Anxiety, uncertainty as local emergency relief recipients face shift to EI

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Many of Southwestern Ontario’s tens of thousands of unemployed could be in for a rude awakening next month when Canada’s main COVID-19 relief program ends.

Under pressure to rein in costs and get people back to work, Ottawa is ending its Canadian Emergency Response Benefit, or CERB, that paid $2,000 a month to those who lost their jobs because of the pandemic and shifting them instead onto Employment Insurance (EI).

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The Canadian Centre for Policy Alternatives, a left-leaning think tank, estimates the switch will leave more than 1.2 million unemployed Ontarians worse off.

Many recipients of the few-strings-attached CERB — the self-employed and those making as much as $1,000 a month, for example — aren’t eligible for EI.

Others, who were in low-paying work before the pandemic struck, are likely to find they’ll get less, in some cases much less, under EI, which is tied to how much a person earned before losing their job and pays a maximum of $573 a week

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“The biggest challenge will be for people that crash out of the system entirely,” leaving CERB and left behind by EI, said David Macdonald, a senior economist with the think-tank who crunched the numbers.

His data suggest most people transitioning to EI will bump down to about $1,200 a month, a dramatic drop from the $2,000 a month under CERB.

“That’s a pretty big decline in support,” he said.

More than 8.5 million Canadians stampeded to CERB as job losses in the pandemic mounted.

Winding down the program, which is expected to end up costing $80 billion, has left many unemployed people anxious and unsure what to expect five months into a pandemic with the unemployment rate still in the double digits.

Just ask Craig Wonnell of Embro, near Woodstock. He’s been on CERB and expects to go onto EI while looking for work, but isn’t sure what benefits he’ll qualify for.

“It’s a little scary and unnerving,” he said. “I have no idea what’s going to happen.”

Making ends meet on CERB has been challenging, said Wonnell, who used to work in sales and marketing for retirement homes. He said he’s fortunate his wife has returned to work amid the pandemic, but he’s still concerned about his EI benefits.

Only about 600,000 CERB recipients in Ontario will be eligible to switch to EI, Macdonald estimates, and those who do, he says, are likely to make much less.

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Almost 3.4 million Ontarians applied for CERB through the duration of the benefit.

Big-city Southwestern Ontario, like much of Canada, was clobbered by the COVID-19 pandemic, with jobless rates shooting as high as 12.6 per cent in London and 16.7 per cent in Windsor. Rates for smaller and rural areas are tougher to pin down because they fall outside metro areas whose unemployment is routinely tracked.

Big-city rates have since come down, the latest July figures show. London now sits at 10.5 per cent unemployment, with 28,000 people jobless, and Windsor at 12.5 per cent, with 21,000 unemployed.

But the figures aren’t much comfort for folks like Wonnell, who’s steeling himself to look for work much farther afield amid Southwestern Ontario’s rocky job market. He’s applied for jobs as far away as Mississauga and Barrie.

“I’ve never been on EI in my life. This a first for me,” Wonnell said. “It’s not something I want to be on forever.”

Monday, Ottawa announced temporary changes to the EI program that will see more Canadians eligible for the benefit, extending the minimum eligibility period to six months.

EI benefits are typically calculated based on the unemployment rate of a given economic region, which determines the minimum number of hours needed to be eligible and how long someone can claim benefits.

All regions will now adopt a minimum 13.1 per cent calculation rate, regardless of whether the area’s jobless rate is actually lower. Regions with a higher unemployment rate will see EI calculated at that number.

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With the new figure, individuals will have to have worked 420 hours to qualify and will receive at least 26 weeks of benefits, to a maximum of 45 weeks.

The calculation rate in most of Southwestern Ontario’s economic regions, including London, South Central Ontario, Niagara and Windsor, will rise to 13.1 per cent.

The Huron economic region, which includes Chatham-Kent, Lambton and parts of Essex and Elgin counties, will follow its actual unemployment rate of 13.8 per cent for calculating EI premiums.

By comparison, Ontario’s jobless rate stands at 11.3 per cent and the national rate at 10.9 per cent.

The basic rate to calculate EI is 55 per cent of a person’s average weekly earnings.

But the updated program still leaves some out in the cold, despite Trudeau government promises that a Band-Aid benefit will come.

The requirement that an EI beneficiary must be actively looking for work becomes complicated during the pandemic, said Audra Bowlus, a Western University economics professor.

“It’s not clear to me how the government will enforce that for people who have health conditions or child-care issues, such that it’s making it difficult for them to go to work,” Bowlus said.

While she recognizes many will make much less on EI than on CERB, Bowlus said that could also be an incentive for some to return to the workforce.

“It may encourage people to go back to work, because there are some concerns that CERB is so generous people want to stay on it rather than taking jobs,” she said. “But if they really can’t find jobs . . . you have lowered their income that’s coming in, so there’s a tension there.”

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Bowlus said the changes to EI minimums will help both job seekers and the government.

The blanket six-month period covers much of the uncertainty over a potential second wave of COVID-19 in the fall, and, hopefully, gives enough time for the economy to rebound, she said.

“Our overall economic recovery, while it has started and has been good, it’s still not where we need to be and where we were,” Bowlus said.

mmartin@postmedia.com

The Local Journalism Initiative is funded by the Government of Canada