Human Resources Committee on April 15th, 2021

[Adam Vaughan, Liberal, Spadina—Fort York, ON]

We have learned from the previous government's fiasco around Phoenix, then?

[Carla Qualtrough, Liberal, Delta, BC]

You know my last job, right? Yes, we have learned.

[Adam Vaughan, Liberal, Spadina—Fort York, ON]

I sat near you. I saw the tears.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Vaughan and Madam Minister.

That concludes a full two rounds of questions. Thank you for your availability, and thank you for your patience. That is also extended to your team, who consistently and ably support you. Thank you so much for being with us.

Colleagues, we're going to suspend for two minutes while we get ready for the next panel.

Thanks again, Minister.

[Carla Qualtrough, Liberal, Delta, BC]

Thank you, Mr. Chair.

[The Chair, Liberal, Sean Casey]

I call the meeting back to order.

Today the committee is meeting to resume its study of the employment insurance program.

Ms. Pohlmann, I just want to make a few comments for your benefit.

Before speaking, please wait until I recognize you by name. When you're ready to speak, you can click on the microphone icon to activate your microphone.

Interpretation in this video conference will work very much like in a regular committee meeting. You have the choice, at the bottom of your screen, of either floor, English or French audio.

When speaking, please speak slowly and clearly. When you're not speaking, your microphone should be on mute.

I'd like to welcome you to the committee, not just welcome you but also thank you for providing a brief in advance. It actually has been circulated to the committee, just so you know.

Colleagues, this is Corinne Pohlmann, senior vice-president, national affairs and partnerships with the Canadian Federation of Independent Business.

You have the floor for five minutes. Welcome.

[Corinne Pohlmann, Senior Vice-President, National Affairs and Partnerships, Canadian Federation of Independent Business]

Thank you very much, Mr. Chair. Thank you for the opportunity to be here to provide the perspective of small businesses when it comes to EI.

As you may know, the CFIB represents about 95,000 small and medium-sized businesses across Canada. As we have this discussion, it's important to keep in mind the current plight of small businesses in Canada. COVID-19 has hit them hard. Just yesterday we released new data showing that, as of April 13, 56% of small businesses were fully opened, 40% were fully staffed and just 29% were back to normal sales. We also know that one in six—about 180,000—small businesses are at risk of closing, putting as many as 2.4 million jobs at risk, and that almost three-quarters of businesses have taken on new debt—on average, $170,000 in new debt. They simply cannot afford to take on any new costs now or in the near future.

Now, EI premiums add to the cost of hiring, along with CPP, and are considered profit-insensitive, so they must be paid regardless of whether the business is making money. As smaller firms tend to be more labour-intensive than larger firms, they also tend to be more sensitive to the costs associated with EI, given that employers pay 1.4 times what employees pay.

In early February, the CFIB did a survey of our members on EI and found that over 90% support EI as a job-loss insurance program that covers those who pay into it. About two-thirds also support having maternity and parental benefits and sickness benefits paid for through the EI system, but only one-third support having employee training paid for through the EI system. This is likely because the EI-paid employee training that exists rarely incorporates the needs of small businesses, and that is why 90% want EI-paid training programs to be more aligned with business needs and priorities.

As you review the EI system, there are several things our members would like to see addressed.

First, over two-thirds support premium rebate-type programs that can help alleviate some of the costs associated with EI. For example, EI premium rebates can be used to encourage smaller firms to hire youth, such as what was proposed by the Liberals during the last election campaign, or they can be used to offset training costs for new and existing employees. There's also strong support from smaller businesses to make the EI system more equitable by moving to a fifty-fifty split in EI premiums and by refunding EI over-contributions to employers. EI over-contributions are refunded to employees when they do their taxes, but the employer amounts remain in the EI system. At the very least, these funds could be redirected to a premium rebate program to enable employers to offset EI costs.

We understand that the current government is looking to add EI coverage for the self-employed. When we asked about whether regular EI coverage should be made available to the self-employed, only 8% supported mandatory coverage. However, 73% were open to having it be voluntary.

In a survey we did last week, we asked our members if they would use a voluntary EI program for the self-employed, and we found that 41% said that they might use it, 34% would not use it and 24% were not sure, likely waiting to see how such a program would work and how much it would cost. We'd be happy to work more with the government on making sure that EI for the self-employed is something that will address the needs of small business owners who are all self-employed themselves.

Another issue that has been discussed is the extension of sickness benefits. Small business owners are in a unique position, as many of them do not have health insurance coverage for their employees or themselves, so some rely on the EI system for that purpose. We asked our members in February whether sickness benefits should be extended to 26 weeks. We found that 45% of our members supported that; 45% were opposed and the remaining 10% were unsure. More recently, we asked about extending sickness benefits to 50 weeks, and we found that 46% remain opposed. However, the level of support went down to 35%, while those saying they were unsure doubled to 20%. Clearly, then, more information is needed for smaller employers to understand what the costs and benefits of extending sickness benefits would be for the EI system.

Finally, I want to touch on some of the temporary supports being provided by the EI system and how they would be perceived by small businesses should some of these features be made permanent. Like with the extension of the sickness benefits, our members are fairly split about increasing the minimum amount of time workers can access EI regular benefits, increasing the replacement rate to more than 55%, and making a COVID-related sick days policy of $500 per week for two weeks—now four weeks—paid for through the EI system. However, the one COVID-related measure that was strongly opposed by three-quarters of small businesses was permanently providing a minimum of $500 per week regardless of the amount previously earned by the worker.

