How much can the CERB help workers and businesses?

How much can the CERB help workers and businesses?
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Thomas Desormeaux

Thomas Desormeaux

Thomas Desormeaux is a reporter and writer who lives close to the border of Oakville and Mississauga. He has lived in the GTA for his entire life and is interested in global events, politics and government. follow on twitter @TommyDesormeaux

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The Federal government’s new Canadian Emergency Response Benefit (CERB) began accepting applications on its web portal Monday. It received registration from close to a million Canadians. The process had to be split into different registry days based on the birth month of applicants. This was in order to deal with the overwhelming numbers of applications that were expected. The CERB was created in response to the financial instability many Canadians are experiencing during the COVID-19 pandemic.

On Monday, March 23, the province of Ontario ordered the closure of all non-essential businesses. Then, provincial and municipal governments first encouraged, then ordered, people to stay at their homes as much as possible in order to slow the spread of COVID-19 infections.

Some Oakville jobs can be performed remotely during the closures. This allows employees to do their work through email and video conferencing. Other Oakvillians however, have no way of earning income during the pandemic. These people usually work in the service or retail sectors.

“This time has created unprecedented challenges that require unprecedented solutions,” says Drew Redden, President and CEO of the Oakville Chamber of Commerce. “It’s absolutely been a significant impact on the average Canadian employee.”

Effect on workers

Redden says that his organization has heard from Oakville workers in many different sectors of industry, from service to tech. “Nobody is immune to the economic impact of COVID-19, whether it impacts your business directly, your customers, or your supply chain,” he says.

Statistics Canada released the results of its monthly Labour Force Survey this Thursday. The survey logs data of a representative sample group in order to create an accurate picture of employment in Canada. This month’s data set is for March. It will be the first to cover the Canadian labour market’s transition into the time when pandemic-led closures began. The results showed a massive decline in Canadian employment. The province of Ontario lost 402,000 jobs alone.

“The amount of economic activity has fallen a lot,” says Jason Dean, an economics professor at Sheridan College. Dean has a PhD from McGill University. “If Oakville loses 25% of its economic activity for a month, it’s a pretty big deal. And that would be a conservative estimate.”

Retail and service industries are expected to be hit hardest by business closures since there in-person interaction is key. An Employment Survey for Halton Region in the 2016 Canadian Census found that there were more than 6000 businesses in service or retail. This represents 37% of overall workers.

New federally funded programs like the CERB are meant to supplement existing ones like Employment Insurance (EI). They are better designed to help Canadians in these unparalleled circumstances.

“Even in the Great Depression, there was still 75% of the labour market working. The biggest drop for employment in a single month in the Great Depression was 2.5%, this will be much worse,” says Professor Dean.

Comparisons to the Great Depression may seem dramatic but many economists believe this labour shut down is as dramatic as what occurred in the 1930s. One of the main differences between Canada now and then however, is government programs that support workers, programs like the CERB.

CERB Businesses Workers 1930s

Some economists believe that the current drop in employment could be worse than during the Great Depression.
image courtesy of unsplash.com

“When you make comparisons to the Great Depression, there’s a lot of differences. If you lost your job then, you didn’t get unemployment insurance,” says Professor Dean. “That’s one of the positive things about nowadays, the government can come in and immediately cut interest rates, immediately come up with billions of dollars in spending.”

The CERB provides eligible Canadians with $500 a week for up to 16 weeks. It is meant as temporary income support and does not come close to replacing many people’s weekly pay from before the pandemic. Programs like the CERB can give valuable help to individuals and families struggling to make ends meet. That being said, they are by no means a sustainable solution to businesses being shut down. Another concern during the pandemic is that a drastic drop in consumption will lead to businesses filing for bankruptcy.

Businesses in trouble as well

With non-essential businesses shut down, the majority of Oakvillians are isolating themselves in their homes. This means stores and restaurants have no source of revenue. This is another way that this situation’s different from recessions of the past, the complete lack of demand in the market. The Conference Board of Canada found that March 2020 had the largest decrease in consumer confidence of any month they’ve ever recorded (beginning in 1960). Many people in Oakville are spending much less than they were before COVID-19.

Kayla Rach was laid off from sales job at a gym in Oakville when it closed down due to the pandemic. The payment from government income support wouldn’t usually be enough to survive on. That was before isolation caused a substantial cut to her monthly expenses.

CERB Businesses and Workers Theatre

The province of Ontario closed all non-essential businesses on March 23.

“If it were normal circumstances, it would not be enough, no,” she says. Most of the businesses where she usually spends money are now closed. “Even with the ones that are open, there’s just so much danger now that I don’t want to take any unnecessary risks that I don’t have to.”

There has been criticism of the Federal government that the CERB does not offer financial aid to groups of people like part-time workers and students. Prime Minister Trudeau announced at a press conference Monday that more support for these people will be available soon. But the effectiveness of the core concept of the CERB and all programs like it will likely depend on how long the COVID-19 pandemic lasts.

The future

“These programs are all good, they’re a help. They aren’t sustainable in the long run to keeping our economy afloat. We need to be creative and we need to be responsive,” says Drew Redden. “This is not an issue that anyone can afford to stand on the sidelines for. It’s impacting our entire economy and it takes all hands on deck to make sure we bring our concerns forward to the government and that the federal and provincial governments are listening to the business community to understand what measures will make the biggest impact,” he says.

This is impacting our entire economy and it takes all hands on deck to make sure we bring our concerns forward to the government and that the federal and provincial governments – Oakville Chamber of Commerce President & CEO Drew Redden

One bright spot is how smoothly different elements of Canadian politics are working together. Different parties and different branches of government have come together to institute programs like the CERB at an impressive clip.

“If we are all able to work together, the impact should be lessened,” says Redden, discussing the business community as well as politicians. “These programs usually take years to develop and our government is rolling them out in a matter of days. There will be gaps but it is our job to make sure the government is aware of those gaps and that these programs are helping as many people as possible.”

It is essential to support Canadians in tough times like these. Experts also agree that it is essential to prop up businesses to assure a quick recovery once things open back up. Temporary income support is at best a valuable band-aid for economic stability while the country and the world work to end the threat of COVID-19.

“It really depends on the duration, and how much income is actually going to be lost,” says Professor Dean. “So, if we flatten the curve quickly, we can mitigate any structural changes and impacts.”


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