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For Angella MacEwen, two significant statistics show how many Canadians are left out in the cold when it comes to Employment Insurance (EI).
The senior economist for the Canadian Labour Congress says that the first — and more widely quoted — is the national percentage of unemployed workers receiving EI benefits, which has hovered around 40 per cent for the past five years.
The second relates to the rate of return of benefits for unemployed workers who paid premiums — this is about 75 per cent.
Both figures clearly show the system is not working, and relate to wider changes in the labour market impacting EI.
The dwindling effectiveness of EI
Eligibility rules in the current system need to be understood in context.
“Back in the 1980s, 90 per cent of unemployed workers were covered by EI,” MacEwen says.
Since then, two major changes — one within the EI system and one outside — have occurred.
“The first is that access [to benefits] was restricted. In the mid 1990s, the federal government shifted from a ‘weeks’ system to an ‘hours’ system, and at the same time they basically tripled the number of hours you needed to work in order to qualify,” she says.
Before 1997, individuals needed to have worked between 12 and 20 weeks — depending on the regional rate of employment — in the year before they applied for EI benefits. A minimum of 15 work hours each week was also required. Now, workers need between 420 and 700 hours of work to qualify.
The second significant development is the rise in the number of self-employed and contract workers which make up the labour force, MacEwen says.
The EI system works against these types of workers.
“For example, you may be doing a contract with a temp agency, or you’re a Rogers person that installs Rogers phones in people’s houses and you’re self-employed so you don’t pay into EI.”
While there is an option for these types of workers to pay premiums towards special benefits under EI, they cannot receive regular benefits, she says.
It’s the same for those transitioning into the workforce.
“If you’re moving from an unpaid internship, or from school or from self-employment, and you’re starting to look for a regular job, you haven’t paid into benefits in the last year so you’re not going to be able to get EI.”
“We’ve got people that are having trouble breaking into the labour market and we’ve got a bunch of workers that have paid into EI that aren’t being covered,” MacEwen says.
Structural issues with the system, and a general lack of understanding around workers’ rights and procedural requirements when it comes to EI benefits, are also contributing to problems.
“We find that young workers or workers in urban areas don’t apply because they…don’t think they’ll qualify, or they’re having trouble getting they’re ROE [record of employment] from their employer, or they’ve heard about delays and think it’s not worth it,” she says.
Some people wait up to three months to receive their first benefit, and that’s if the application was submitted without any issues.
“If there are problems, it takes really, quite a long time to hear back. There are chronic problems there [Service Canada] where people have their claims delayed because the employer is sending in the information Service Canada needs to process the claim.”
The big picture
MacEwen says implementing a single, national entrance requirement of 360 hours is the first step in improving EI.
“It’s the biggest thing that could be done to improve access to EI and would make access easier for workers to get benefits. “
Looking at how the changing nature of Canada’s workforce has increased pressure on EI is also important.
“It is really important to realize that EI is only part of a broader system.
“I think we need to talk about EI in conjunction with other labour market policies.”
For example, at the provincial level, better enforcement of employment standards, especially around the misclassification of self-employed workers and contractors who should be categorized as employees — and therefore paying into EI — would help in ensuring more people qualified for benefits, she says.
Addressing the difficulties for new workers attempting to break into the labour market also needs to be considered.
“It’s taking students after they graduate longer to find work than it used to.”
While this isn’t directly related to EI, it does mean more people are unemployed, impacting on the wider unemployment rate, and therefore eligibility requirements for benefits.
Increasing opportunities for young workers to break into the labour market, possibly through programs that encourage employers to hire young workers, is another way to tackle this, MacEwan says.
“What we’re hearing a lot now is employers wanting to hire people with three to five years’ experience. If you don’t have that, it’s a self-defeating cycle,” she says.
More education around EI, raising awareness around the system among workers, including what their rights are and the types of benefits they are paying towards is also essential.
And while the Liberal federal government has already begun to address certain problems with EI — including reinvesting in frontline staff at Service Canada — a “more global rethink than what we’re doing right now” needs to take place, MacEwen says.
Next, Teuila Fuatai looks at the function of special benefits in EI.
Read all of Teuila Fuatai’s special series on employment insurance here.
Teuila Fuatai is a recent transplant to Toronto from Auckland, New Zealand. In New Zealand, she worked as a general news reporter for the New Zealand Herald and APNZ News Service for four years after studying accounting, communication and politics at the University of Otago. She is rabble’s labour beat reporter.