What you need to know about EI reform

The Liberals and Conservatives could stand to learn a thing or two about it

harper/iggyPerhaps it’s a sign of the tough economic times. As the ranks of the jobless continue to swell in Canada, politicians have taken to bickering over just what to do with them. Over the past month, the Liberals have made no secret they see employment insurance (EI) reform as a viable trigger for bringing down the government. “I just know in my guts as I go across the country,” Ignatieff told reporters at the party’s convention in early May, “that we have an EI system that is not purpose-built for the most serious economic crisis since 1945. And we have to fix it and we have to fix it now. We’re in a crisis situation.”

Fixing it, according to Ignatieff, means lowering the eligibility requirements to 360 hours, or nine 40-hour weeks, for everyone. In most circumstances under the current system, laid-off (or otherwise unemployed through no fault of their own) workers need to have worked between 420 and 700 hours in the previous year, depending on where in the country they live. (Under certain conditions, up to 910 hours may be needed to qualify.) That’s because EI requirements are based on a byzantine system of 58 “economic regions,” each differentiated by their unemployment rates. Regions with high unemployment, like the Gaspé and Northern Manitoba, have the lowest barriers to EI, while places like Ottawa and Saskatoon, where unemployment hovers in the low single-digits, require substantially more hours worked. (In other words, the system works unlike any other insurance plan: the more likely you are to make a claim, the easier it is to make it.)

The Liberals acknowledge that lowering EI eligibility requirements means throwing more money at the unemployed. They peg the total cost of the change at around $1.5 billion. But for supporters of the move, the extra money would work to stimulate the economy in much the same way all that infrastructure spending was supposed to—only quicker. “EI is a very direct and immediate form of stimulus,” says Jim Stanford, an economist with the Canadian Auto Workers. “The money goes right into the pockets of the people who need it the most and the economic evidence is clear that they spend it right away.”

Dusting off their trusty anti-Kyoto rhetoric, the Conservatives have attempted to brand the Liberal proposal a “socialist scheme.” The very thought of allowing more people to collect EI benefits by working less appears to run against their ideological grain. “They are suggesting that what we should do is bring in an EI system where any Canadian, anywhere in the country, in perpetuity, could work 45 days and collect EI benefits for a period up to a year,” Stephen Harper said last week. “This is an absurdity.”

Thing is, that’s not how the system works. The amount of time someone can spend on EI depends on two things: where they live and the amount of hours they’ve logged at work. For example, a part-time worker who’s logged 1,000 hours in Ottawa, where the unemployment rate is a relatively low 5.6 per cent, would qualify for 23 weeks of EI. That same worker, were they in rural Newfoundland, where unemployment tops the 20 per cent mark, would be eligible for 45 weeks of payments. Currently, there’s no way qualify for a full 50-weeks’ worth of cheques by having worked only the bare minimum number of hours. The longest period of time for which a person can receive benefits after working the minimum number of hours is 37 weeks—and even then, they would have to live in an area with an unemployment rate over 16 per cent. Someone who worked the minimum number of hours in a place like Ottawa would get a comparably meager 19 weeks’ worth of benefits.

The Conservatives aren’t the only ones who are guilty of obfuscation in this debate, though. When the Liberals complain that “over 60 per cent of unemployed Canadians do not qualify” for EI, they’re barely in the ballpark. Of the 1,456,600 unemployed Canadians in March 2009, 681,400 (47 per cent) were receiving benefits, meaning 53 per cent of them weren’t covered by the program. But many of those who are unemployed don’t qualify for benefits for a variety of reasons that have nothing to do with the number of hours they’ve worked. They may have quit their job or been fired, for instance, or been self-employed, meaning they never paid premiums in the first place.

