Agreement needed on EI and training – Opinion – Agreement needed on EI and training
January 15, 2009

Open letter to the Prime Minister of Canada and provincial/territorial premiers on the occasion of their First Ministers Meeting in Ottawa on Jan. 16

Dear Sirs:

We are calling on you as our elected leaders to collectively forge an agreement that provides new employment insurance and training supports as part of an economic stimulus package that responds to the gathering storm in Canada’s job market.

The crisis has already inflicted considerable pain on families and communities. A further battering looms, with layoffs in virtually all sectors of the economy.

There is broad consensus on the need for better EI benefits. The Council of Chief Executives has joined in the call for improvements urged by unions and various parliamentary committees, and reflected in Bill C269 and many others.

Unemployment insurance can be the most powerful of all economic stabilizers. A federal study has shown that during the recessions of the early ’80s and ’90s, UI prevented deeper and longer downturns and reduced the shock of both job and GDP losses.

But we’ve entered this new economic crisis with a much weaker EI system. It provides only half the coverage it did in the last recession. At any given time only 42 per cent of the unemployed are receiving EI – because fewer workers qualify and because benefit weeks were reduced.

The U.S. Congress has seen the wisdom of giving priority to adjusting the UI system as part of its stimulus package. In November it passed a second federal extension to state unemployment benefits, which means that workers in many states are now collecting up to 59 weeks of benefits. A bill supported by President-elect Barack Obama would provide a further extension to the end of 2009. If that happens, workers laid off in early 2008 may be collecting UI benefits for up to two years in many states.

In Canada the EI maximum is 45 weeks but only for regions with 10 per cent unemployment. Most workers live where the maximum is only 36 to 40 weeks. From coast to coast, workers in cities like Vancouver, Calgary, Regina, Winnipeg, Ottawa, Quebec City, Fredericton and Halifax have a maximum of 36 weeks.

We’ve gotten EI wrong on at least three accounts.

We’ve made it more difficult to qualify for benefits. In a region with 8 to 9 per cent unemployment, qualifying hours are more than three times what they were in the recession of the early 1980s and more than double what they were in the early ’90s.

We’ve reduced the duration of benefits. Many displaced workers are shocked to find that benefits don’t run to 50 weeks as they used to. While a pilot project extends benefits by five weeks to a 45 week maximum, it only applies to 21 of the 58 EI regions.

We’ve reduced the benefit level, now only 55 per cent of earnings. At one time it was 66 2/3 per cent. There’s also a 2009 maximum of $447 (below the $465 maximum set for 1996 then cancelled), which means workers earning over $900 weekly get less than half their former earnings. Furthermore, workers are forced to exhaust any severance pay before getting EI.

It’s time to repay some of the more than $54 billion that successive governments have borrowed from the EI “surplus” premiums paid by workers and employers. Indeed, until 1989 the federal government actually contributed to the EI account to pay for extended benefits. It has not contributed since then.

We urgently petition you to support these measures as part of a stimulus package:

(a) Increase benefit duration to at least 50 weeks in all regions.

(b) Provide an additional year of “Special Extension” benefits if national unemployment exceeds 6.5 per cent, paid from federal general revenues.

(c) Further extend EI Part 1 benefits as “Skills Development Income Support” so long as the worker remains in approved training. New provincial training initiatives and course completion rates will inevitably suffer if workers do not have sufficient income. This will be particularly important where long-term workers need extended training and literacy programs. Those who don’t qualify for EI should be given similar income support through funding increases to Labour Market Agreements.

Set a fixed 360 hours to qualify for all types of EI benefits – in all regions. Currently the requirement is set monthly and varies from 420 to 700 hours depending on the unemployment rate in each of the 58 EI regions. There is no reasonable justification for this variation. Prior to 1996 when an insurable week was defined as 15 hours or more, workers could qualify for a short duration claim with fewer than 360 hours. Many workers can’t meet the tough new requirements, especially given the growth in part-time and temporary jobs.

Eliminate the two-week unpaid “waiting” period.

(a) Provide benefits that are at least 60 per cent of earnings, based on workers’ 12 best weeks of earnings, and increase the $447 maximum benefit rate.

(b) Suspend the allocation of severance pay.

Actively promote and expedite EI Work Sharing, including a new Work Sharing While Learning program. Encourage innovative uses of these programs to help workers stay on the job.

Revamp Older Worker Adjustment Initiatives, including supports for intensive retraining and bridging to retirement. This will be particularly important for long-term employees in vulnerable industries and regions.

At some point we should also turn our attention to recent changes in the EI Act that moved us away from counter-cyclical financing of EI. We should set EI premium rates so that we are raising rates in upturns and reducing them during downturns, which a 1995 federal report concluded was key to EI’s role as Canada’s “single most powerful automatic stabilizer.” We’re failing to save in the fat years for the lean years – which are very much upon us now.

Yours truly,

Ken Lewenza, President, Canadian Auto Workers

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