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Employment insurance (EI) is failing to meet the needs of working Canadians, and policy-makers are not addressing the problem, say Michel Bédard (former chief actuary for the EI program) and Pierre Fortin (Université du Québec a Montréal).

The current system reflects biases that discriminate against workers based on where they live and whether they work full-time or part-time, say Bédard and Fortin in a new paper from the IRPP. These disparities are not only inhibiting the development of an efficient pan-Canadian labour market, they are also increasingly at odds with reality as part-time work becomes more prevalent.

“In the current system, where the eligibility and duration of benefits is determined by regional unemployment rates and the number of hours the claimant worked during the reference period, a worker in Cape-Breton could receive up to $1.18 in EI benefits for every dollar of employment earnings, compared with $0.35 for a worker in Saskatoon (as of May 2015),” they say.

Rather than address these fundamental problems, governments have increased the number of geographic regions within the program, restricted the eligibility and generosity of income support for the unemployed, and expanded the program’s reach into other areas of social policy (e.g., parental and compassionate care leave).

“Today Canada spends less on unemployment benefits – which is EI’s core mandate – than it has at any time since the 1970s. Close to 40 percent of the benefits now delivered by EI go toward programs other than direct income replacement for the unemployed. It is time to hit the reset button.”

The authors propose a major simplification of EI. They outline an 11-point plan that would cover more Canadians, be less costly for employers and support a more efficient labour market. Among other things, they recommend that the federal government:

  • Establish a single national      standard for eligibility and duration of benefits on the basis of a      minimum of 20 weeks of insurable employment;
  • Refocus employment insurance’s efforts      on income replacement for people who have lost their job; the other      mandates (sick leave, parental leave, training, etc.) should be separate      programs; and
  • Manage the program through a      fund that is separate from the federal government’s consolidated revenue      fund and financed in equal measure by employer and employee contributions

Onze propositions pour un meilleur régime d’assurance-emploi by Michel Bédard and Pierre Fortin, and its accompanying English summary, can be downloaded from the Institute’s website (irpp.org).

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