According to a 2007 study by the Ministry of Human Resources and Skills Development, an insufficient number of work hours accounted for about 17 per cent of cases in which people don’t qualify for EI. And lowering the eligibility requirements wouldn’t even necessarily cover them all; if people have never worked or not worked in the past year, they wouldn’t qualify for benefits no matter how low the threshold is set. “I really don’t see who is supposed to benefit from [lowering the elegibility requirements],” says University of Laval economist Stephen Gordon, who regularly blogs about the issue. “There just aren’t that many people right now who got hired a few months ago—December and January were horrible in the labour market—and who’ve lost their jobs.”

The real reason behind the Liberals’ sudden desire to change the system they put in place 13 years ago is most likely political. The universal 360-hour requirement just so happens to be the same figure both the Bloc and the NDP have lobbied for over the years. It also just so happens that the Liberals will need both parties’ support if they hope to take advantage of their party’s surge in the polls and force an election. For Ignatieff, focusing on the country’s unemployed may simply be the quickest way to having the Conservatives join their ranks.




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What you need to know about EI reform

  1. "In most circumstances under the current system, laid-off … workers need to have worked between 420 and 700 hours in the previous year."

    The 360-hour target proposed by the Liberals et al is too low. Why not choose the average between the current eligibility minimum hours requirement – i.e., 560 hours – and also enable the self-employed to contribute to EI?

    That would treat all working Canadians equally and make more of us eligible in times of employment scarcity.

  2. “In most circumstances under the current system, laid-off … workers need to have worked between 420 and 700 hours in the previous year.”

    The 360-hour target proposed by the Liberals et al is too low. Why not choose the average between the current eligibility minimum hours requirement – i.e., 560 hours – and also enable the self-employed to contribute to EI?

    That would treat all working Canadians equally and make more of us eligible in times of employment scarcity.

  3. i usually support the conservatives, but i wonder what is the deal with them trying to support the EI system designed by the liberals, maybe it needs a complete overall, it doesnt seem to make much sense to have this complicated system where the elegibility and benefits are so different all over the country, …why 58 regions? thats nuts, i would prefer one standard but if they have to have different ones get it down to a manageable number between 3 and 5

  4. (In other words, the system works unlike any other insurance plan: the more likely you are to make a claim, the easier it is to make it.)

    Really? Show me a REAL insurance system where that happens. What you’re describing is a sure-fire way to have the insurance company go belly-up. Your parenthetical sentence makes absolutely no sense.

    The more likely you are to make a claim, the more likely you will be refused coverage. The more likely you are to make a claim, the more likely you will be charged a higher premium if you qualify at all. The more likely you are to make a claim, the more likely there will be conditions applied to your coverage, in the insurer’s favour, in order to prevent certain high-risk claims.

    Pregnancy & Maternity leave with no higher premium for fertile females? Easy access to benefits with no higher premium in seasonal industries that just manage to eke out the hours-worked requirement, with no astronomically higher premiums for this near-certain risk? That’s not insurance.

    I said this a week or so back. When they changed Unemployment Insurance to Employment Insurance, they changed the wrong word.

    • I think he said it “doesn’t” work like real insurance.
      Anyway, a real insurance plan would be grossly unfair and simply nuts politically speaking. As long as people choose to live wherever they want we’re pretty much stuck with such a system.
      Reforming the system to allow the self-employed to contribute would help to reduce the number of Canadians who presently fall through the cracks.

      • As long as people choose to live wherever they want we're pretty much stuck with such a system.

        Well, as long as we continue to subsidize people to live where there are no jobs, we're pretty much stuck with such a system.

  5. i usually support the conservatives, but i wonder what is the deal with them trying to support the EI system designed by the liberals, maybe it needs a complete overall, it doesnt seem to make much sense to have this complicated system where the elegibility and benefits are so different all over the country, …why 58 regions? thats nuts, i would prefer one standard but if they have to have different ones get it down to a manageable number between 3 and 5

  6. (In other words, the system works unlike any other insurance plan: the more likely you are to make a claim, the easier it is to make it.)

