Retraining key to getting and keeping economy moving in the future

The COVID-19 Crisis Working Group has proposed longer-term policy options to support Canadians during the pandemic and recovery, including investments in retraining.

The government introduced programs such as the Canadian Emergency Response Program (CERB) at the onset of the pandemic to ensure that households stayed afloat while stay-at-home restrictions were in place.

But the working group, put together by the C.D. Howe Institute, says it’s time to realize that the virus will remain in circulation for some time and that the re-opening of the economy will be gradual, regional and sector by sector and will require a change in skills for some people.

Need a more targeted support system for unemployed Canadians

It says what must now happen is that Ottawa move away from a one-size, fits-all approach to a more targeted support system. This would account for regional and sectoral differences, while addressing specific needs, such as child care, and specific sectors, such as tourism, travel, or oil and gas, which are experiencing the largest and most sustained displacements.

The working group has expressed concerns about CERB. It has noted that some recipients will exhaust their benefits and end up remaining unemployed without access to Employment Insurance. For others, CERB may discourage them from returning to work as some businesses start to re-open, slowing down the recovery.

To address these concerns, the group suggests CERB eligibility be extended beyond the July cut-off date with an income-tested claw back to tackle disincentives to work. At the same time, when planning out the next phase, Ottawa should aim to preserve fairness between those who would continue to receive the CERB and others who would continue to work without receiving the CERB.

All-out shutdowns not feasible, says group

The working group has also said that keeping the economy “in an induced coma” for a long period of time isn’t feasible. With planned gradual re-openings, some sectors may not return to their normal state of operations for an exceptionally long time, requiring some people to learn new skills to make a living.

Major shifts in the economy had already taken place before COVID-19 hit and the working group expects these changes could lead to structural unemployment. With some sectors struggling while others are growing, the working group believes policymakers should focus on how they can support workforce reallocation through retraining.