Mind the gap: Navigating Canada's EI system

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With less than $600 left in the bank, the letter finally arrived. Opening the envelope in her one-bedroom apartment in north Toronto, Kendra read that her application for Employment Insurance (EI) had been denied: her two part-time jobs didn't add up to enough hours to qualify. "I was sad, but then I knew what my next option was: to apply for welfare," says Kendra softly, matter of fact.

The recently graduated student is a fashionable 24-year-old with freckled brown skin, gold hoop earrings and black hair worn in side bangs that frame her face. She sits upright in her chair at a social agency's board room table, speaking quietly about her future aspirations, volunteering, the job hunt, student loans, describing the worries that sometimes go through her mind: "Oh my God, how am I going to pay this bill? Maybe I should cut out something else."

Kendra is not the only out of work Canadian struggling after being denied EI. Among the criticisms levelled at Canada's EI system, one of the most glaring is that it excludes too many unemployed people. According to Statistics Canada, in December 2008, about 538,000 Canadians were receiving regular EI benefits, while 1,209,100 Canadians were unemployed, meaning only about 44 per cent of unemployed Canadians were on EI.

Rising unemployment in the recession has exposed more of the system's flaws -- like regional disparities and EI's questionable role as an economic stimulus -- and galvanized a reform movement that asks: can we do better?

EI excludes a wide range of people, some of whom had EI payments automatically deducted from their paycheque, but now can't get benefits -- recent immigrants, the self-employed, people who are fired or quit their job without a good reason, long-term jobless who run out of benefits and part-time workers, who tend to be disproportionately female and young, like Kendra.

Kendra first earned a degree in early childhood education from Humber College, then a BA in sociology from York University. As a full-time student, she also worked part-time at two jobs, for the university and at a daycare centre, working between four and 17 hours a week. But those jobs ended when she graduated, and after running through her savings with no job in sight, she filled out an application for EI at the Service Canada centre.

The low-down on EI

EI applications can be filed online or in person at a local Service Canada centre. As they walk into the Service Canada office of Etobicoke, Ontario, most people queue in front of the "Reception Réception" and wait to speak to the receptionist, who will refer them to a staff member to sort out their EI payments. While people wait their turn to speak with staff, they're free to search the job bank. "There are currently 28,041 jobs available from Canadian employers," the screen says. Three of 22 computer terminals are set up in Punjabi, Cantonese and Mandarin.

The office is quiet, orderly and impersonal. No one pushing or shoving in line, no one raising their voice, but beneath the surface, frustration must sometimes run high.

Administered by Human Resources and Skills Development Canada, EI currently pays 55 per cent of workers' insured earnings, up to a maximum benefit of $447 a week, which you can collect for up to 50 weeks. Workers pay a required premium of $1.73 for every $100 earned, while employers contribute $2.42.

To be eligible for EI, you must have worked between 420 and 700 hours in the past 12 months, depending on the rate of unemployment in your region. For someone just entering the work force -- say a recent immigrant or a young person like Kendra -- the requirement is 910 hours. The hours required make it harder to qualify for someone who takes time off for health problems, the birth of a child or when management reduces the number of shifts at a plant.

As well, a fluctuating labour market means full-time permanent jobs can be converted into part-time or temporary jobs, self-employment and other irregular work. So many people are working but not part of the EI system.

Working but ineligible

That's the case of Ted. At age 46, Ted has been employed since he finished high school in 1997, working first as an upholsterer and then in construction. Sitting at a table in a North York non-profit agency, he explains that sometimes he worked full-time, with EI deductions coming off his paycheque, but at times a company paid cash or wrote a cheque to his business.

"It was all good as long as I was getting an income," he says ruefully as he removes his jacket, revealing prominent biceps under a white T-shirt. His 10-year-old daughter leafs through a book in a chair beside him.

Construction work started to dwindle in 2008. With car and mortgage payments, his $15,000 line of credit is gone and he's considering borrowing against the house where he lives with his wife, an education assistant, his daughter and his 14-year-old son. "Right now I'm at the end of my funds. I had to cash in my RRSP. I'm good for about two more weeks," he says.

Unable to access government training because he's not on EI, Todd has instead applied to the Canadian Armed Forces, where he hopes to get training as an electrical engineer in the navy.

Navigating the system

Those who've used the EI system sometimes complain about long waits, a confusing application process and the relatively small amount of benefits they get for relatively few weeks. Some like Ted also point out that it's hard to get into government-funded retraining programs like Second Career unless you're on EI or welfare.

The complaint about retraining is echoed by Lance, a 42-year-old graphic artist in Toronto. He works onsite in companies' offices for days or weeks at a time and calls himself a temp, though Revenue Canada regards him as self-employed. After completing one year of college, his career has gone back and forth between full-time jobs, shorter gigs through employment agencies, and freelance work that he finds on his own -- a type of work that pays better than agency work, but which means he's no longer eligible for EI. He sees himself as one of the people caught in the shift towards outsourcing and temping.

"The purpose of EI is to disallow as many people as possible," he says, angrily. "I assume that for somebody with a traditional nine to five job, it still works, but for the rest of us out here in temping hell, we're not eligible."

Lance applied for EI at a Service Canada office last spring when work was getting scarce and he realized how many training programs are offered through EI. He submitted records showing the hours he had logged. "I had basically a giant pile of paperwork for all the places that I'd worked, from March '07 to March '08, invoices to show how many hours I'd worked."

After regularly checking his file online for two months, a message finally showed up that his claim was disallowed. Now Lance is living off his savings until the fall, when he will start training as a practical nurse, funded by student loans.

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

Visit rabble.ca tomorrow to read the second part of Susan Peters' article which examines proposed solutions to "fix" the EI system.

Susan Peters is a writer and editor based in Toronto.

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