This is likely because many see this approach as a disincentive for some to return to work. In fact, 43% of small business owners said they had difficulty retaining and/or hiring people because they suspected that they would rather collect EI or other COVID-related income supports. This went up to 64% among those in the hospitality industry. During pre-pandemic times, only about 17% felt it was difficult to attract workers as they suspected they would rather stay on EI.

It's important that any permanent changes to the EI benefits not make anyone better off than if they were working.

All the details I shared can be found in our new report, which was released today, but they are also part of the submission that has already been circulated to all of you.

I would like to leave you with one last recommendation: Now is not the time to be making permanent changes to the EI system. Many small businesses are struggling and are singularly focused on finding ways to keep their businesses solvent to retain their own livelihoods and that of their employees. Should permanent changes be contemplated, then the vast majority of our members ask that there be full consultation with workers and employers that includes a detailed cost analysis. As the funders of the EI system, employers and employees deserve to be fully informed of the costs and benefits of any proposals, and should be given lots of opportunity to provide input.

Thank you. I look forward to your questions.

[The Chair, Liberal, Sean Casey]

Thank you very much, Ms. Pohlmann.

Madam Clerk, were you able to hear from Ms. Nord, or shall we move to questions?

[The Clerk]

We spoke with Ms. Nord. Unfortunately, the sound is no better. We may have to reinvite her for another meeting later on, if that's agreeable.

[The Chair, Liberal, Sean Casey]

Ms. Nord, we'll be in touch. We want to hear from you, but we need to do it in such a way that everyone can hear and understand in both languages.

Thanks for your patience, and we're sorry it wasn't in the cards today. We hope we will get you back before the study concludes.

[Leah Nord, Senior Director, Workforce Strategies and Inclusive Growth, Canadian Chamber of Commerce]

Thank you.

[The Chair, Liberal, Sean Casey]

Ms. Dancho, you have six minutes, please

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Mr. Chair.

Ms. Pohlmann, it's great to see you again. Thank you for taking many meetings with me and sharing the difficulties that small businesses in Canada are facing.

I just want to share back with you some of the things you said in your opening remarks. You said that CFIB, the Canadian Federation of Independent Business, represents 95,000 small businesses in Canada.

Is that correct?

[Corinne Pohlmann]

Yes, that is correct.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

What is the average size of the small business that you represent?

[Corinne Pohlmann]

It's probably around 12 to 14 employees—on the smaller end.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Those are the corner stores, restaurants, boutiques, maybe tech boutiques and things like that—the smaller services—various technological services, or plumbers, construction companies and little mom-and-pop shops.

Is that about accurate?

[Corinne Pohlmann]

Yes. We have members in every sector of the economy across the country. It can be anything from your mom-and-pop main street to your manufacturing or even high-tech firm, all of which are members of CFIB.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Right. There are 95,000 members, the bulk of which have about 12 to 14 employees.

Is it fair to say that a lot of the businesses you represent are new immigrant businesses or businesses owned by women?

[Corinne Pohlmann]

Yes. We certainly have both of those among our membership. It's a very good cross-section of the business population as we have it in Canada today.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

That's great. I have a lot of those businesses in my riding, so I'm very keen to hear from you today.

Can you share with the committee a little about what you do? Small businesses refer what they are going through to you and you also conduct surveys, and that's how you produce your research.

Is that correct?

[Corinne Pohlmann]

That's correct.

We do three things: We do advocacy. The advocacy is based on survey research that we have refined over many decades. We are celebrating 50 years this year. We have a full research team that vets every survey that goes out, does all the cleanup and makes sure the information we put out publicly is valid, clean and credible.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I know you have a stellar reputation with small businesses in Canada. I heard this in Winnipeg. In fact, 73% of Manitobans employed in the private sector are employed by small businesses. It's a huge employer in Manitoba. Our small business industries are very critical.

I want to ask you about something that happened earlier today in the public accounts committee. The NDP member of Parliament, Matthew Green, said that your research was dubious. We were talking about the impact of the pandemic. I was quite concerned by that, given what you've just shared with me: new immigrant businesses, women-owned businesses, small mom-and-pop shops. These are the businesses that create the culture of Canada in all of our ridings as members of Parliament.

I want to hear from you. Could you explain to members of the committee your perspective on the integrity of the CFIB, what you've heard from your members, and how critical the situation is for them, given the pandemic this year?

[Corinne Pohlmann]

It has definitely been an incredibly difficult year. Given that we are an organization that has done survey research for decades already, we were well positioned when the pandemic began to get to our membership quickly to really determine what the impact was and what was happening. I would even argue that we were probably the only organization that was able to do that as quickly as we did.

A lot of that research was used quite extensively within government, because there wasn't much other research happening at the time. With our average survey, especially at the beginning of the pandemic, we were getting 8,000 or 10,000 responses to a survey, which was more than enough to make sure it was representing what was actually happening. Even today, we're still getting about 4,000 to 6,000 responses to every survey.

Many times over the years, because we're an advocacy organization and people will suggest that maybe our research is biased, we have done much research to try to validate that it isn't. We have found that when our research is done in a different way by others, it is pretty much on par with the information we have. We've had government departments duplicate our research, because they didn't necessarily believe it at first, and then find the same thing that we found.

I would say it is not dubious. It's a fairly good reflection of what is happening out there in the small business landscape in Canada.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Yes.

To your point in your opening remarks as well, you'll have to correct me on the exact number, but approximately 200,000 small businesses are at risk of closure, and that's over two million jobs. I have heard even up to three million jobs and 220,000 small businesses could be lost.

Can you share with the committee what we're facing if we don't get our economy back on track—what you're hearing from your membership and the small businesses you represent?