The 2016 Budget announces some much needed improvements to Employment Insurance, and leaves room for more changes in the near future. The changes announced in the budget are largely positive, but many details are still missing, and some stinkers from Harper are left unchanged.
The Good …
Significantly, the government will reduce the 910 hours threshold for new entrants/re-entrants as of July 2016. All workers within a region will have the same entrance requirements between 420 hours and 700 hours, depending on the local unemployment rate. This change will be implemented 6 months earlier than promised in their election platform, and will be a meaningful change for young workers, recent graduates, and new Canadians. (Grade: A+)
Another significant announcement is $106 million over two years for front line staff. In their election platform, the Liberals had committed to reducing EI wait times, but had not allocated any funding for that purpose. This budget provides a one year increase of $19 million to help Service Canada meet increased demand for processing. It also provides $73 million over two years for increased staffing at EI Call Centres, and $14 million over two years to promote compliance with program rules. Mostly good, but in my experience, face-to-face discussions with well-trained staff near the beginning of claims are the best way to promote compliance with program rules. (Grade: A-)
The budget will extend the duration of EI regular benefits by 5 weeks, up to a maximum of 50 weeks of benefits, for claimants whose primary residence is in one of the 12 EI regions with the sharpest increase in unemployment. The extension will be available for a year starting in July 2016, and will apply retroactively to all eligible claimants as of January 4, 2015. The government will also offer an additional 20 weeks of EI regular benefits to long-tenured workers who reside in those same 12 EI regions, up to a max of 70 weeks of benefits. This too will be available for a year, and applied retroactively.
While this benefit extension will be significant for many workers, many others will fall through the cracks. Those who worked in affected regions but returned home to look for work will not qualify, and younger workers are unlikely to qualify for the 20 week extension offered to long tenured workers. Long -tenured workers must have paid into the EI program for the past seven out of ten years, and over the past five years must have received 35 weeks or less of EI benefits. About 20 – 25% of EI recipients fall into the long-tenured category. (Grade: B)
In a positive step, the maximum duration of work-sharing agreements will be extended from 38 weeks to 76 weeks. I encourage the government to work with employer and worker groups to increase awareness of this program, as it can be very effective but take up is low. (Grade: A+)
The government will extend the current version of the working while on claim pilot until August 2018. This pilot allows workers to keep 50% of their earnings from employment, up to a maximum of 90% of their weekly insurable earnings. All workers will also have the option to fall under an earlier pilot. Under the alternate working while on claim pilot, workers may keep all of the first $75 earned and have earnings above that amount deducted dollar for dollar from their EI benefits. This alternative pilot may work better for low wage workers with opportunities for part-time work. (Grade: A-)
As promised in their election platform, the two-week waiting period for EI benefits will be reduced to one week, starting January 1, 2017. This change does not add to total benefits, it simply starts the claim period one week earlier. I think this money could be better spent elsewhere in EI, but it was an election platform promise. (Grade: A)
The Mixed Bag …
Budget 2016 promises to reverse job search requirements by claimant category introduced by the Conservative government in 2012, but maintains the three claimant categories: frequent claimants, occasional claimants, and long tenured workers. Since one of the requirements to be “long tenured” is seven years of EI contributions, this automatically excludes younger workers. (Grade: D)
Other elements of Harper’s cuts to EI are not addressed in this budget, such as changes to the appeals process or changes to the number of EI regions in PEI, Yukon, Nunavut, and the Northwest Territories. This is certainly not what workers expected when we called on the federal government to undo the Conservative EI changes that were punitive to workers. (Grade: D)
Despite some expansion of benefits, this budget predicts a $1.7B accumulated surplus in the EI Account by December 2016. If you’re looking for stimulus, money in workers’ pockets is the most effective route, and there was enough money in the EI Account to make that happen. It’s disappointing that opportunity was wasted. (Grade: D)
The budget also forecasts a seven year break even rate at 1.61 per $100 of insurable earnings. This premium level does not take into consideration the promised expansion of benefits for compassionate care leave, or parental leave. Since the new premium rate is set to take effect on January 1st, 2017, it’s hard to know what that means. Will they figure out the details of the new programs before then, and then announce a new rate? Will they let the EI Account go further into deficit in 2017 and then raise rates later on if required? Unknown.
The takeaway? So much better than Harper, but still lots of work to do. And I expect that Atlantic Canadian MPs are going to be hearing an earful over Easter.
- Lessons from the Reagan Era on Managing Twin Deficits (February 14th, 2017)
- Federal Income Support for Low-Income Seniors (August 29th, 2016)
- Central Agencies in Canada (August 8th, 2016)
- Ten things to know about the 2016-17 Alberta budget (May 3rd, 2016)
- February Labour Force Woes (March 11th, 2016)