    Really? Show me a REAL insurance system where that happens. What you’re describing is a sure-fire way to have the insurance company go belly-up. Your parenthetical sentence makes absolutely no sense.

    The more likely you are to make a claim, the more likely you will be refused coverage. The more likely you are to make a claim, the more likely you will be charged a higher premium if you qualify at all. The more likely you are to make a claim, the more likely there will be conditions applied to your coverage, in the insurer’s favour, in order to prevent certain high-risk claims.

    Pregnancy & Maternity leave with no higher premium for fertile females? Easy access to benefits with no higher premium in seasonal industries that just manage to eke out the hours-worked requirement, with no astronomically higher premiums for this near-certain risk? That’s not insurance.

    I said this a week or so back. When they changed Unemployment Insurance to Employment Insurance, they changed the wrong word.

  7. I think he said it “doesn’t” work like real insurance.

    Anyway, a real insurance plan would be grossly unfair and simply nuts politically speaking. As long as people choose to live wherever they want we’re pretty much stuck with such a system.

    Reforming the system to allow the self-employed to contribute would help to reduce the number of Canadians who presently fall through the cracks.

  8. Here is a very simple formula:
    If you pay the same premiums for unemployment insurance as everyone else, then why shouldn’t you receive the same entitlements as anyone else. What’s so complicated with that?

  9. Here is a very simple formula:

    If you pay the same premiums for unemployment insurance as everyone else, then why shouldn’t you receive the same entitlements as anyone else. What’s so complicated with that?

  10. wml says it like it is

  11. wml says it like it is

  12. As long as people choose to live wherever they want we're pretty much stuck with such a system.

    Well, as long as we continue to subsidize people to live where there are no jobs, we're pretty much stuck with such a system.

  13. Nice piece, Philippe. Okay, I'm really just testing the comments system, but nice piece, too.

  14. Nice piece, Philippe. Okay, I'm really just testing the comments system, but nice piece, too.

  15. Well I'm not going to do this reporter's homework for him, but lets just say there are some inaccuracies and so you don't earn an A from me.

    How do you manage to attribute our current system to the Liberals? Since 1941 there has been some kind of unemployment insurance iN Canada. The many changes to the act between 1974 and 1996 contributed in great measure to where we are today (there are some Mulroney days in there). ??

  16. Well I'm not going to do this reporter's homework for him, but lets just say there are some inaccuracies and so you don't earn an A from me.

    How do you manage to attribute our current system to the Liberals? Since 1941 there has been some kind of unemployment insurance iN Canada. The many changes to the act between 1974 and 1996 contributed in great measure to where we are today (there are some Mulroney days in there). ??

  17. This is an outstanding article. Thanks for the information. An impartial assessment that is well-researched.

  18. This is an outstanding article. Thanks for the information. An impartial assessment that is well-researched.

  19. I have to say it again, as I,m disgusted.
    I find it shamefully ironic that the 2 parties that raped and pillaged a 57 billion dollar surplus in EI now say it needs fixing .
    The Liberals misappropriated 57 billion into General Coffers from the EI fund and the Conservative Reformers helped spend it . If the dam money had been left in the fund that it was collected FOR there would be more than enough to fix any problems that the recession had caused. I find it insulting to hear these people claim that a system that had a 57 billion dollar surplus needed fixing in the first place , it seemed to be doing what it was supposed to be doing by accumulating money to help people in times of need. . Waiting periods could be done away with , more people could be hired to run EI , more money thats needed for increased money could be handed out in benefits . If the fund had not been raped there was more than enough there for it to be self sufficient and I find it equally insulting to hear the 2 Parties responsible arguing over and saying this or that would be too expensive to fix . What was expensive was what they spent the missing money on NOT EI. The 57 billion misappropriated was more than the 50 billion they are estimating the deficit to be from the stimulus .
    All they did was turn EI into a tax by squandering the surplus and using it for anything BUT WHAT IT WAS COLLECTED FOR.
    SOMEONE SHOULD BE HELD ACCOUNTABLE FOR THIS THEFT.

