On July 17, the Trudeau government cut the Canada Recovery Benefit (CRB) by 40 percent. The CRB is the Liberal Party’s main COVID-19 benefit for unemployed workers who lack sufficient hours to qualify for employment insurance. The cut will change the CRB from $500 per week to $300 in advance of the program’s termination on September 25.
The Liberals are pushing forward with the cuts even though the party acknowledges that many of the jobs wiped out by the pandemic aren’t coming back at the same rate of pay. In place of additional worker supports, however, the party is instead doubling down on its commitment to tech entrepreneurialism.
It’s yet another sign that Justin Trudeau’s party is reconciling itself to a post-pandemic austerity regime in which employers will impose a new regressive standard on working people across Canada, leading to widening inequality and rising precarity in the labor market — all in the name of innovation.
The Post-Pandemic Workplace
The cut was announced in the 2021 budget — the very same budget that observed the following:
Long unemployment spells mean that many vulnerable workers risk withdrawing from the workforce or seeing their skills erode, with lasting impacts on their lifelong earnings, and on the wider labor market, that could take years to reverse.
Business investment is, as Bloomberg notes, “well below pre-crisis levels.” Over 312,000 people have been unable to find work for over a year. Unemployment has remained high at 8.2 percent in May, up from 8.1 percent in April — an increase led, in part, by manufacturing job cuts.
A proposed cut in unemployment supports is clearly a poor policy response to low employment opportunities. But it is not an accident. In fact, it reflects the coming reality for which the CRB was intended to pave the way — preparing Canadian workers for lower wages and a far more precarious future.
The Canada Recovery Benefit was created in response to claims from right-wing media and big business that the below-minimum-wage Canada Emergency Response Benefit (CERB) was “too generous.” Both the CERB and CRB were designed as COVID-19 supports for workers who, owing to years of cuts and eligibility tightening, were not covered by the existing employment insurance system.
However, Canada’s business class took umbrage at CERB dispensations. CERB may have empowered workers in the midst of the pandemic to walk away from dangerous low-wage jobs, but big business claimed that it overshot the mark and simply encouraged workers to refuse work. They found a receptive audience for this argument in Trudeau’s cabinet. Unlike CERB, the CRB mandates that workers must reapply every two weeks. It requires that recipients seek “reasonable work” to continue to qualify.
Federal employment minister Carla Qualtrough, addressing the House of Commons in September 2020, allayed concerns that the CRB would be overgenerous:
We have put a lot of effort into ensuring that there are no disincentives to work. These new benefits really work like employment insurance: People must be looking for work, be available for work, accept a reasonable job offer and be present in the country.
Should the federal government find that a CRB recipient has declined “reasonable work,” they will have their support cut for ten weeks, during which time they are ineligible to reapply for the program. Nowhere, however, is “reasonable” defined by the Canada Revenue Agency (CRA).
CRB guidelines specify that recipients are not obligated to accept work outside their skill set. But the program offers no explicit protection against wage or hour 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.
Reached for comment, the CRA would not disclose how many workers have been penalized for declining “reasonable work,” claiming that such a disclosure would “jeopardize the CRA’s compliance activities.” In accordance with the Ministry of Finance’s 2021 mandate, the program is set to expire in September, having always contained a sunset clause so as to “avoid creating new permanent spending.”
“No One Gets Left Behind”
BMO Capital Markets anticipates “unprecedented corporate earnings growth” by the year’s end. But the Globe and Mail paints a different image of Canada’s future, anticipating “both a large cadre of unemployed, less educated workers and a raft of unfilled jobs.” Projections from the Conference Board of Canada predict average wage increases will fall to 1.6 percent this year, down from an actual increase of 2 percent in 2020. And earlier this month, the Globe warned that cuts to COVID supports “could result in more soured loans.” This prospect is a real hazard because Canadian households are among the most indebted on the planet.
Cuts to jobs and available hours have hit women and youth especially hard. By the end of 2020, single-parent mothers worked almost 40 percent fewer hours than they did before the pandemic. “We could lose this generation,” Qualtrough told CBC Radio, “if we don’t deliberately or intentionally shore up the sides of their opportunities.” Qualtrough promised to make sure “no one is left behind” — a line repeated ad nauseam by the Liberals — with few results to show. In the wake of the pandemic, youth face “long-term scarring” and double the regular unemployment rate, according to Minister Qualtrough.
