The rocky relationship between CERB, EI and getting back to work

Back to school concerns compounded by back to work woes

While parents worry about sending their kids back to school in September, millions will be without work and without government assistance. The Canada Emergency Response Benefit (CERB) runs out in September. It provided   $500/week to pay the rent and buy groceries.

The future looks especially bleak for those previously employed in the service sector. They represent the largest sector -three out of every four jobs.  With isolation measures in place, many jobs in the food and tourist accommodation sectors are lost for a long time.

Without CERB, a cloud of debt hangs over the unemployed. Canadians owe $1.77 for every dollar available to spend as of June, 2020.

The holders of that debt face a problem as well. Banks were happy to see Canadians in debt as long as the credit cards, loans, and mortgages were paid off with profitable interest. But what do banks do when Canadians can no longer pay debt?

Canada’s Big Six banks face growing loan losses as government programs wind down, and loan-deferral and interest rate relief programs come to a halt. Banks have already set aside $11 billion for losses but that may not be enough.

CERB has kept the wolf from the door so far. Personal insolvencies are below average and credit payments have remained stable.

The government of Canada faces a big problem as well. You only have to look back at the Dirty Thirties to see what happens when there are no jobs and no government support. Men left their desperate families on dustbowl farms and wandered the countryside on trains trying to find any work and money to send back home to starving families.

As of Tuesday, Prime Minister Trudeau has prorogued Parliament to deal with the crisis, a move that sets up a confidence vote this fall that could trigger a 2020 election.

Here’s the problem that the Trudeau government faces.

As of last March all EI recipients were rolled into the CERB program and received $500 a month. The feds will discontinue the CERB program at the end of this month and move recipients back to EI or an “EI-like” transitional benefit. Just what will an EI-like program look like?

There are major holes in the move back to EI as it now stands, according to calculations done by David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.

At the start of August there were 4.7 million people receiving the CERB. Because EI has no minimum, 811,000 of those would receive less on EI than they did on CERB; instead of $500 a week, they would receive only $312 on average.

And under current EI rules, 2.1 million of those receiving CERB will not be eligible; they will get nothing at all. In B.C., that’s 324,000 who were previously receiving $500/week who will now get nothing.

The clock is ticking as CERB runs out. I look forward to the Throne Speech on September 23 and the federal plan in which “no one will be left behind,” as Trudeau promised.

 

A good economy

A good economy will feature work rather than growth for growth sake. Some progressives think that negligible growth is inevitable, perhaps even desirable. Too much growth, so the argument goes, consumes too much of the Earth’s resources. It doesn’t have to be that way says Economist Jim Stanford.

“I disagree on all counts. I do not think that slow growth is natural, inevitable or desirable. I do not think that stagnation and recession will fix environmental problems; more likely, they will make things worse (CCPA Monitor, May/June, 2016).”

New jobs can be created when a nation decides to.

New jobs can be created when a nation decides to.

There are many ways to create growth. One is through capitalism and the unsustainable plunder of the Earth’s resources which focuses on fat dividends for investors.

Another is through work. It’s not like there is a shortage of things to be done, much of it in the service sector: better care for seniors, health care, child care, education, and the arts. Many more jobs wait in green technologies; building and repairing roads and bridges, schools and cultural facilities, public transit. Jobs will continue in areas such information technology and as energy extraction (we won’t stop using fossil fuels tomorrow).

Increased service sector jobs are a novel concept when seen through the lens of Neoliberalism where growth is seen as a function of profit. And it’s a mistake to think that growth is even their primary motive. Greed is. Capitalism is organized to reinforce the wealth and power of a few.

Neoliberalism does not encourage growth. To reduce input costs, wages are driven down. Workers are disempowered through de-unionization and precarious work. “These are all anti-growth policies,” says Stanford.

A measure of growth is the Gross Domestic Product: the total value of goods produced and services provided in a country. In order to keep up with the growth of population and productivity, the GDP should grow by about two per cent annually says Stanford. Any slower and unemployment increases.

The growth of jobs in the service sector may sound a bit fanciful because of resistance from capitalists. Try as they might, they haven’t managed to squeeze much profit out of health care and education.

It’s not fanciful when you remember that we did it once before. Canada and other Western nations pulled themselves up by the bootstraps during the Second World War by creating jobs that met a national objective, not corporate profits.

Unemployment disappeared within months. Untapped sources of labour were drawn into the workplace, particularly women. The bloom of job growth lasted decades with a reduction in poverty and improvement of life expectancy.

Who’s going to pay for it? During the war, money was never a constraint in spite of the hard times of the Great Depression. With modern credit, raising capital is easier than ever. Private financial institutions create money out of thin air whenever it suits their profit-driven motives, as I discussed in my column of December, 2015 How to make money.

Governments can similarly create money, as they did when they saved banks and industry after the Great Recession of 2008. The only thing stopping the growth of service sector jobs is the government’s fear that they will offend the sensibilities of corporations.