This COVID-19 pandemic has highlighted the weaknesses of Canadian income security programs and the number of Canadians who are just living ‘pay cheque to pay cheque’. More than 8.4 million Canadians have applied for the Canada Emergency Response Benefit (CERB).
Credit unions have an interest in making sure these various income security programs work. Lest it be understated, credit unions were created in the 40’s and 50’s as part of the same revolution that also created Unemployment Insurance (1940, 1970), medicare (1961), the Canada Pension Plan (1965), and other key income support programs for ordinary Canadians. Credit unions are owned by and champion the interests of ordinary Canadians. Access to credit was complementary to the campaigns for income security.
I was glad to see a Central 1 blog post earlier in August that spoke to this kind of issue; the post related to disability tax credits that are not being claimed. Credit unions have a bigger role to play in ensuring members access to such income supports. Too many low income households do not claim benefits to which they are entitled. But credit unions can do more.
Even before COVID-19 hit there was evidence of the problems in our income security systems, and our employment strategies. Growing inequality of incomes and wealth was well established in this country (and elsewhere). Non-standard employment arrangements were more common, leading to more precarious income streams.
In total, it is possible to estimate that between 27% and 45% of all Canadian workers do not have what we traditionally think of as stable full-time jobs. Moreover, a large proportion of these non-standard jobs, as high as 25% of the paid work force, could be considered precarious (i.e. temporary, precarious self-employed or involuntarily part-time).HillNotes Nov2018
Over decades there has been a shrinking middle-class in Canada. And Canadians have also had very low household saving rates. Some good policy responses have been proposed and some implemented to alleviate the burden on low and moderate income families – in the tax system, in education, and in other services.
Recent events have led to an emergency response, the CERB, to address a crisis in household incomes and cash-flow. This fall the CERB is being retired, to be replaced by the Canada Recovery Benefit and an enhanced Employment Insurance scheme. Government is now working on just how these programs will work and who will be eligible. These changes will likely have long term implications.
The Globe & Mail provided a good conceptual overview of these new programs, raising the issue of guaranteed basic incomes. Secondarily, many good suggestions have been made by John Stapleton. Stapleton correctly identifies the confusing ways in which various federal and provincial programs conflict or are simply inconsistent.
As lenders and bankers, credit unions are deferring loan payments, reducing credit card interest rates, and waiving fees to help some members who are in stress. These measures are only temporary; the real issue is income security. Perhaps credit unions could, on behalf of credit union members, be more directly involved in the design of the next generation of income security systems?