Sunday, October 03, 2021

CANADA
End of CRB and EI to cause major risks for consumption rates, financial outlook: Economist

Temur Durrani
Multi-Platform Writer
BNN BLOOMBERG
Oct 1, 2021


As COVID-19 relief from the federal government is set to expire this month, a senior economist is sounding the alarm about major risks to Canada’s overall consumption rates and financial outlooks from the central bank once recovery benefits are withdrawn.

Stephen Brown, senior Canada economist at Capital Economics, believes it is inevitable that the country’s household income rate will take a hit as people come to the end of their Employment Insurance (EI) eligibility period and the Canada Recovery Benefit (CRB) closes.

However, household savings rates have kept analysts at bay about the risks posed by the winding down of benefit payments so far, he said.

“Now, we’re starting to doubt that view because all these goods shortages mean there isn’t really the extent or ability for other people to pick up slack who weren’t receiving these benefits,” Brown said in an interview Friday.

“Suddenly, there’s this sort of cliff edge when it comes to household income. We’re talking about potentially over one million people losing their benefits over the span of two months.”

Ever since the Canada Emergency Response Benefit (CERB) ended last year, people who were still unable to work due to the pandemic have been able to claim payments through a modified EI program or the CRB.

But, barring any last-minute adjustments, as the 12-month entitlement period for EI ends and the CRB comes to a close on Oct. 23, an estimated 2.2 million people that are currently receiving those benefits will be left to face the unknown.

That means Canada’s household income will fall by three per cent in the first quarter of 2022, per analysis from Capital Economics.

“So, we need an increase of somewhere in the region of a few 100,000 jobs both in September and October to offset this negative effect from the expiry of these benefits,” said Brown. “And that just seems very unlikely to us.”

Still, Brown isn’t sure the answer to this conundrum is extending these emergency programs.

“If I’m being honest, it would be tricky to make the case for extending these benefits in their current form,” he said.

On one hand, Brown believes there is a valid argument to be made that the generosity of these programs has far exceeded their need. A lot of people have been getting more money through these recovery benefits than they were at their actual jobs prior to the pandemic, he added.

“So, there certainly is a case really for bringing them down, particularly when we’re seeing all these widespread labour shortages,” he said.

On the other hand, the Bank of Canada will now face something it isn’t used to, he added.

“I think from the point of view of the central bank, if we suddenly have a sharp drop here in household income, that’s the equivalent of saying we suddenly have a very tight fiscal contraction in the fourth quarter,” said Brown. “That’s a big unknown, and it’s not something we usually see.”

However, no matter which side you look at, Brown believes the central bank will not necessarily begin focusing on a forward-looking approach yet.

“If we have these benefits expiring in October, then by the second half of next year, that’s a much longer period for these people that lose their benefits to adjust, to find employment and to see their income pick up again, So, by the second half of next year, we could potentially be in a much stronger position again,” said Brown.


“But, I’m not sure the Bank is going to be signalling that anytime soon. Given all this uncertainty and given that we still haven’t had all these pandemic issues resolved, I’m not of the view that they’re going to be more hawkish.”

For now, Canada’s economy can look forward to continued low interest rates well into 2022. The central bank has only indicated it will raise those rates, for the first time in months, at some point in the second half of next year.

Employer frustrated at Canadians who 'just don't want to work'



Iva Poshnjari, BNN Bloomberg
June 21,2021

Some business owners across Canada are finding it increasingly difficult to hire workers.

That is true for Essex Topcrop Sales Ltd., a leading pet food manufacturer based in Ontario that is facing supply chain disruptions and now labour shortages.

The founder, Craig Brummell, said Tuesday that trying to get people out of their homes and into entry-level paying jobs has been challenging throughout the pandemic.

"We find one out of three people scheduled for an interview don’t even show up,” he said in an interview.

“We now hire people right on the spot from the interview and even after you tell them [they] have job – and these are people who are collecting CERB or unemployment insurance, or both – they don’t even show up.”

Brummell added that those who do show up “last until noon, or one day, or three-four days, or maybe a week.”

"They're not leaving for other jobs. They just don't want to work," he said.

He explained that the struggle is in retaining workers while federal assistance programs such as the Canada Emergency Response Benefit (CERB) and Canada Recovery Benefit (CRB) have been available during the pandemic. The CRB offers $1,000 for every two-week period of eligibility for Canadians whose employment was affected by COVID-19 and who are not eligible to collect employment insurance.

Brummell said those who fill the entry-level positions he referred to at EssexTopcrop are offered between $16 and $17 per hour to start. A month-old job posting from the company to fill a manufacturing assembly line operative position is being advertised, however, for a starting pay of $14.54 per hour. When asked about this discrepancy, Brummell noted in a follow-up conversation that pay ranges vary among positions and they are sometimes open for negotiation. Essex Topcrop also has a posting open for a warehouse operative with a stated pay range of $15 to $18 per hour.

Brummell said he doesn't believe the federal government has a true understanding of what employers are going through.

"What it's leading to is investment into automation and elimination of jobs in the end.”


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