Political Action

Changes to EI Benefits Are Needed Now

By Gord Falconer
IAMAW Political Action

Between October 2008 and May 2009, 363,000 Canadians lost their jobs — and the Organization for Economic Cooperation and Development or OECD, projects unemployment to rise to 9.8% in 2010. In this global recession, the weakness of Canada’s Em¬ployment Insurance (EI) system has become a glaring federal policy omission.

The Canadian Centre for Policy Alternates has completed a study on this very issue, by Lars Osberg. This study looks at income protection for the unemployed, federally and elsewhere, and makes a strong case for EI reforms.

(Un)Employment Insurance is the major program by which the Government of Canada has historically helped offset the financial risks of unemployment faced by Canadian families. Unemployment in Canada is now rising at an unprecedented rate and is forecast to stay high for some time to come — so many Canadians are now finding out personally just how little insur¬ance coverage they have.

This study finds it is much more uncommon for Canada’s unemployed to receive regular EI benefits during this recession compared to previous recessions. Now that Canadians need a social safety net, many Canadians are discovering they do not have much of one.

Compared to the vast majority of OECD nations, unemployment benefits in Canada are very low — much below the OECD average.

But the response of the Government of Can¬ada has been decidedly tepid. Budget 2009 did little to change the fact that in terms of access, benefit duration and income replacement levels, EI in Canada falls far below OECD norms. Eligibility and benefit levels remained unchanged, while benefit duration was increased by only five weeks.

The study concludes that the inadequacies of Canada’s (Un)Employment Insurance — combined with weakened provincial social assistance programs — has produced a massive risk shift, the burden of which is being borne by Canadian families who have fallen victim to the global recession. Since low-wage individuals are especially likely to experience unemployment, the downloading of recessionary risk is having its biggest impact on disadvantaged Canadians — an impact that will only increase as EI benefits are exhausted in coming months.

The study recommends reforms to Canada’s EI system. In the current context, Canadians need [1] a plausible expectation that they can get unemployment benefits if laid off — i.e. an easing of entrance requirements and [2] a safety net for the possibility of a longer duration recession — i.e. a ‘second tier’ of unemployment benefits (combined with counselling and retraining) to deal with the problems of the long duration unemployed. The question for Canada’s political economy is — if the recession drags on — what happens if that is not forthcoming?

In addition, organized labour, including the Machinists, has been lobbying the federal government to make changes to the EI system. Here are some facts:

In the late 1970’s and especially during the 90’s, Liberal and Conservative governments made it harder to get EI, and cut the benefit levels and duration of benefits for people who were eligible.

The number of unemployed workers receiving EI went from 80% in 1990 to only 44.5% in December 2008.

While benefits were being cut from workers, the accumulated surplus from EI rose to an astonishing $57 billion in 2008.

A strong EI program is essential to assist unemployed workers while they search for work, and to help stabilize against the effects of a prolonged recession, by providing people with income to spend in their local communities.

That is why we are asking for these changes:
1. 360 hours to qualify for EI benefits in all regions of Canada

2. Increase benefit duration to 50 weeks for all workers, in all regions, and

Provide an additional year of “Special Extension” benefits if national unemployment exceeds 6.5% – paid from federal general revenues.

Extend EI Part 1 benefits while a worker is in approved training.

3. Increase benefit rates to at least 60% of normal earnings, use workers’ 12 best weeks, and raise the maximum. Suspend the allocation of severance pay. Eliminate the 2-week waiting period.