NEW BRUNSWICK – The Canada Emergency Response Benefit (CERB) had over 150,000 unique applications for New Brunswick – and it’s just been extended for an additional four weeks.
Some employers have noticed difficulties in hiring or getting their employees back to work. Two New Brunswick economists say their difficulties could be related to the CERB.
“The challenge it [CERB] creates is for regions like ours in the Atlantic where we have jobs available, but eligibility for the benefit still exists,” said economics professor at University of New Brunswick, Herb Emery.
“It’s becoming a potential work disincentive.”
The CERB launched on April 6 of this year to support Canadians who stopped working for Covid-19-related reasons.
On June 15, the government extended the benefit by eight weeks, which makes the recent update, the second extension.
“If you’re going to get a 2,000 dollar a month subsidy, and if you can use that to cover your bills and pay your bills … [then] for some people, they do a very rational economic calculation that says, ‘free time plus $2,000 provides me more utility than $3,000, but working full time,’” said David Campbell, president of Jupia Consultants Inc.
But some CERB-recipients are not taking into consideration that the CERB is a taxable benefit. Most paycheques have the taxes taken off them before the money gets to the recipient. But the CERB will be taxed later rather than having a built-in tax.
“If people do end up paying taxes at the end of the year, at least they’ll start to understand that public services do cost money and that we all pay taxes to support those,” Campbell said.
“So maybe this will be a little bit of a wake-up call.”
On September 27, the CERB will transition into an EI program that is now more flexible than before, including about 400,000 more people in the program.
As well as that, the Canada Recovery Benefit, the Canada Recovery Sickness Benefit, and the Canada Recovery Caregiving Benefit are all new benefits being implemented to help Canadians struggling during COVID-19.
“At the end of the day, what we need to do is try to get as many people back to work as possible,” Campbell said.
“And we don’t want government support programs to actually be a disincentive to getting people back to work.”
Emery said employers perceived less interest in jobs being advertised but also noticed an increase in new hirers between the ages of 15 to 19-year-olds who were ineligible for CERB.
“It was offsetting, let’s say, the 20- to 24-year-olds who were getting CERB,” said Emery.
But Emery also said one of the more concerning effects of CERB is that 20 to 30 percent of small businesses may fail in the coming months, and some already have.
So, when employees aren’t returning to work because they are receiving the CERB, the businesses could close due to a lack of staff. When the employees are ready to return to work, the jobs are no longer available.
Some employees have become comfortable with staying home and still earning money, so getting the employees with that mindset back to work is the challenging part for employers.
“I’ve talked to small businesses in Fredericton, where most of their employees have come back because they like being there, they got sick and tired of being cooped up at home,” Emery said.
“So again, it may come down to figuring out who the hardcore recipients are.”
This story was originally published in Huddle on Aug. 24, 2020.
Hannah Rudderham Portfolio 