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Federal pandemic assistance on the chopping block—another way to ‘discipline’ workers

Leaving struggling workers behind is a feature of Justin Trudeau’s management of income support programs, not a bug

COVID-19Canadian PoliticsLabour

Prime Minister Justin Trudeau delivers a speech to G7 leaders at the international summit in Cornwall, England, June 13, 2021. Photo from Twitter.

The Trudeau government’s willingness to curtail Employment Insurance eligibility and throw unemployed workers off its key pandemic benefit programs, prior to employment even fully recovering, is a reminder that leaving people behind remains a feature of Canada’s social assistance regime—not a bug.

Effective October 23, barring any unexpected intervention, Canada’s main support programs for workers thrown into unemployment by COVID-19 will end.

The Canada Recovery Benefit, the Canada Recovery Sickness Benefit and the Canada Recovery Caregiver benefit could be extended by a cabinet order until November 20. Cabinet itself, however, won’t be sworn in until October 26. And, while Finance Minister Chrystia Freeland acknowledged to CBC News “during the election campaign, Canadians were promised we would continue helping the businesses hardest hit,” nothing has been said about extending support for the hardest hit workers.

The unemployment that persists

Canada Revenue Agency data shows nearly one million people were accepted as eligible for CRB, during the most recent application period, at the end of September.

As of October 8, unemployment stands at 6.9 percent, as compared to 5.6 percent pre-pandemic. But total hours worked are still 1.5 percent below pre-pandemic levels. Further, the share of Canadians deemed “long-term unemployed”—without a job for roughly six months—remains elevated, accounting for 389,000 people, nearly 25 percent of all unemployed.

That comes with regional differences. But unemployment remains elevated especially in working class communities previously hit hard in 2008-09. Many of these communities were experiencing challenges already, in 2019. Windsor, for example, boasts one of the highest unemployment rates in Canada, owing to the pandemic and microchip shortages. This past week, Stellantis announced plans to slash production at its assembly plant to just one shift by spring 2022, likely wiping out another 1,800 jobs. Since that time, much of the auto sector has imposed temporary layoffs—in Brampton, Oakville and St. Catharines and Ingersoll, citing parts shortages, typically leaving these workers dependent on Employment Insurance and their savings. Reports suggest, over the past year, homelessness has also soared in Oshawa and Cambridge, overwhelmed shelters in Hamilton, and reached “emergency” levels in Sarnia.

For these communities, the pandemic exacerbated imminent slowdowns. One federal 2019 report noted Canada’s metal-producing industries were already weakened by a “global oversupply” of steel, cars, car parts, minerals, and other exports. This saw GDP growth slip to its slowest in four years at the end of 2019. And, the Parliamentary Budget Office isn’t anticipating a full rebound to 2019 GDP for several years.

Defining the future

The pandemic assistance programs’ seemingly imminent end, even as hundreds of thousands still rely on them, contrasts oddly with the fact that Trudeau began his 2021 election campaign lauding their apparent successes.

In his August 15 speech, Trudeau warned of another “global recession” on the horizon. In the face of uncertainty, the prime minister further promised to observe “the values” that drove his government to deliver the CRB’s forerunner, the Canada Emergency Response Benefit (CERB), “to make sure Canadians could get through this crisis, too.”

It was, it would seem, an interaction of his past promise: “Economic growth that leaves no one behind.”

Effective October 23, barring any unexpected intervention, Canada’s main support programs for workers thrown into unemployment by COVID-19 will end. Photo by Olivier Douliery.

From ‘emergency benefits’ to ‘recovery’ benefits

CERB was designed as a COVID-19 support for workers who, owing to years of cuts and eligibility tightening, were locked out of the existing employment insurance system. Previously, Trudeau’s promises to extend EI coverage—as in the 2019 election—only promised to cover workers who’d lost work after five years of continuous employment. CERB, spurred by the pandemic, extended beyond the fine print of these proposals.

But, last Fall, Employment and Social Development Minister Carla Qualtrough proposed an end to the $2,000 per-month CERB, after months of business complaints that the program was “too generous.”

In CERB’s place, the Liberals changed the floor on EI benefits to $400 per week and reduced the hours needed to qualify to 120. The Liberal government further split CERB into the Canada Recovery Sickness Benefit, a $1,000 two-week benefit for those self-isolating, the Canada Recovery Caregiver Benefit, a $550 weekly benefit for parents who miss work to care for dependents, and the Canada Recovery Benefit, a $450 weekly benefit for everyone else.

In addition to being less “generous,” the CRB requires workers to reapply every two weeks. In addition, it requires them to seek out “reasonable work” to continue to qualify. In effect, as noted before, the CRB was a workfare program in disguise.

