EI: Little Accomplished, More To Do

March’s large increase in Employment Insurance (EI) recipients was no surprise given mass layoffs and February’s record-high number of EI benefit claims. But when compared to Labour Force Survey figures on March unemployment, today’s figures provide a sobering reminder that well below half of unemployed Canadians receive EI benefits.

Employment Insurance Coverage, March 2009

 

 

EI Recipients 

Unemployment 

EI Coverage 

Canada 

681,410 

1,456,600 

46.8% 

Newfoundland

38,760

37,300

103.9%

PEI

8,160

8,900 

91.7%

Nova Scotia

31,420

44,300

70.9%

New Brunswick

34,090

38,400

88.8%

Quebec

198,650

346,300

57.4%

Ontario

221,150

620,400

35.6%

Manitoba

13,900

32,300

43.0%

Saskatchewan

11,540

25,600

45.1%

Alberta

42,160

123,000

34.3%

BC

82,210 

180,100 

45.6% 

 

 The silver lining on this dark cloud is that EI coverage has increased slightly. In February 2009 and many previous months, only about 43% of unemployed Canadians received EI benefits. In March, this proportion rose to nearly 47%. In Ontario, the change was from 32% to almost 36%. These percentages are still incredibly low given that almost all employees pay EI premiums.

This apparent improvement reflects both bad news and good news. The bad news is that employers have laid off many full-time, formerly permanent employees, who worked more than enough hours to qualify for EI benefits. The good news is that the EI program’s eligibility rules, which are based on regional unemployment rates, have automatically begun to loosen in response to the recent spike in unemployment.

Rather than waiting for this painfully slow adjustment in eligibility rules, the federal government should immediately reduce the entrance requirement to 360 hours and extend the maximum duration of benefits to 50 weeks across Canada. Yesterday’s announcement fell far short of these needed reforms.

Minister Finley did not unveil any new money for EI or training, but rather explained how some of the funds already allocated in Budget 2009 would be used. The Budget Plan envisioned these funds “benefiting up to 10,000 workers” (page 94). Yesterday’s press release claimed that “approximately 40,000 individuals are expected to benefit” from the same money. Even if we accept the higher figure, it still constitutes fewer than 3% of unemployed Canadians.

One of the new initiatives is to not claw back severance pay from the EI benefits of long-tenured workers if they invest these funds in retraining. This initiative begs the question of why severance pay is ever clawed back from EI benefits.

While more funding for training is welcome, more funding is also needed to create jobs and provide adequate benefits for workers who cannot find jobs.

2 comments

  • Iglika Ivanova

    It always amazes me just how much mileage governments try to get from a single policy change by issuing multiple news releases re-announcing the same reforms as if they were new. Fortunately, most people catch on pretty fast as is the case with this “new” announcement.

    Erin is right that the current reforms are welcome, but they fall short of what we need in order to help those hardest hit by the recession.

    Making EI more accessible would ease both the human and the economic costs of the recession: it will prevent many families from sliding into poverty and will stimulate the economy by putting money in the hands of individuals and communities that need it most (preventing a big drop in consumer spending).

    I was on the local CBC Early Edition show this morning, discussing EI reform with a representative from BC Business Council (an association of the larger employers in the province). Mr Finlayson was open to the idea that a larger fiscal stimulus may be necessary, including expanding EI coverage, but he argued that it’s too early to tell and we should wait and see what the result of the current reforms is given what he sees as evidence of fairly quick recovery (I should note that many economists question the so called green shoots).

    I see no reason to stand back and wait for a large number of people to slide into poverty before we decide to do something about it. Unlike most households, who are very vulnerable given their record-high levels of debt and low savings rates (negative in BC prior to the recession), the federal government is in an excellent position to run a larger deficit and help both those who’ve lost their jobs and the economy at the same time. This should be a no-brainer!

    That being said, EI is only one part of the social safety net and we need to think about improving other programs such as provincial social assistance. For example, the self-employed – 16% of Canadian workers – are not covered under EI and would not benefit from lowering the eligibility threshold or improving benefit levels.

  • I am affraid that none of you have been reviewed by the relevant peer reviewed journals and therefore your input on the matter is suspect:)’

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2009/05/true-or-false-michael-ignatieff-is-to-ei-as-stephen-harper-is-to-the-gst.html

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