Mind the gap: Fixing Canada's EI system

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At noon on March 16 in Scarborough, Ontario, protesters wearing hoods, toques and sunglasses under sunny spring skies hoisted round blue and white signs with messages scrawled in marker: "Fix EI" and "360 hours now." The multi-ethnic crowd of about a hundred men and women marched in a lopsided loop around the entrance to the skyscraper housing Scarborough's Service Canada offices.

People signed petitions asking the House of Commons to increase EI benefits to 60 per cent of earnings, make payouts last 50 weeks in all regions, and lower the number of hours needed to qualify to 360 across the board. Members of five unions hoisted signs in support of speakers who called each other "brother" and "sister." This was one of a series of protests and meetings in the Toronto area planned by the Good Jobs Coalition, a grouping of social service agencies and unions.

Peggy Nash, the Canadian Auto Workers' organizer, sounded polished, as befits a former NDP member of Parliament. "We all know that workers pay into EI and when they're in a time of crisis they can't get the benefit. What's the message that we want to tell the government up in their ivory tower?"

"Fix EI, fix EI," the crowd chanted.

How we got here

As the recession affects the working lives of people like Kendra, Ted and Lance, who are excluded from Canada's system of employment insurance (EI), the debate grows.

Prime Minister R.B. Bennett proposed payments for jobless workers during the Depression in 1935, and Unemployment Insurance (UI) was introduced in 1940. In the early 1970s, changes made UI easier to get, covered more people, and increased the payouts. Cuts in the 1980s and 1990s decreased the amount paid out, required more hours to qualify, and linked the amount of benefits to unemployment rates in different regions. The name changed to Employment Insurance in 1996.

"It used to be one of the most generous in the world, but now it's becoming similar to other countries," says Jim Struthers, a professor who has studied EI at Trent University in Peterborough, Ontario. Unlike other countries, Canada uses EI as a tool to redistribute wealth to poorer regions and to benefit seasonal industries like fishing.

Struthers believes EI has a role to play in the recession as a fast, efficient economic stimulus going to people who will spend the money they get. "Unless we restore EI to the levels experienced in 1988, it's going to prolong this recession or at least slow down the rate of recovery," he argues.

Critics of EI will tell you that the number of unemployed people who were able to collect benefits dropped from a high of over 80 per cent in 1989 to a low of 40 per cent by 1998. Meanwhile, swelled by contributions from workers and employers, the EI fund soared to a $25 billion surplus, some of it put towards the federal deficit. Some ordinary Canadians are angry that that government treated EI as a general revenue stream. They think of the system as "insurance" rather than a "social program," and they feel that Canadians who find themselves out of work are entitled to receive money they have paid into the system.

Also, because contributions are involuntary, it's galling when workers are required to pay in even when they can't collect. A stark example is foreign farm workers who labour under the Seasonal Agricultural Workers Program or the Temporary Foreign Worker Program but are sent back to countries like Guatemala, Thailand and Jamaica before they can collect.

To a lesser extent, the same is true of part-timers like Kendra who pay in but can't collect. On a regional level, workers in areas with high employment like Calgary pay in at the same rate as everywhere but collect fewer weeks of benefits compared to workers in high-unemployment areas like Antigonish, Nova Scotia.

Everyone's a critic

Some observers point out the difficulties in including self-employed workers like Ted and Lance in EI. "What's to stop them from laying themselves off? How do you monitor the hours they're working?" says Colin Busby, a policy analyst at the C.D. Howe Institute think-tank in Toronto.

Catherine Swift, president of the Canadian Federation of Independent Business, would like to see EI function more like insurance, less like a social program. She argues that EI should cover people working full-time or half-time: "Do you want to insure the person who is only marginally employed? If somebody is only working one day a week, then their workforce attachment isn't very strong." Despite this, one area where she wants EI expanded is to provide maternity benefits to women business owners.

The debate over EI initially prompted promises by Stephen Harper's Conservative government to improve the system. In January, the maximum length of time you can collect benefits was raised from 45 weeks to 50; there was talk of including self-employed workers.

In June, Liberal leader Michael Ignatieff called for a 360-hour requirement and blustered about calling a summer election based on EI, then quietly agreed to strike a committee instead to study the issue.

At the same time, the premiers of Western provinces unveiled a plan to replace EI's regional disparities with different eligibility requirements for urban, rural and remote areas.

EI is likely to be an issue in the next federal election. It's an easily understandable topic that hits ordinary Canadians in their pocketbook, and one that critics won't let the government forget.

Who benefits?

The politicos' proposed EI fixes won't necessarily help the poorest of the poor, the workers who aren't voter banks or don't have unions fighting for them -- the really, really screwed out of the screwed. Extending benefits from 45 to 50 weeks (already done), eliminating the two-week waiting period (proposed), ending regional disparities (proposed) -- these won't do much to extend EI coverage to the 56 per cent of Canadians not eligible to begin with.

What will cover more workers is bringing the self-employed under the EI umbrella (proposed) so people like Ted and Lance are covered.

Another solution is to lower the number of hours required to 360 (proposed), so more part-time workers who pay into the fund will be eligible. Unfortunately, this may do nothing for an immigrant or a young person entering the workforce for the first time -- will she still need 910 hours to qualify for EI?

That was the problem for Kendra, the 24-year-old whose two part-time jobs didn't add up to the hours she needed for EI.

"If you're going to school full-time and working part-time, how do they expect you to have the 900 hours? Whereas a person who is working full-time needs less hours?" her soft voice sharpens.

Kendra is now living month to month on social assistance, which connected her to a job search program through the JVS non-profit agency in Toronto. She's applying for jobs, volunteering at a law firm, and will soon start volunteering in social services. "EI, for people who can get it, I think it's a good thing. But I didn't qualify for it," she says.

Despite paying into the system, Kendra is one of the tens of thousands of unemployed Canadians who are excluded from EI, a system that reaches only 44 per cent of unemployed workers. While a large-scale loss of jobs in the recession highlights flaws like regional disparities, a stripped-down EI system may fail to provide the jolt to the economy that government wants. We require workers to pay in who will never be able to collect, and shut out other workers from joining at all. Whether you see it as an insurance scheme or a social program, Canadians can surely do better.

Note: All names of interviewees in this article have been changed to ensure their privacy.

Read the first part of Susan Peters' article which examines the problems with the EI system.

Susan Peters is a writer and editor based in Toronto.

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