Further, the CRB’s guidelines specified that “reasonable work” may very well even include pay cuts: “Accepting part-time work may be reasonable if it is with your previous employer at the same or similar pay, with the possibility to work more hours in the future.”

The welfare state ‘transformed’

Just over six months ago, The Economist lauded CERB as a key example of how Western countries can “transform” the welfare state to support those typically left out. Gone, The Economist told us, were means-testing, conditionality and “social insurance”—ensuring benefits only went to those who paid in. This new, more-flexible approach, the magazine claimed, would surely help those trapped in less secure work make ends meet.

By the time this article was published, however, much of this was already out of date. CERB, mentioned in the article, had already been replaced by the explicitly-conditional CRB. But the gap between the CRB, at $1,800 per month, and the CERB was fairly small—at least until July.

After temporarily increasing the benefits through successive infection spikes, the CRB was slashed, in late July, by 40 percent—to $1,200 per month. This cut was first announced in Trudeau’s 2021 budget even as the same budget acknowledged: “Many vulnerable workers risk withdrawing from the workforce or seeing their skills erode, with lasting impacts on their lifelong earnings, and on the wider labour market, that could take years to reverse.”

On September 26, the government tightened EI eligibility—more than doubling the 120 hours needed to qualify to 420, eliminating any “top-ups” that might help some qualify and cutting the floor on benefits to $300 per week. It directed those who no longer qualified to apply for the now-reduced CRB.

Now, the CRB and all the other programs are on the chopping block. Workers, however, have not recovered.

Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland. Photo by Adam Scotti.

‘No light of day’

While CERB was an emergency benefit, meant to avoid massive social dislocation during the worst of the public health emergency—the CRB was, explicitly, a “recovery” benefit. In effect, it is slated not primarily to improve livelihoods or decrease poverty but to aid the economic recovery. There is little doubt that many unemployed will fall through the cracks as a result of these cuts. Yet, for the government, the program has been a success.

The question, therefore, is: who was meant to recover and on what terms?

COVID-19 plunged Canada’s economy into its deepest recession on record. And, the recovery has been slow and uneven since. With a supply glut in many industries persisting, and with many pushed to the edge of insolvency, the prospect of demand leading to a sudden surge in sales and revenue is exceedingly distant.

Yet, profitability must be recovered if employers are to remain in business. That can only be done by cutting costs, chiefly wages, benefits and job security. Doing so, however, requires a workforce desperate enough to accept cutbacks. Capitalism, in this respect, finds poverty quite helpful—as a threat.

As Qualtrough told CBC News: “Between economic and public health there’s really no light of day.”

Slashing benefits has been one of the main means of disciplining workers during crises for much of the post-war period.

In the 1970s and early 1980s, when the expanding post-war market produced a glut of goods, and spiking prices and a devalued money supply hampered profits together with rising inflation, former Prime Minister Pierre Trudeau was adamant that a change was in order. Promising “a bit of strong medicine,” joint federal and provincial programs abrogating wage increases, curtailing strikes and jailing labour leaders, as John English notes, importantly included “reductions in unemployment insurance and in the federal part of provincial shared-cost programs for medicare and hospitals.” Many of Canada’s provincial governments, then still in a 50-50 cost share, were also eager to cut social assistance programs to this end.

In the 1980s, the Conservatives promised new cuts and A New Direction For Canada. This early document called for sweeping cuts to federal grants for social programs and to Unemployment Insurance funding to help “facilitate adjustment to market forces.”

More famously, when the Liberals returned in 1993 with 250,000 jobs lost in the economic crisis and over one million kids in poverty, cutting social assistance was a key priority of the government’s “a strict austerity program.”

According to then–prime minister Jean Chrétien’s account of the period, My Years As Prime Minister, cabinet saw in the crisis “an opportunity to launch a much-needed review of Canada’s social security system” and to remove any “disincentives to work” with cuts and eligibility rule changes. The Liberal government’s cuts encouraged the provinces to maximize “labour market flexibility” by compelling workers to accept any job at any wage.

Most of these cuts continued well into the present. According to Justin Trudeau’s memoir, Common Ground, it was during these periods that the Liberal Party “earned credibility on the economy.” While acknowledging “big structural changes” are “making life harder,” Trudeau wrote that his party would still staunchly “favour free trade, practice fiscal discipline, and support foreign direct investment.”

To that end, leaving struggling workers behind is a feature of Trudeau’s management of income support programs—not a bug. These and other cuts will restore employers’ confidence, confidence that they can find workers desperate enough to do any work at any wage.

Mitchell Thompson is a writer, editor and occasional radio producer based in Toronto.

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