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Crisis Comes at Worst Time for Struggling Canadian Workers and Families

Opinion column by Ken Neumann

If you were walking around the streets of most Canadian cities over the last few days, you could not escape the sound of silence – little traffic, shuttered stores and empty office buildings. That silence was, however, punctured by the ongoing sound of construction workers continuing to do their jobs at work sites across the country.

As Canadians get used to the new normal caused by the COVID-19 crisis, many of us are being urged to work from home, in the hope that we can flatten the curve and avoid a public health disaster. But for the many Canadians who shower after work rather than before, working from home is not an option. Most Canadian workers have to show up for their jobs at retail stores, hotels, warehouses, construction sites, auto plants or steel mills, or they don’t get paid.

Governments, economists and business are already projecting that this crisis will lead to catastrophic job losses. Incredibly, last week alone, the federal government received nearly 1 million applications for employment insurance (EI), an incredible and unprecedented number.

It is clear that initially the service sector will be hardest-hit – retail trade, recreational and travel services, accommodation and food services. This sector is characterized by a prevalence of low-wage jobs and self-employed workers who have no cushion for economic hardship.

Soon enough, however, all sectors of the economy will be profoundly affected. As demand dries up and supply chains are broken, our goods-producing sectors will also see massive layoffs.

This crisis could not come at a worse time for Canadian workers, and so far, the government’s response has been woefully inadequate. Unfortunately, the reality for most Canadian workers is that their wages have been stagnant for decades, while corporations have seen robust profits. As a result, Canadian household debt, at about 100 per cent of GDP, is among the highest in the developed world. This means that massive numbers of Canadian families have no savings to survive the gathering economic storm that is about to strike.

Moreover, for decades now, successive Canadian federal governments have allowed our social programs to atrophy. In 2018, barely one-third of unemployed workers even received EI benefits – a number that has been steadily declining over the last 25 years. Therefore, while it is a good thing that the government package announced last week will provide emergency EI benefits to many workers who would not have been previously eligible, it is not nearly enough to support workers through this crisis.

The federal government must do more to help workers who are facing unemployment. To start, we should increase EI benefits for all Canadians to a replacement rate of at least 60% of wages (up to maximum of $625 a week) while lowering the eligibility threshold to 325 hours and increasing the benefit floor to $300 a week.

More importantly, the government must provide much stronger economic incentives for employers to keep workers on the payroll. The initial plan for a 10% wage subsidy for small businesses was grossly inadequate , as it would not have kept businesses afloat.

The USW and others argued the federal government should look to the examples of European nations, such as the U.K., where the government will pay grants covering up to 80% of workers’ salaries if companies keep them on their payroll, rather than lay them off as the economy crashes. These extraordinary payments will be worth up to $4,200 per month, just above the median income in the U.K.

The Canadian government has since heeded our call and announced an increased wage subsidy of 75% of workers’ wages. However, serious concerns remain regarding eligibility for the increased subsidy, with indications that not all businesses will qualify.

It is imperative that Canada follow the lead of European countries that are making their wage subsidies available to as many companies as need the help.

The subsidy must be broadly applied in Canada as well, in order to provide desperately needed support to hundreds of thousands of companies and help protect the jobs of millions of Canadians. Restricting the subsidy will result in massive job losses across the country and will exacerbate this crisis.

In order to keep our economy from total collapse, governments must focus on two priorities: keeping workers employed and supporting those who are laid off or unable to work because they are sick or caretaking. This means that in the short term we need to get as much government support into the hands of as many affected workers as possible. In the longer term, this crisis, like the 2008 financial crash, will affect our economy for years to come. We have to be concerned that many businesses that are forced to close in the next six months will never re-open.

Governments must do more to keep workers employed and they need to be thinking about how we build an economy where workers are not so vulnerable when the next economic crisis hits our country.

View the column at rabble.ca

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