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The Progressive Economics Forum

Harper’s Strange EI Parental Leave Plan

Harper today announced that he would include self-employed workers in EI for purposes of paid maternity and parental leave. Extending such EI coverage is a good idea, and Quebec has already done this through a provincial adaptation of the EI program which requires a separate provincial premium rate.

In Quebec, partcipation by the self-employed is mandatory so they all contribute to the cost of the benefit. However, participation in Harper’s plan by the self employed would be voluntary, and they could opt in to the plan just in six months in advance of collecting benefits. No rational self employed person would contribute in advance of knowing that they would soon collect.

Harper’s plan would seem to entail a large cross subsidy from employees and employers to the self employed and higher EI premiums.  Conservative language on this issue – which follows – is not very precise.

If there were no cross subsidy, the cost of benefits would greatly exceed premiums, unless the cost of premiums in the six month eligibility period was extraordinarily high.

http://www.conservative.ca/EN/1091/105194

Here are the bare bones:

  • The system will be voluntary. Self-employed Canadians can opt in to EI premiums and, in return, will be able to receive maternity and parental benefits.
  • Self-employed Canadians would have access to the same type of maternity and parental benefits available to regular EI participants.[3]
  • Self-employed entrepreneurs would be required to opt-in to EI premiums at least six months prior to making a claim.
  • Exact premium amounts and required payments post-claim will be set upon implementation, following a review by the newly created Canada Employment Insurance Financing Board.
  • Once this measure is fully implemented, rates will be set so that costs are fully offset by received premiums, just as with regular EI.
  • The annual cost of this benefit is estimated to be $147 million, based in part on the take-up of a self-employed maternity and paternal benefits plan that is already offered by the Quebec Government. When implemented, the benefit would be fully funded by premiums within the EI plan; it would not affect the federal government’s budget.
Enjoy and share:

Comments

Comment from Ann D
Time: September 15, 2008, 9:39 am

I posted my two cents on the plan at

http://anndouglas.typepad.com/one_woman_one_blog/2008/09/harpers-materni.html

Ann

Comment from janfromthebruce
Time: September 15, 2008, 10:51 am

“However, participation in Harper’s plan by the self employed would be voluntary, and they could opt in to the plan just in six months in advance of collecting benefits. No rational self employed person would contribute in advance of knowing that they would soon collect.”

This didn’t make sense to me as it is contradicting. If I was self-employed and knew I was pregnant, I would definitely opt in before I was 3 months pregnant, so I could collect EI.

And right, it looks like employees (both male and female) who have to contribute to this fund would be a) subsidizing the female self-employed
b) providing a “free ride” to males who overwhelmingly would not consider voluntarily contributing, whether 6 months or anytime.

But even more disturbing is the long-term implications of this “new program.” Employees and Employers would want to be included in the “opt-out” arrangement, as putting all those contributions on a level footing.
Moreover, it would divide people along gender lines (Harper loves pitting one group against another, so we would have waged workers vs. self-employed workers; male vs. female).

Long term Neoconservative goal – destroying a social safety net universal program.

Outcome – each person for themselves in this dog-eat-dog world. Better start saving for that raining day!

Comment from Deb Prothero
Time: September 15, 2008, 11:25 am

Harper is dishing out little bon mots just like he did in 06/07 election campaign. Without enough details about the outcome, he thinks Canadians who are not really paying attention yet, will vote for him. We need to get the media asking harder questions.

The demise of the Employment Insurance system is planned through this little tidbit tossed to self-employed people who might very well grab onto it as a good idea. What they fail to see is that the whole system will collapse from this.

Very much in the same way that Canadians voted to give Harper a minority based on little treats like $100 a month without realizing that the impact actually was the loss of the best Child Care solution that had yet been devised – the one that Ken Dryden had negotiated with all the provinces and territories. As a result, a few people got a little more (most was taxed back) and we lost our shot at a universally available child care solution for working families.

What will happen to EI after he’s done with it? The collapse of the entire system.

Comment from andrew jackson
Time: September 15, 2008, 11:32 am

My phrasing was not the best Jan. What I meant is that no one would contribute until they knew they were going to have a child. Given the need for just 6 months of contributions, one would not start contributing until one was planning a leave.

Comment from janfromthebruce
Time: September 15, 2008, 12:20 pm

thanks Andrew. It’s once again about targeting people as individuals and not about ensuring that Canadians live in a sustainable community where we all look after others.

Comment from Sullum Voe
Time: September 15, 2008, 1:00 pm

I like how they phrased this, “the successful self-employed”. There are a whole bunch of self employed out there that are classed as self employed but should really be employees, i.e. contract workers, temproray workers and such. They do form a large proportion of the self employed. These are the self employed that one would hope any changes to EI and self employment need the help. Many are in non-traditional work arrangements and have little or no benefits.

This is merely another hastily put together vote grab by this pathetic group of vote pnadering short term oriented libertarians.

pt

Comment from Trasvis Fast
Time: September 15, 2008, 8:11 pm

Unfortunately Harper is getting good mileage out of it in the press

Comment from Sullum Voe
Time: September 16, 2008, 5:47 am

Further to my last point, the changes proposed by Mr. Harper are merely tinkering. The tories have rebooted the EI system, stole away $56 billion from the unemployed and have done nothing to unfurl the belt tightening that the liberals hacked away from the former UI system. For the Tories to hold out this perk to the “successful” self employed is more of Harper and his cronies arrogance and smugness regarding social policy and labour force adjustment mechanisms. It would have been nice to see a comprehensive training initiative announced to help the manufacturing sector.

pt

Comment from Chris Smillie
Time: September 17, 2008, 6:46 am

My first fleeting thought was more around the opt-in ability and not who the program was aimed at. We ought to be concerned here about introduction of opt-in opt- out capability of participants. By extension in the future will regular particpants be able to opt in opt out??

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