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The Progressive Economics Forum

EI Reforms – Unfinished Business of the Recession

With their backs once again to the wall, the Conservatives today announced that they will, at long last, propose additional measures to help the unemployed, something almost everyone inside and outside Parliament has been asking them to do for the better part of a year.
They will extend employment insurance benefits by another 5 to 20 weeks for those who qualify to their new rules, a move they claim will help about 190,000 unemployed Canadians – people who are already protected by Employment Insurance provisions, but are running out of time. But they will only qualify for the new help if they meet all sorts of other conditions that make them the “deserving” unemployed in the Conservatives’ eyes – long-term tenure at their job, and not having made a claim for help in the past.
A little reality check is in order:
As of August, there were over 1.6 million unemployed Canadians. About half of them were in receipt of jobless benefits. What was the other half doing?
A recent HRSDC report noted that in 2008, 25% of the unemployed were still actively looking for work 12 months after being laid off. That’s been roughly the proportion of long-term unemployed for the past five years. That percentage will rise now, as it always does during a recession.
That means today at least 400,000 people, possibly more, fall in the category of the long-term unemployed.
According to the government, less than half (190,000) might be helped by the measures announced today.
Certainly any improvement to protections for the unemployed is welcome. But why have we had to wait so long for so little from our federal government, during the deepest economic downturn since the Great Depression, and with Canadians more exposed to the economic risks of unemployment than at any time since the Second World War?
There is a nagging concern that the government is again playing politics with this announcement, and overestimating the good news. Is there any reason to believe these numbers aren’t just as wildly hopeful – and off – as the number of jobs they said their stimulus package would create?
Among those making claims for EI in 2007-08, 57% (the majority) had been in receipt of benefits at some point in the last five years. That’s because of the nature of much of our industry: assembly lines in manufacturing, oil rigs, even the forestry industry gets periodically shut down for maintenance and retooling, or if demand falls off with seasonal variations, as it often does. Many of these people, whether long-term workers or not, may not be deemed sufficiently worthy of extended help.
The estimated 190,000 people that might benefit from the new measures may be as inflated as the 140,000 jobs the Conservative stimulus package was supposed to create (190,000 jobs including the provincial leg of it).
After 10 months of recession and almost half a year of infrastructure and renovating stimulus, there are 387,000 fewer jobs on offer. The loss of 486,000 full time opportunities has been offset by the creation of 98,000 part time jobs. This includes both employees and the self-employed. Comparing August 2008 to August 2009, there are 56,000 fewer employees, and 100,000 more people who have hung out their shingle as hopefully self-employed.
The temporary measures announced today cannot be seen as a significant response to the larger scale transformations of the labour market that this recession is unleashing. More people are grabbing whatever kind of work is out there, at lower wages, lower or no benefits, and less control over working hours than ever before.
In 2008, 9.3% of the unemployed didn’t have enough insurable hours of work under the highly complex EI system to qualify for unemployment insurance benefits. Assuming, again, that this proportion has not risen since, the needs of at least another 150,000 unemployed Canadians are not addressed by this government’s reforms.
That makes roughly 350,000 unemployed Canadians who are left dangling in the wind.
What will these hundreds of thousands of people do? Scramble for any job, under any terms, and look for a cheaper place to live.
This kind of economic dislocation was more avoidable in the past. In the recession of the 1990s, it took the equivalent of 255 hours to qualify for help if you lost your job in a region with 8-9% unemployment; in the recession of the 1980s, it took the equivalent of 165 hours. Today you need 595 hours of insurable work to get help, and up to 900 hours if you have asked for help in the past.
The call to lower eligibility requirements so that more people can have an income bridge to their next job has fallen on deaf ears, even though virtually every party and extra-parliamentary body has weighed in on the importance of providing more generous help so that we don’t unnecessarily prolong hard economic times.
Harper and his Conservative government may think they’ve taken EI reforms off the table as an election issue, but restoring genuine help for the unemployed remains part of the unfinished business of this recession.

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Comment from Leigh Thomson
Time: September 15, 2009, 4:31 am

“There is a nagging concern that the government is again playing politics with this announcement, and overestimating the good news. Is there any reason to believe these numbers aren’t just as wildly hopeful – and off – as the number of jobs they said their stimulus package would create?…After 10 months of recession and almost half a year of infrastructure and renovating stimulus, there are 387,000 fewer jobs on offer. The loss of 486,000 full time opportunities has been offset by the creation of 98,000 part time jobs.”

a toe forward in other words, while taking three steps back.

the steps back are in the continued outrages of private banker (aka ‘trade’) deals and casino spawn, destroying what we love of our society, our country, and our means of making a decent living.

Comment from Barrie Hebb
Time: September 15, 2009, 6:51 am

Many people unfortunately ignore the EI issue thinking that it does not affect them, especially if they are employed and apparently safe. The Conservatives have safely framed this debate around minor extensions rather than looking at the problem with this system as a whole; not surprising given that helping those without work is not part of the Conservative ideology in this Regime.

The EI system has to be reframed publicly. Millions of workers and employers have paid luxury premiums for an insurance program that is supposed to provide them with income support (at least) in the event that they lose their jobs and income so that they can transit more comfortably from one job to another. Like car insurance or any other, you buy this hoping you never have to use it. If car insurers, however, stopped providing benefits to those who paid; then those who have not yet been in an accident who also hold that insurance should be increasingly worried – the protection they thought they bought and paid for is simply not there.

Canadians should be incredibly upset at how much money has been taken from them to provide far better coverage and services; especially when we look at how little of their money has actually goen towards securing the intended goals of EI. This is a serious issue that affects the employed and unemployed alike and ought to be a far hotter topic with more voter resonance.

I suspect that the reason this is not happening is that the Ne-Conservative agenda has simply attacked so many pillars all at once that we are left trying to glue back a few pieces here and there rather than stopping the overall onslaught.

Comment from Rod Smelser
Time: September 16, 2009, 12:18 pm

To some degree I think this will become a glass half full/half empty discussion, although perhaps the proprtions should be more like one quarter full and three quarters empty.

The CLC has apparently decided that this package, while not very good, is good enough to warrant passage.

I think it’s fair to say the the Canadian unemployment insurance system, when compared to its counterparts elsewhere, has tended to provide fairly long periods of benefits for fairly short periods of work. That has been of help to workers and industries whose jobs are seasonal or are project-oriented such as construcdtion.

What has been missing is longer periods of benefit for workers who are laid off in mid-life and mid-career and are facing a permanent adjustment. To the degree that this measure starts some movement towards longer periods of support for permanently laid off middle-aged and older workers I think it’s a small positive step.

Comment from Bill Popadopolus
Time: October 21, 2009, 6:03 pm

Wow this is really shocking i had never really taken the time to think about this. The one thing though is it seems to me that you are making the conservatives sound terribly evil. But i agree with rod this will become a half full/empty kind of deal. No system is perfect at least we have something in place that can help us as Canadian’s. And now with the booming of the internet industry’s soon the jobless rate should decrease. Like the field of work the company is in demand and really helps company’s learn how to sell to people. And when people sell they can hire more.

The thing we should be worrying about is not paying people for being unemployed but put better programs in place to help find jobs. Which i must say we have some good ones.

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