So much of the effort to “flatten the curve” of COVID-19 has been to protect some of those most at risk – people with underlying conditions.
So it is appropriate that this unprecedented effort – shutting down whole swaths of the economy to combat the virus – has exposed other “underlying conditions” that threaten the long-term social and economic health of our country.
Over the past two months, as workplaces closed and millions of Canadians were furloughed or lost their jobs entirely, the precarious economic situation of most Canadian families has come into vivid and troubling relief:
- More than half of Canadians are living paycheque to paycheque.
- One-third of households are “asset poor.”
- Ten million workers have no workplace retirement plans.
- The median retirement savings of near-retirement households without pensions is only $3,000.
- Nearly four in 10 Canadians have no retirement savings at all.
- Household debt is hovering at an all-time high.
It hasn’t always been this way. In the 1980s, Canadians routinely set aside 20 per cent of their income for large household purchases, education, starting businesses, retirement or just plain rainy days. Having a savings nest egg was accepted wisdom and the norm. What has changed is the nature of employment. More than a third of today’s work force is precariously employed – working on contract, self-employed, or in part-time (often involuntarily) or temporary jobs in the gig economy.
They lack the predictable paycheques that enable them to plan their expenditures and to save. Their bills come like clockwork every month, but their pay doesn’t. That means that when a crisis hits – and not just a crisis as pervasive as COVID-19, but more mundane emergencies such as a car repair or a prescription – they’re driven further into debt.
With its COVID-19 economic response plan, the federal government has moved swiftly to get money into the hands of individuals and businesses across the country to help see them through the crisis. This has likely saved millions of those who are precariously employed from real hardship and devastation.
That said, like the crisis it addressed, this massive government intervention is meant to be temporary. It’s a triage. It’s necessary and urgent, but it doesn’t address the underlying condition of widespread financial insecurity. The drop in stable full-time jobs has stripped millions of workers of employment-based retirement plans, insurance against common life risks (job loss, illness or disability) and even just a steady paycheque.
Over the longer term, federal and provincial governments need to modernize our public income security programs and employment standards to align with today’s labour market, providing coverage to all workers and at adequate levels. A massive initial step in the right direction would be to simplify and streamline access to existing income benefits.
Every year, $2-billion in existing federal benefits is left on the table by people who need them most. Too many people either don’t know they’re eligible or encounter language, literacy, digital or other barriers that prevent them from obtaining this much-needed income. Just look at the numbers: Canadian families struggle to pay for their children’s postsecondary educations; but every year, almost two million children are not receiving the Canada Learning Bond, with its grants of up to $2,000 a child. Between 10 per cent and 12 per cent of Canadian adults don’t file taxes; that cuts low-income individuals out of more than $1.7-billion a year in existing benefits, such as the Canada Child Benefit and GST rebates, that can give them greater economic control over their lives. It’s estimated that 75 per cent of eligible Canadians don’t participate in the Registered Disability Savings Program; they’re missing out on up to $90,000 in government bonds and matching grants.
For millions of people, accessing these and other existing programs could mean the difference between penury and economic security. Take one program – the Canada Child Benefit. Not only does it provide up to $6,400 a child per year, it also allows retroactive claims for up to 10 years.
Piecemeal systems prevent many of the people who most need these programs from accessing them. A more sensible approach would be for governments and employers to work together to make them more accessible to Canadians in the work force.
Governments can’t solve these problems on their own. Employers, the private sector, non-profits, workers themselves and labour unions all have important roles to play. But governments must demonstrate intentionality by acknowledging the problem, mobilizing data and research to accurately diagnose it, and inviting interested stakeholders from all sectors to the table to design solutions. The mere existence of programs is of little use if they aren’t being applied as intended.
Beyond this, now is the time for governments to help seed innovations that potentially offer sustainable large-scale improvements to systemic income-security concerns. One such path would be to encourage workplace-based portable benefits and savings programs that help build financial security as a key part of an equitable recovery plan. We must take advantage of the opportunity to try to cure underlying conditions, which if they remain ignored, will claim heavy casualties.
Chaviva Hosek was director of policy and research for prime minister Jean Chrétien. Jonathan Weisstub was senior policy adviser to prime minister Paul Martin and is a co-founder of Common Wealth. Ed Waitzer is a professor at Osgoode Hall Law School and the Schulich School of Business.
This op-ed was first printed in The Globe & Mail on June 14