EI and Displaced Older Workers

The Task Force on Older Workers appointed by HRSDC Minister Solberg did endorse – in a limited way- labour’s call for severance pay to be ignored for EI purposes – but only for long tenure workers with a record of no prior EI claims in the previous 5 years. (My earlier post on this is  http://www.progressive-economics.ca/2008/04/09/employment-insurance-and-severance-pay/

Similarly, they endorsed our call for improved EI benefits – including mobility assistance – for displaced long tenure workers – but only for those who have not been EI claimants in the past 5 years.

It seems highly problematic to condition improved EI benefits on not having used EI in the past given that many displaced workers may not pass this test even after spending years with a single employer. Layoffs are hardly an infrequent event in, for example, the auto industry. The recommednations ignore the fact that becoming unemployed and filing an EI claim is involuntary – workers do not choose to be laid off.

EI Recommendations and link to Executive Summary follow:

Recommendation 8:

That the regulations under the existing EI program be changed so that severance payments made to workers who become unemployed after a period of long tenure in the workplace and who have not been EI recipients on a regular basis, are no longer considered earnings for purposes of EI. This would enable those claimants to collect EI Part I benefits after the 2-week waiting period.

For the purpose of the recommendation, the operational definitions of “long tenure” and “regular basis” need to be determined. As guidelines, the Panel suggests that these benefits be available to unemployed workers who had been employed for at least 10 years and had not collected benefits in the last five years.

Recommendation 9:

That the federal government, under the existing EI program, initiate through EI Part II (innovation and research capacity) a demonstration project to test the viability and cost effectiveness of a wage insurance plan that would help to mitigate the income losses faced by displaced older workers and thereby encourage these workers to more rapidly return to employment.

Recommendation 10:

That the Employment Insurance Act be modified such that workers who become unemployed after a period of long tenure in the workplace, and who have not been EI recipients on a regular basis:
– be eligible to receive benefits for longer than they are eligible to receive them under the current program; and
– that the extended duration of benefits and mobility assistance (see Recommendation 11) for these long-tenured employees not depend on the unemployment rate in the region, as is the case for special benefits such as maternity, parental, compassionate and sickness benefits.

For the purpose of the recommendation, the operational definitions of “long tenure” and “regular basis” need to be determined. As guidelines, the Panel again suggests that these extended benefits be available to unemployed workers who had been employed for at least 10 years and had not collected benefits in the last five years.

Recommendation 11:

That the Employment Insurance Act be modified such that the suite of measures under EI Part II be expanded to include a specific mobility assistance measure with a commensurate adjustment to the budget allocated to EI Part II.

Recommendation 12:

The Panel strongly recommends that the federal government engage in a fundamental review of the Employment Insurance Act.

Recommendation 13:

That the termination date of the current TIOW program be extended until the government has modified the EI program to provide improved benefits to long-tenured displaced older workers (see Recommendation 10); that mobility assistance measures and commensurate funding be added to any new TIOW agreements being extended or negotiated; and that the TIOW program be modified to provide for financial mobility assistance as an eligible program activity.
Here is the Executive Summary
http://www.hrsdc.gc.ca/en/publications_resources/lmp/eow/2008/page01.shtml

5 comments

  • An additional comment is the thread through the various recommendations that labour mobility is somehow the panacea for displaced workers.

    It is like they stubbornly got fixated on moving out west is the solution and never seemed to quite consider with any serious notion of many of he progressive recommendations. Hardly surprising.

    I also feel that 10 years and five years seem quite arbitrary. Did they do any research into the counts by region of employment for people who would fall into these domains. Given the nice numbers of 5 and 10 I would think not. There is a plethora of data that could have accounted for some kind of regional segmenting of these numbers.

    Not a lot of thought seems to have went into these, seemingly hardened and fast measures.

    The one I do like is 12, however, given the winds blowing potentially 12 could be quite destructive.

    So many things could be accomplished with this fund, and training rather than mobility centric is ideally what is needed. Such a huge, huge potential to start hammering away at those needed skills that everyone seems to magically think we can just import or move around. How about a little HR skill development. Apprenticeships, on the job training and a whole host of other programs have proven themselves as quite an effective social lubricant in a downturn.

