Better levels of EI benefits are unlikely to discourage work

Labor Day will see a record official unemployment rate of around one million workers, even though most of our neighbors are out of work.

According to Statistics Canada, about half of adults are unemployed. However, only a fraction is counted as unemployed. In Canada, more than 12 million adults are unemployed.

Even if the government included only people who want to work but have given up looking, some involuntary part-time workers, and people waiting for work (i.e. workers laid off on recall), it could really be another 500,000 people out of work. This would bring the official unemployment rate to over seven percent.

What if the government used the current pandemic unemployment rate from the Canada Employment Insurance Commission? This would mean that nearly 2.5 million workers are actually unemployed.

Nonetheless, September will see the end of improvements to EI such as the assumed unemployment rate of 13.1% for expanded access to benefits, a flat employment threshold of 420 hours for recipients and the minimum weekly benefit of $300. The government says it is necessary to cut EI benefits to keep the program affordable and to discourage workers from quitting or being fired.

“Unemployed workers will face a 66% increase in the number of hours required to qualify for EI, much tighter restrictions on who can get benefits, and a clawback of their severance pay and holidays,” said Canadian Labor Congress President Bea Bruske. “Now is not the time for the government to abandon people who lose their jobs. We urge the government to extend the temporary measures until the employment insurance program can be enhanced permanently, as the government has committed to do.

Genuine EI reform requires a social policy approach. Significant reform would focus on reducing waste and duplication of multiple program strands working at cross purposes, ostensibly with the common goal of income support between jobs. EI reform could address gaps in program adequacy related to differential support for unemployed workers such as new mothers as well.

Employment insurance benefits are insufficient, judging by the approximately 20% of contributing workers who are not eligible in Canada. Better levels of EI benefits are unlikely to discourage work when the real driver of job search over the past 50 years has been the amount of work available. In fact, experience with the Canada Emergency Response Benefit has shown that $500 should be the minimum weekly benefit. And eligibility for EI benefits should better reflect actual work patterns by using nine weeks rather than variable hours as a measure of contributor entitlement.

Canada has cut the poverty rate by a third during the pandemic.

Statistics Canada concluded that income supports like CERB led to a reduction in poverty of 1.4 million people in 2020. Most temporary pandemic income supports are being phased out, which puts vulnerable populations at increased risk from inadequate food, clothing and shelter.

The World Health Organization says poverty is the number one cause of disease, illness and premature death. Even if only 20% of health care costs are attributable to poverty, an increase in poverty of 1.4 million people could reasonably add more than $3 billion per year to federal health transfers.

When daily reports of declining life expectancies and rising death rates ring alarm bells about the impact of poverty, we cannot afford to turn back the clock. Trading a self-funded EI fund for health tax hikes to pay for more poverty is not a Labor Day sale. It is not charity but simple justice that demands that we build back better.

Tom Baker is a retired labor leader living in Burlington