Trudeau, Mulcair vow end to Harper Employment Insurance changes

Just 36.6% of unemployed workers are receiving Employment Insurance benefits – an all-time low in Canada, according to recent government numbers.

In 1990, 83% of the unemployed received benefits, but coverage declined to 42% in 1998 — when the former Liberal government redesigned the program to make it far less generous. After further changes by the Conservative government in recent years, the beneficiaries-to-unemployed ratio fell below 40% in 2012 for the first time in almost 40 years.

In 2013, the ratio of beneficiaries-to-unemployed dropped to 37% after the government implemented further restrictions, requiring Canadians to accept any job deemed “suitable” — even if it’s unrelated to a worker’s career and comes with a 30% pay cut. In Toronto, the ratio is closer to 20% meaning 80% of Toronto’s unemployed are ineligible for Employment Insurance.

In this post, Canada Fact Check examines the proposals being put forward by Justin Trudeau and Tom Mulcair to fix Employment Insurance (EI) and deal with declining eligibility and other EI shortcomings. While the Conservative government has made Employment Insurance changes over the years and these are referenced in this post, the Conservatives have not put forward any new, substantive EI proposals in the campaign to date.

By way of introduction, the basic rate for calculating EI benefits is 55% of a worker’s average insurable weekly earnings. As of January 1, 2015, the maximum insurable earnings amount is $49,500. This means that an out-of-work Canadian can receive a maximum amount of $524 per week in EI benefits – regardless of his/her compensation in a previous job.

None of the three parties are proposing a change to this part of the EI calculation formula.

EI Issue 1:  Premium Levels

Current rules: The current EI premium rate (contributions) is set at $1.88 per $100 of insurable earnings. Given that employers pay a larger share of premiums than employees, this means a maximum employee contribution of $930.60 per year and a maximum of $1,302.84 for employers.

According to the federal budget, the $1.88 per $100 rate was projected to bring in $22.6 billion in premiums for fiscal 2014-15, and was used to pay out $17.8 billion in benefits.

NDP

The NDP would maintain the current level of EI premiums at $1.88 per $100 of insurable earnings as opposed to reducing it to $1.48 in 2017 as proposed by the Conservative government. This would result in a savings of approximately $4.8 billion that the NDP would use to enhance and supplement EI benefits, maternity leave, and EI training programs (see below).

Liberals

The Liberals have said that they would cut EI premiums to $1.65 per $100 from the current $1.88. This would result in a savings of approximately $2.1 billion that would be used to enhance and supplement EI benefits and EI training programs (see below).

EI Issue 2: Hours worked to qualify for benefits 

Current rules: For most workers, the current work threshold to qualify for EI benefits is between 420 and 700 hours in the past 52 weeks, depending on the rate of unemployment in any given region of the country.

However, for those workers who recently joined the labour force for the first time – or are re-entering it after being away for two years – the current requirement is 910 insurable hours.

NDP

The NDP would significantly lower the eligibility threshold to 360 hours worked in the preceding 52 weeks for all workers (including new or returning workers) anywhere in Canada. This would cost $1.2 billion.

Liberals

The Liberals would end the higher 910 hour eligibility rule for new workers and those re-entering the workforce. This means that all workers would be eligible for EI benefits when they reach the current threshold of between 420 and 700 hours of work, depending on the rate of unemployment in any given region of the country. This would cost $550 million.

EI Issue 3: Best weeks of pay calculation

Current rules: Currently, the number of an EI claimant’s highest paid weeks used to calculate benefits is between 14 and 22, depending on the unemployment rate in different regions. In other words, if you live in a high unemployment region, your benefits will be calculated on the basis of your best (highest paid) 14 weeks. If you are living in a low unemployment region, your benefits will be calculated on the basis of 22 weeks. If you live in a middling unemployment region, the calculation will be based on a number of weeks somewhere in the middle of the 14-22 week range.

NDP

The NDP would spend $460 million to calculate all EI benefits on the highest 12 weeks of pay.

Liberals

The Liberals are proposing no changes to this part of the EI calculation formula

EI Issue 4: Maternity and parental leave.

Current Rules

EI maternity benefits are offered to mothers who cannot work because they are pregnant or have recently given birth. A maximum of 15 weeks of EI maternity benefits is available. The 15 weeks can start as early as eight weeks before the expected date of birth, and can end as late as 17 weeks after the actual date of birth.

EI parental benefits are offered to parents who are caring for a newborn or newly adopted child. A maximum of 35 weeks of parental benefits is available to parents. The two parents can share these 35 weeks of benefits.

NDP

The NDP would allocate $500 million annually to improve parental leave. No details have been released as of publication.

Liberals

The Liberals say they will make Employment Insurance parental leave more flexible for family and work circumstances. This includes providing parents with the option to receive their benefits in smaller blocks of time over the first 18 months of their child’s life, or take a longer leave (up to 18 months) at a lower benefit level. This will cost $125 million.

EI Issue 5: Job search and “acceptable” jobs

Current rules: A complex new regime announced in 2012 by the Conservative government breaks EI claimants into three categories: long-tenured workers, frequent claimants and occasional claimants. The objective of the rule changes was to make claimants less choosy about accepting lower paid work, including taking a job paying only 70 per cent of his or her previous wage.

The new rules create a sliding scale in which EI claimants are expected to broaden their search to lower-paying jobs the longer they remain on EI.

NDP

The NDP would remove what it calls “punitive and unfair” definitions for “suitable employment” and “reasonable job search” that were imposed by the Conservative government in its 2012 budget. In the NDP’s eyes, these rules effectively forced the jobless to accept any job at 70 per cent of their previous salary, under threat of losing benefits.

Liberals

The Liberals would also repeal the 2012 Conservative changes to job search and “acceptable” jobs.

Other NDP Employment insurance promises

In addition to the above, the NDP would allocate:

• $430 million to increase benefits to a maximum of five extra weeks in regions with high unemployment rates;
• $1.3 billion to improve sickness benefits from 15 to 45 weeks.
• $200 million annually towards allowing four times as many Canadians to qualify for compassionate care benefits; and
• $500 million more per year to the provinces for skills and training through the Labour Market Development Agreements.

The NDP would also:

• Amend the Employment Insurance Act so that any surplus amount received through premiums cannot be redirected to general government revenues.
• After four years, work with employers and labour to set up an independent board of directors to set EI premiums and manage the EI program.

Other Liberal Employment Insurance initiatives.

In addition to the above, the Liberals would:

• Reduce the waiting period for Employment Insurance benefits to one week from two. This will cost $700 million.
• Increase investment in skills training, through a $500 million annual increase in funding to the Labour Market Development Agreements with provinces.
• Introduce a more flexible and accessible Employment Insurance Compassionate Care Benefit so that six months of benefits are available to those who are providing care to a seriously ill family member, rather than only those caring for a loved one at risk of death.
• Work with the provinces and territories to assess how successfully the Employment Insurance system is delivering its core mandate to provide income security to workers in a changing labour market.

Bottom Line

Both the Liberals and NDP have put forward substantive and worthwhile changes to the Employment Insurance program. For example, both parties are reducing the number of hours worked needed to qualify for EI and both parties are promising to do away with the Conservative’s coercive 2012 job search changes.

As the NDP is maintaining EI premium levels at current rates while the Liberals are proposing to reduce premium rates (although not as much as the Conservatives), the NDP has $4.8 billion to reinvest in enhancing benefits and EI funded training programs while the Liberals have only $2.1 billion in savings to reinvest.

This gives the NDP the edge in rebuilding this vital element of the social safety net.