A clear post-COVID social divide is emerging, in which laboring people will have to do with less and a tiny few will enjoy greater profit.
The Tech That Failed
In his budget address, Trudeau promised to “punch our way out of the COVID recession” and “build a more resilient,” “more prosperous,” and “more innovative” Canada. In response to concerns about a “she-cession” — a slower recovery for working women — Trudeau offers little other than can-do sound bites. Promising to increase public funding for “women-run startups” to “affect the greater good,” Trudeau is confident in Canada’s entrepreneurial chutzpah: “We would be fools not to massively flip around the access to capital challenge.”
In place of supports for workers, the Liberals are touting strategies for bootstrappers, such as the Venture Capital Catalyst Initiative. They are also proposing an outlay of $2.6 billion to the Business Development Bank of Canada. This is a new spin on an old plan to jump-start prosperity by lavishing Canada’s owners with hundreds of millions in new subsidies, while cutting support for workers.
The Liberals are also doubling down on their $918 million “supercluster initiative,” committing an additional $60 million to establish “made-in-Canada Silicon Valleys.” Investment in tech has been a passion of Trudeau’s for years — in 2016 he rhapsodized on the subject to an audience at Davos:
Just look at Silicon Valley. It crackles with ideas and experimentation. We have a diverse and creative population, outstanding education and healthcare systems, and advanced infrastructure. We have social stability, financial stability and a government willing to invest in the future.
In 2018, the Trudeau Liberals created the supercluster initiative, which aimed to establish, with public seed money, “dense networks” of tech firms across ailing industrial centers. That federal funding was to be matched by over $1 billion in private-sector funding alongside public university money. Over time, it was supposed to generate fifty thousand jobs and $50 billion in GDP. It didn’t work out that way.
In October 2020, the Parliamentary Budget Officer (PBO) found that while forty-five supercluster projects were earmarked for support, fewer than 2,600 of the promised fifty thousand jobs had been established. It also found that it was unable to “distinguish the nature of these jobs; whether they are full-time, part-time, permanent, or temporary.” Furthermore, the PBO determined that it is “highly unlikely” that the initiative will be sufficient to generate $50 billion over ten years or fuel much in the way of a technological revolution: “To PBO’s knowledge, the ministry does not have quantifiable objectives for any of these metrics.”
The lackluster performance of the supercluster initiative does not inspire much confidence in the Liberals’ $443.8 million Pan-Canadian Artificial Intelligence Strategy. That these tech sector jobs, should they materialize, will pay more than those wiped out contradicts research conducted by industry and the federal government itself. The technology sectors of Winnipeg, Toronto, Montreal have been repeatedly subject to praise. Notably, however, that praise has been for these cities’ comparatively low business taxes and “competitive labor costs,” measured chiefly by wages, salaries, and benefits.
According to the Information and Communications Technology Council (ICTC), Vancouver’s bid as a possible business center for Amazon similarly “hinged on significantly lower wages in Vancouver vs. many other US (and Canadian) cities.” On the whole, the ICTC notes that “when it comes to attracting US MNCs, lower wages have indeed acted as an incentive.” A summer 2020 CBRE Group report titled Scoring Canadian Tech Talent informs policy makers that “tech labor costs have been weighted more heavily than office rents” when firms decide whether or not to expand.
The federal government’s Invest in Canada program itself brags that Canada ranks number one in “workforce competitiveness” across sectors — including among university graduates. A report from February by Policy Horizons Canada found that expanding the use of “sophisticated online platforms” could further allow firms in Toronto to “cut labor costs by 50 to 70 percent.”
While the Trudeau Liberals promise a future that “leaves no one behind,” they are now building a Canada that will have left huge swathes of the country adrift. The hype of tech investment appears to directly contradict what tech-sector investors themselves are saying — that it will not help the vast majority of working people. With bleak prospects for its post-pandemic job market, insufficient worker supports, and a broken employment insurance system, Canada’s “return to normal” will only mean less security and lower pay for much of the labor force.