    Of course I keep thinking the fund has 50 odd billion in its tank.

    Shame on the policy makers for stealing from those facing the unemployment line and need that lifeline.

    pt.

  • Canada’s unemployment insurance system stands out among western countries for giving large payouts to short term seasonal and other workers, but does not provide major adjustment assistance to longer term, older workers whose jobs have been permanently removed.

    If more funding is going to be provided to the latter, it’s likely going to involve a trade off with the former, which is probably in order in any event. Subsidizing low wage trade and service businesses by allowing their work force to rotate through periods of what amounts to even lower paid vacations collecting EI is hardly a sound social policy.

  • Speaking about bias.

    How can one reasonable make such a generalized statement over so many people in transition.

    YEs EI does have a seasonal nature to it and a good part within the numbers lay within the construction industry, however, total payments to those individuals within this loosely defined economic activity do not make up the majority of the EI payments.

    How about the employers who rely on the fact that they can lay off these workers ad nausea and get away with it. Without these features a whole lot of construction workers would have to be paid a lot more for their hourly labour during the periods that they actually work. So in a sense the public is rewarded with a less costly construction wage bill for employers and subsidized by EI.

    So if one wants to get into that arguement lets bring in some facts.

    I do agree that more in terms of permanent displacement and labour market transition is where soem new directions are needed. However with current fed directions as outlined in this report about the only employer or workers who are happy is bus companies taking the labour force from east to west.

    Those policy choices fro EI smack so much of arrogance it is pathetic.

  • Paul, if you want to be emotional, fine.

    However, I repeat what I basically put forward. The Canadian unemployment insurance plan is unique in the western world in the way it provides substantial paybacks to shorter periods of employment. It’s a subsidy from one industry to another, and from one occupation to another, and it continues over time. If it weren’t for EI, these employers would have to pay more, and some would shutdown if they were too close to the margin.

    I find your suggestion that the public is rewarded with cheaper construction to be kind of funny. I don’t sense that happening in any of our major markets. The small contractors who do home renos are mostly self-employed, and therefore not on the merry-go-round.

    My favourite example of this kind of thing occured some years ago in Surrey, BC. EI investigators found several claimants living in the same apartment. At any given time one or two of them were doing pizza delivery work and the others were on claim having been laid off from their pizza delivery jobs. All the jobs, past and present, were with the same pizza outlet. It didnt’ quite go to the level of prosecution, but the EI types had to bring the employer in and explain to him that you cannot lay some one off at 10am citing a shortage of work, and then at 2pm the same day hire someone else to do that very job. Let alone the guy’s roomate.

  • Me be emotional, uh yeah okay, I was kind of thinking it was you being emotional.

    I mean really, you bring up outlier cases. Every insurance system has abuses, but the norm is legitimate dollars for a person who qualifies.

    I worked on that file for over 2 years and I can tell you that what I speak of is in the literature I helped put it there. It has also been well documented by several other researchers.

    Of course you would find it funny, when I say there is a public savings garnered by having workers who accept interrupted paypacks in exchange the measily payout of the EI 55%. I have talked with construction companies who had a difficult time in laying off workers in the winter months in certain areas.

    If it did not exist I am sure there would either be higher wages during work periods or a lot more labour mobility for construction workers.

    Why else would they stay in region. So in a sense it is a subsidy to industry. EI keeps the wages down by ensuring workers stay in a region. I don’t find that particularly funny at all. In fact when they decreased EI to the 55% level, I am sure these construction workers and others in seasonal work were whacked a lot more than anybody else.

    I would also suggest it is not just construction workers I speak of but they are indeed the highest modality within the seasonal industry. That is, according to the EI data.

    I would also suggest that the season component of EI is not as big as many think it is.

    So you can focus the spotlight conveniently on the outliers and promote the typical anti-worker view point of EI (it is an easy target well groomed by the neo-cons) . The Ei system is the single biggest help to those who lose a job. As stated instead of focusing on labour mobility asthe changes above focus on, it should instead be married with a lot more of a training culture oriented EI.

    However this would mean regulating markets and of course that is supposed to be bad.

    Your point on misuse and abuse of EI is taken and duly filed where it should be.

    paul.

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