    • Completely agree with you. They pillage the money, lower the cost of temporary foreign workers, jet set all over the globe to attract these workers at our expense, and then say it’s absurd to put this money into EI. What???!!! It was absurd that they took the 57 billion out of the plan. It’s absurd that the fly halfway around the glob and shout that they haven’t got enough workers in Canada. It’s absurd that they then promise a job the day they get off the plane, while Canadians are unemployed. That’s what was absurd. Amazing what they can do and then spin it in another direction!! Shameful abuse of the taxpayers money.

  20. I have to say it again, as I,m disgusted.
    I find it shamefully ironic that the 2 parties that raped and pillaged a 57 billion dollar surplus in EI now say it needs fixing .
    The Liberals misappropriated 57 billion into General Coffers from the EI fund and the Conservative Reformers helped spend it . If the dam money had been left in the fund that it was collected FOR there would be more than enough to fix any problems that the recession had caused. I find it insulting to hear these people claim that a system that had a 57 billion dollar surplus needed fixing in the first place , it seemed to be doing what it was supposed to be doing by accumulating money to help people in times of need. . Waiting periods could be done away with , more people could be hired to run EI , more money thats needed for increased money could be handed out in benefits . If the fund had not been raped there was more than enough there for it to be self sufficient and I find it equally insulting to hear the 2 Parties responsible arguing over and saying this or that would be too expensive to fix . What was expensive was what they spent the missing money on NOT EI. The 57 billion misappropriated was more than the 50 billion they are estimating the deficit to be from the stimulus .
    All they did was turn EI into a tax by squandering the surplus and using it for anything BUT WHAT IT WAS COLLECTED FOR.
    SOMEONE SHOULD BE HELD ACCOUNTABLE FOR THIS THEFT.

  21. As a small business owner I will NOT ever pay EI premiums on myself, My employees yes, not me. I don't care if it becomes law F.U!
    Years ago before I started my business I was working for company A. I got another job at company B for more money, Gave my notice and left A on Friday, started for B on the Monday. Absolutely no work interruption. Imagine my suprise in December when I found out I had lost all those hours from company A because I quit. What kind of system punishes you for leaving a job to make more money? That spring I opened my own Masonry and Snow Plowing business. I have no intensions of ever being on EI I work year round and will never submit to this blatant cash grab. The government can take me to court and I'll fight it all the way to the top. It is insurance why should it be mandatory, If a small business owner wants to pay it they should be able to, if they don't they shouldn't have to. Both of my parents were professionals who paid into EI but were ineligable to ever receive it. Now the next generation is going to get raped again, paying for something I will never see any benefit from! I guess this is my punishment for being successful in Canada. Maybe I should say F**K Canada, take advantage of my dual citizenship and move to the States, Kills me to say that as I've lived here all my life and never considered moving to That Country! If that is where I have to go to be a success and escape this crock of a socialist country, Blow it out your butt Canada I'm taillights down the road!
    What ever happened to capitalism, if your company is not viable year round it should fold up and not be supported by governmental handouts. Why should my tax money go to keep a non successful competetor in business? Maybe my successful company would hire him as an employee next summer

  22. As a small business owner I will NOT ever pay EI premiums on myself, My employees yes, not me. I don't care if it becomes law F.U!
    Years ago before I started my business I was working for company A. I got another job at company B for more money, Gave my notice and left A on Friday, started for B on the Monday. Absolutely no work interruption. Imagine my suprise in December when I found out I had lost all those hours from company A because I quit. What kind of system punishes you for leaving a job to make more money? That spring I opened my own Masonry and Snow Plowing business. I have no intensions of ever being on EI I work year round and will never submit to this blatant cash grab. The government can take me to court and I'll fight it all the way to the top. It is insurance why should it be mandatory, If a small business owner wants to pay it they should be able to, if they don't they shouldn't have to. Both of my parents were professionals who paid into EI but were ineligable to ever receive it. Now the next generation is going to get raped again, paying for something I will never see any benefit from! I guess this is my punishment for being successful in Canada. Maybe I should say F**K Canada, take advantage of my dual citizenship and move to the States, Kills me to say that as I've lived here all my life and never considered moving to That Country! If that is where I have to go to be a success and escape this crock of a socialist country, Blow it out your butt Canada I'm taillights down the road!
    What ever happened to capitalism, if your company is not viable year round it should fold up and not be supported by governmental handouts. Why should my tax money go to keep a non successful competetor in business? Maybe my successful company would hire him as an employee next summer

