada Recovery Sickness Benefit to provide income support for workers that are sick or must self−isolate because of COVID−19.

The benefit will offer $500 per week for up to two weeks and cannot be received while claimants are also taking paid sick leave.

It is also available Sept. 27 and paid in arrears.

What if I have to look after kids or family member?

The government has announced the Canada Recovery Caregiving Benefit, a new and temporary program for workers who must miss work to care for a child under the age of 12, a family member or dependant because schools, daycares or day program facilities are closed due to COVID−19.

This benefit offers $500 per week for up to 26 weeks per household. It may be shared, but only one member of a household at any time can receive the benefit at a time.

Workers who prefer to keep dependents at home when facilities are open are not entitled to the benefit, which is effective Sept. 27 and paid in arrears too.

(Original story: Aug. 20 @ 6:40 am): The Liberals plan to use existing tools to quickly create a new support measure next month for struggling workers who won’t qualify for employment insurance.

Some four million workers will move onto EI next month when a key COVID-19 benefit for workers, the Canada Emergency Response Benefit, begins to wind down.

Millions more who have seen their incomes crash as a result of the pandemic-related shutdown won’t qualify for the decades-old social safety net program, but the Liberals had promised a new EI-like support for those who will still need the help.

Sources who have been briefed on the government’s plan say that transfer will be done through regulations, rather than legislation that could not be introduced until late September, following the prorogation of Parliament.

The measures are to be temporary and flow through existing programs and tools, the sources say, meaning the Liberals won’t need parliamentary approval.

<who> Photo credit: Canadian Press

The sources, who spoke to The Canadian Press on the condition of anonymity because they weren’t authorized to discuss the plans publicly, say details will come soon.

The Liberals have agreed on how to extend EI-like benefits to those currently deemed ineligible for the program, as well as a floor on the value and duration of payments.

Hassan Yussuff, president of the Canadian Labour Congress, said he sees the temporary measures as a springboard to a larger overhaul of the federal safety net.

Its weaknesses have been known for years and widely exposed through the pandemic-induced crisis, he said.

“We need to look at these temporary measures and figure out how do we incorporate some of that as permanent measures into the future,” Yussuff said, “because you can’t have a social safety net where a significant chunk of people don’t even have any net.”

Prime Minister Justin Trudeau has made clear his intention to reshape a safety net that supports a modern workforce and “gig” economy. The Liberal cabinet is slated to talk about the larger overhaul at next month’s retreat.

David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives, noted recently that about 4.7 million people were receiving the CERB at the start of August, with about 2.1 million not eligible for EI under existing program rules.

He added that just over half of CERB recipients at risk of being ineligible for EI are women, and they would also receive less than under the CERB.

NDP Leader Jagmeet Singh called on Trudeau to extend the CERB until the end of September and present a plan to fix EI by the end of this month.

“Millions of people across the country are stressed about how they’re going to make ends meet when the Liberals cancel the CERB at the end of the month,” Singh said in a statement issued Wednesday.

Unemployment is expected to remain high for the rest of 2020, with employment levels not reaching pre-pandemic levels until some time next year, based on Royal Bank forecasts released Wednesday.

It makes sense to help people in the short term, but the question for the government will be what to do if a large chunk of the labour force still needs help by late 2021, said Robert Asselin, a former adviser to Trudeau and now former finance minister Bill Morneau.

“If you create a program like EI and say, we’re going to support these people as long as it takes … you basically create a permanent income-support program and it’s hugely expensive,” said Asselin, now a senior vice-president at the Business Council of Canada.

“It’s going to have to be paid for by someone, including employers. You’re effectively putting a tax eventually on businesses, which I think would be very damaging in the current circumstances.”

Modelling done in the latest report on EI premiums showed rates would have to rise by five cents per year for four years in response to a recession like the one the country suffered during the 2008-2009 financial crisis.

The estimate didn’t account for any special, temporary economic measures the government could put in place like a rate freeze, or benefit expansion.



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