‘CERB is the reason I’m eating’: How CERB prevented an economic collapse
In March when Covid-19 hit cities across Canada and resulted in a shutdown of many businesses and the economy, the Canada Emergency Relief Benefit (CERB) helped millions of people weather the worst of the storm.
The $500 weekly payments to people who lost their job due to coronavirus or had their hours reduced and had to stay at home helped prevent the economy from completely collapsing. Till early July, about 22% or 8.4 million people in Canada had applied for CERB. With money in the hands of working people, and consumers making up around 60% of the economy, they continued to spend and kept the economy running, for example – food and grocery sales and online spending all remained stable.
But as the economy has begun to reopen, without any indication from the government on extending CERB beyond 16 weeks, some economic leaders have hinted that the termination of federal aid may be the gateway into a debt crisis for Canada. Before the pandemic, the average Canadian was saving about $4 for every $100, but since the pandemic, the average Canadian debt to disposable income ratio has reached an all-time high at 177%.
Some leaders are expressing anxiety about what will happen post-CERB. Meanwhile, leaders such as Alberta Premier Jason Kenney, believe that continuing CERB may be disincentivizing workers from returning to work.
But risky businesses such as hospitality and manufacturing jobs are the ones that are finding it hard to fill jobs because of workers’ safety concerns, making CERB the safest option. According to a survey by the Canadian Federation of Independent Business, 74% of people are apprehensive about returning to work because of childcare obligations and concern for safety, and 16% because there aren’t enough hours available. Economist Armine Yalnizyan also points out the fallacy behind believing that most people aren’t returning to work because they prefer CERB:
Seeing how many and how fast people went on CERB, 50 senators have voiced their support for a Universal Basic Income (UBI) because the pandemic laid bare the economic precariousness of most people in Canada. And an Angus Reid poll found that 60% of people support a UBI of $20,000 per year.
On public social platforms such as Twitter, people have expressed just how much CERB has helped them from economic devastation.
By allowing people to stay at home, while still maintaining some form of income, Canada’s economic response defined its health response. Prime Minister Justin Trudeau said: “Nobody should have to choose between taking a day off work due to illness or being able to pay their bills. Just like nobody should have to choose between staying home with COVID-19 symptoms or being able to afford rent or groceries.” At first the Liberal party was leaning towards a broader Unemployment Insurance (EI), but instituted CERB after pressure from the NDP.
The United States’ response, in comparison to Canada, has been weaker and led to not only the US now having the highest number of cases and deaths in the world, but also mass unemployment and long queues of people at food banks and unemployment insurance offices. The US government gave a one-time US$ 1,200 cheque to all people making upwards of US$75,00 per year, and increased unemployment insurance by US $600.
Canada’s fiscal response to the pandemic has cost approximately 9.5% of its GDP, according to the International Monetary Fund. Writing for Broadbent Institute Marshall Auerback says, “That is a big number. But if you’re going to deny people the right to work via a government-mandated shutdown to confront a pandemic, relief must be generous and widespread.” But Canada’s economic response has been middle of the pack compared to other countries such as Japan, which allocated 20% of its GDP to its economic response, and 24% in Germany.
An IPSOS poll recently revealed that only 48% of Canadians have enough money saved up to last them three months without working. The success of CERB, in the way it has prevented mass homelessness and economic precariousness, has led to one of the largest conversations on a Universal Basic Income unseen in a long time. Many are advocating for some part of CERB to be converted to a Universal Basic Income (UBI) to help reduce economic inequality and give more power back to the workers.
The pandemic and associated economic anxiety continues with so many unable to work either because they are in care-taking positions, or their workplaces are shut. What people need at this time is assurance from the government that they will be taken care of, rather than criticized for accessing federal aid when they were forced to stay at home.