  23. Mark T said
    " It is insurance why should it be mandatory"

    Its insurance to know that it is there IF/WHEN you need it. when you pay ei premiums, those premiums are not set a side when when you need it, it's being used for people right now. Other people pay it so that if you need it in 10 years, then there is ( or rather should be) money there for when you need it.

    If you were unemployed and didn't pay EI premiums, how much would you get from Pogie (IE) ? $0.00 just because you don't need it now, doesn't mean you won't need it in the future.

    " Maybe I should say F**K Canada, take advantage of my dual citizenship and move to the States"

    You are going to move to the US just because you don't want to pay EI premiums and admittedly you don't. how the hell does that make sence, IF YOU DONT PAY, WHY ARE YOU BITCHING?

    Haha it's like those losers who don't vote yet bitch about who got into office.

    If your going to the states, stop whining and go…friggin americans think the world owes them.

  24. Mark T said
    " It is insurance why should it be mandatory"

    Its insurance to know that it is there IF/WHEN you need it. when you pay ei premiums, those premiums are not set a side when when you need it, it's being used for people right now. Other people pay it so that if you need it in 10 years, then there is ( or rather should be) money there for when you need it.

    If you were unemployed and didn't pay EI premiums, how much would you get from Pogie (IE) ? $0.00 just because you don't need it now, doesn't mean you won't need it in the future.

    " Maybe I should say F**K Canada, take advantage of my dual citizenship and move to the States"

    You are going to move to the US just because you don't want to pay EI premiums and admittedly you don't. how the hell does that make sence, IF YOU DONT PAY, WHY ARE YOU BITCHING?

    Haha it's like those losers who don't vote yet bitch about who got into office.

    If your going to the states, stop whining and go…friggin americans think the world owes them.

  25. Americans Suck is right.

    If your going to go to the staes. JUST GO AND SHUT THE HELL UP.

    I don't pay EI but i have a right to bitch about it… whiner.

  26. Americans Suck is right.

    If your going to go to the staes. JUST GO AND SHUT THE HELL UP.

    I don't pay EI but i have a right to bitch about it… whiner.

  27. Why not allow us to asses our risk(s) and buy the coverage we need for ourselves and our families. They keep making the rules and changing things as they see fit, as said before shouldn't we subscribe to the coverage we want and buy it ? If I want no waiting period, the ability to quit employment and move on as I see fit, be covered for up to 104 weeks, I should be able to buy that coverage. (like other insurances the higher the risk the more the premium costs)

  28. Why not allow us to asses our risk(s) and buy the coverage we need for ourselves and our families. They keep making the rules and changing things as they see fit, as said before shouldn't we subscribe to the coverage we want and buy it ? If I want no waiting period, the ability to quit employment and move on as I see fit, be covered for up to 104 weeks, I should be able to buy that coverage. (like other insurances the higher the risk the more the premium costs)

  29. Putting 1.5 billion into this plan is the right thing to do. Except it should be 58 billion, the amount the conservatives took from the EI surplus only two or three years ago. This is not a gift, it is giving back a small amount of the money that hard working Canadians had taken off their pay cheques every week in case they became unemployed. The money was deducted for that explicit use, alone. EI was in very good shape financially until it was drained for use other than it was intended for. This is a small step in the right direction.

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