How financially secure are Canadians when faced with work disruptions? If our current economic climate is anything to go by, not very.
Turns out Statistic Canada has studied this issue in their recent report, Work Interruptions and financial vulnerability. Using data from the 2016 Survey of Financial Security (which, the authors note, remains a reasonable comparison to financial circumstances for Canadians just prior to COVID-19), the study helps determine which Canadians are most vulnerable financially during a temporary period of work interruption.
The government’s response to our current economic lockdown, implementing programs like the Canadian Emergency Response Benefit (CERB) and the Canada Emergency Wage Subsidy (CEWS), has certainly helped a portion of those who face challenges in meeting household and financial obligations. However, an exploration of financial vulnerability in the absence of these income support programs demonstrates just how vulnerable Canadians really are, and which groups among them are most in need of sustainable financial improvements.
Households in Canada are saving less money than they used to, exacerbating anxieties around financial instability. Their risk of falling below the poverty line, if faced with a two-month work disruption, increases as the savings rate drops.
In the face of mandated COVID-19 restrictions, nearly one-third of Canadians have indicated a noticeable impact on “their ability to meet financial obligations or essential needs.” The data shows that single mothers are some of the most vulnerable individuals when faced with work interruption (check out ESPC’s 2020 Alberta child poverty report for our take on families and poverty); 56% would be faced with the inability to make ends meet—even if they sold liquid assets or had access to private sources of income (e.g. investments or property).
Additionally, 67% of households whose main income earner is 35 years or younger without a high school diploma would be at high risk of financial vulnerability if faced with two months of work interruption and no government transfers.
Other highly vulnerable households are those headed by Indigenous individuals (47%) or newcomers (50%). We at ESPC are very aware of the challenges that Indigenous and immigrant communities can face, and continue to advocate for equitably policies and supports to address these issues.
Based on the data, financially vulnerable families would need approximately $1,745 per month, on average, to keep them above the poverty line. These are 2016 numbers, remember; inflation and the consumer price index should be considered when translating this into current 2020 terms. CERB currently provides $2,000 per month to eligible individuals, which is, for many, a great start. But it is worth noting that it also has its limits, and is not accessible to all those who remain financially vulnerable.