Improving EI much better stimulus than infrastructure

Posted on August 3, 2009 in Debates, Governance Debates – Opinion/Comment – Improving EI much better stimulus than infrastructure

The Ontario economy will receive $3.2 billion less in employment insurance (EI) benefits in 2009 than it would have under the program as it existed in 1990. Changes made year after year by the federal government have eaten away at EI, making it more difficult for laid-off workers to qualify for benefits.

This is creating extra stress and hardship for Ontario’s unemployed workers but it also means a large reduction in the amount of money available to stabilize Ontario communities during hard times.

Our researchers at the Canadian Labour Congress compared the EI benefits available in March 2009 with those under the old unemployment insurance program in 1990. Both years were times of economic crisis when unemployment rates had begun to climb.

What stands out for the two years is the big difference in the percentage of the unemployed actually receiving benefits. In 1990, 65.8 per cent of Ontario’s unemployed got benefits but by March 2009 that number had shrunk drastically to 35.6 per cent.

We found, as mentioned, that if access to the EI system were the same today as it was in 1990, unemployed Ontarians would receive an extra $3.2 billion this year.

We also did a straight comparison on the amount of money the unemployed in Ontario will receive in EI this year and compared it to 1990. We found that the unemployed will receive $76 million less in benefits this year. This figure is adjusted for inflation and it is startling.

Ontario today has about 280,000 more people unemployed than there were in 1990 but the total they are receiving from EI is far less. The problem again is that the unemployed today have less access to benefits than they did previously.

The national figures are stark as well. The rate of unemployment now is roughly equal to what it was in 1990, but unemployed Canadians and their communities will receive about $8.9 billion less in employment insurance this year than they would have if access was the same as it was in 1990.

The trend is true for almost every province and it is true for both cities and rural areas. The radically reduced number of beneficiaries is due to rules, regulations and barriers that have been put in place by the federal government, even though workers and employers continue to pay premiums and the government has collected $57 billion more than it has paid out in benefits.

Many people who lost their jobs last fall are now using up their benefits and they will be forced to rely on provincial social assistance programs and food banks. The unmistakable conclusion is that EI is not contributing, as it once did, to stabilizing the economy in each province during these hard times.

Reinvesting in the EI program would reduce the pressure on provinces and municipalities and would increase economic stimulus. It is for these reasons that the Canadian Labour Congress continues to call upon Ottawa to reform EI by taking the following actions:
•    Change accessibility rules to provide regular EI benefits on the basis of 360 hours of work, no matter where people live and work in Canada.
•    Extend benefits to at least 50 weeks in all regions of the country.
•    Raise benefits immediately to 60 per cent of earnings calculated on a worker’s best 12 weeks of earnings.

Improving EI benefits immediately would provide a far better stimulus for the Ontario economy than the federal government’s slow-moving infrastructure program. The unemployed spend virtually every dollar they receive in the community. The time to fix employment insurance is now.

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