I have often written about Unemployment Insurance/Employment Insurance (UI/EI) on this blog. Reviewing the posts I made over the past 18 months reveals six dedicated articles reflecting on issues such as governance, premiums and federal budget provisions. There is lots to talk about.
UI was the first building block of Canada’s welfare state, aimed in 1940 at protecting against the risk of unemployment, deemed at the time as the first and greatest need in any country’s social security system.
Canada’s UI/EI system has generally been in decline since the early 1990s as a result of a series of steps taken to restrict and decrease benefit amounts and access, reduce the length of time for which benefits could be claimed, and lower premiums. It was also rebranded from Unemployment Insurance to Employment Insurance in order to move the program from a focus on ‘passive’ income support to ‘active’ employment measures.
EI has received less attention as the national unemployment rate in December 2018 stayed at 5.6 percent, the lowest rate in more than 40 years. However, more than 1.1 million Canadians aged 15 and over were seeking work. Across the provinces, the jobless rate was below the national rate in B.C., Québec and Ontario while Newfoundland and Labrador recorded the highest rate at about 14%. Ontario had the largest share of unemployed persons at more than 37%.
While some actions have been taken since the cutbacks of the 1990s to improve EI special benefits (including maternity, paternity, compassionate care etc.), very little has been done to resolve fundamental issues with EI regular benefits. As for employment services, the main change has been that provinces, territories and Indigenous organizations have since 1996 taken over management responsibility from Ottawa.[1]
Today, workers and their advocates describe EI as irrelevant because benefits are so low and the barriers to access so high. Many workers don’t think they have enough hours of insurable work to make a claim and don’t bother to apply when they lose their job. They wonder why they should pay into a system that is not going to be there when they need it. Whereas in the early 1990s 84% of the unemployed were eligible for benefits; today that figure is only around 40%. In places like Ontario’s large cities it is less than 30%.
“The problem we have today is that the Canadian economy is not recession ready because Employment Insurance is not recession ready. Not since the Great Depression have unemployed Canadians been so unprotected in the face of a recession” (Yalnizyan 2009).[2]
This is extremely troubling. Since 1942 the Atkinson Foundation has been promoting social and economic justice. In 2017 it placed EI reform at the top of its decent work agenda. Working together we have just released a paper entitled Employment Insurance: Next Steps on the Road to Renewal that identifies contemporary challenges with EI and calls upon the Government of Canada to renew EI through a broad-based review to start in the Liberal’s current term.
The paper identifies and describes in detail six policy[3] challenges that make the income support component of today’s EI program less relevant, fair and effective than it used to be.
- Coverage: There is a gap between those who are eligible for EI and those who need it.
- Variable entry requirements: There are regional inequities in eligibility for the program.
- Adequacy: Benefits are inadequate to meet workers’ needs during a jobless period.
- The impact of re-distribution: Some regions and industries contribute more and benefit more than others. This undermines solidarity toward the program as a whole.
- Discrimination: Many workers pay into the program but cannot ever draw benefits from it.
- Governance: The representatives of workers and employers – the people who finance the program – have been sidelined.
We believe that the next step in modernizing EI is to undertake a broad-based and fundamental review. In fact, the Trudeau Liberals committed to such a review in 2016 through the mandate letter given to the Minister of Families, Children and Social Development. However, the following undertakings have not yet been realized:
“Improve our Employment Insurance (EI) system so that it is better aligned with the realities of today’s labour market and serves workers and employers. This would include:
- undertaking a broad review of the EI system with the goal of modernizing our system of income support for unemployed workers that leaves too many workers with no unemployment insurance safety net;
- eliminating discrimination against immigrants, younger workers and parents re-entering the workforce so that they are treated the same as other workers in their region
- working with the Minister of Finance to ensure that EI contributions are only used to fund EI programs”
There is still time to initiate an EI review within the Liberal’s current mandate. The paper makes suggestions on the structure of a review, the stewardship of a review, as well as its scope.
While the essentials of Canada’s Employment Insurance program are good, too many workers are falling between the cracks. It is time to mark 2019 as the next milestone for EI and as the year that Canada renewed its collective capacity to face the future of work.
[1] For more information see my 2018 book Federalism in Action: the Devolution of Canada’s Public Employment Service 1995-2015.
[2] Yalnizyan, Armine, 2009, Exposed: Revealing the Truths about Canada’s Recession, Canadian Centre for Policy Alternatives.
[3]. EI administrative issues are not considered in the paper, as these were recently explored through the 2017 Employment Insurance Quality Review and the 2018 Social Security Tribunal Review.
The Welfare State Matters.... 