Labour concerned about workers being forced to take lower paying jobs, others say reforms don’t deal with ‘major’ structural problems
Proposed changes to employment insurance (EI) are getting mixed reactions from experts.
“There will certainly be pressure on workers and so called frequent claimants to take low wage jobs,” said Andrew Jackson, chief economist at the Canadian Labour Congress (CLC).
Some of the concern is workers will be required to take jobs at significantly lower wages at a much earlier stage in their claim, said Jackson, who is based in Ottawa.
“The other concern is the ratchet effect there. If you take a short term job at a lower wage, then you lose that job then you can be forced to take a job at an even lower wage.”
But it doesn’t mean the CLC think all of the changes that are proposed are bad for workers.
“There are some positive changes that have been announced,” he said. “People who accept a short term job while they’re on an EI claim, in many cases they will get to keep more of the additional earnings than is the place under the current rules.”
The government is also promising to give a lot more information to the unemployed on available jobs, he said.
“I’ve certainly got no problem with that,” he said. “So not all of the changes that are being made are necessarily bad, but the key ones certainly we have some concerns about.”
Yet some experts think the changes are not going far enough to make the system run more efficiently.
“The current EI reforms don’t deal with any of the major structural problems within the system,” said Matthew Mendelsohn, director of the Mowat Centre at the University of Toronto. “The current changes may play some small role in facilitating a more efficient labour market, it may encourage some people who previously may have chosen not to take a job to take available jobs.”
The changes so far have raised the ire of people in seasonal work and people in Atlantic Canada, he said, although he’s not certain why. The changes will likely have more of an impact in bigger cities — like Vancouver and Toronto — where there are more jobs available. In those areas, unemployed workers will be more likely to take a job they would have refused in the past.
Charles Lammam, associate director at the Centre for Tax and Budget Policy with the The Fraser Institute, agrees the current proposed changes don’t address fundamental problems with the system.
“I mean we have so many issues with EI that cause the system to not operate like a true insurance program,” said Lammam, who is based in Vancouver. “I argue it should operate more like an insurance program and instead of tinkering with small issues as the federal government has done with these changes, they should have made bolder changes.”
Right now, everybody pays the same premium regardless of how often they use the system, regardless of their claim history and what industry they are in.
“That’s one issue that has to be dealt with if we are going to call EI an insurance program, because all insurance programs change their premiums depending of the usage,” he said.
Introducing an experience rating type of system would help eliminate this. It would take into account how many claims people have made in the past, if someone is a frequent user or if they work in a seasonal industry.
“Your premiums should reflect that,” he said.
The result would be similar to auto insurance. With most auto insurance companies if you have an accident you end up paying higher premiums, using this same principle with EI would get at the main issues with the system, said Lammam.
Charles Cirtwill, president and CEO at the Atlantic Institute For Market Studies in Halifax, also thinks EI should be a system based on experience rating.
“Any of us who have car insurance, fire insurance or insurance of any kind are familiar with (that),” he said. “That’s how it’s supposed to work, right? You are high risk, then your premiums are higher.”
If the government went to a true experience rating for employee and employer than there would be one set of rules across the country — retail workers in Toronto would be treated the same as retail workers in Halifax, construction workers in Toronto would be treated the same as construction workers in Fort McMurray, Alberta, said Cirtwill.
“And that makes a lot of sense on both a fairness grounds,” he said.
The challenge is the EI system isn't just about insurance. It also handles parental leaves, retraining and sick leaves, which could not be handled in an insurance environment, said Cirtwill.
“None of those things should be handled through an insurance process,” he said. “And because they are being handled in an insurance process two things happen. One, access to them gets restricted — unduly restricted in my view — and, two, the cost of the entire program goes up for people who are paying the rates.”
Lammam agrees.
“It’s fine if as Canadians we want to provide compassionate care leave and parental leave, but I don’t think it should be done through the EI program, I think it should be a separate social program that deals with tackling those issues.”
Melissa Mancini is a Halifax-based freelance writer.
What are the EI changes?
The federal government is revising employment insurance (EI) to include changes to the definition of “suitable employment” and a “reasonable” job search and deal with the issue of high unemployment alongside job shortages.
The improvements will enhance the assistance provided to people collecting EI benefits, according to Diane Finley, minister of human resources and skills development.
For example, Canadians receiving EI benefits will now receive job postings on a daily basis from multiple sources. And the Temporary Foreign Workers Program (TFWP) will be better connected to EI to ensure Canadians are aware of and can apply for local jobs before employers hire temporary foreign workers.
Suitable employment
The current legislation lacks clarity with respect to what constitutes suitable employment and a reasonable job search, said the government. Should the Jobs, Growth, and Long-term Prosperity Act receive royal assent, the government will define both in new regulations.
Several factors will determine the definition for suitable employment: personal circumstances, working conditions, hours of work and commuting time.
Two additional criteria will vary based on the claimant’s EI history and duration of the claim. They are type of work (responsibilities, tasks, qualifications, experience) and wages.
In determining these criteria, EI claimants will be placed in one of three categories:
Long-tenured workers: Includes claimants who have paid into the EI system for the past seven of 10 years and over the last five years have received 35 or fewer weeks of EI regular/fishing benefits.
Long-tenured workers would be required to expand the scope of their job search the longer they receive EI benefits. However, they would be provided with significantly more time to search for a job within their usual occupation and at a similar wage (starting at 90 per cent of previous hourly wage). After 18 weeks on EI, they would be required to expand their job search to jobs similar to the job they normal perform and to accept wages starting at 80 per cent of their previous hourly wage.
Frequent claimants: Includes claimants who had three or more regular or fishing claims and received more than 60 weeks of regular or fishing benefits in the past five years.
Frequent claimants would be required to expand their job search to jobs similar to the job they normally perform at the onset of their EI claim (one to six weeks) and accept wages starting at 80 per cent of their previous hourly wage. After receiving benefits for seven weeks, they would be required to accept any work they are qualified to perform (with on-the-job training, if required) and to accept wages starting at 70 per cent.
Occasional claimants: Includes all claimants not captured by the definitions of frequent and long-tenured claimants. They have limited experience of being unemployed and looking for work.
Occasional claimants would be allowed to limit their job search to their usual occupation and wage (at least 90 per cent of previous hourly wage) for the first six weeks. After receiving benefits for seven weeks, they would be required to expand their job search to jobs similar to the job they normally perform with wages at 80 per cent of previous earnings. After 18 weeks, they would be required to further expand their job search to include any work they are qualified to perform (with on-the-job training, if required) and accept wages starting at 70 per cent of their previous earnings but not lower than the prevailing minimum wage.
People will not be forced to move to get benefits but will be expected to commute up to one hour if they have the means of transport.
"Let me be crystal clear," said Finley. "The changes that we are proposing to EI are not about forcing people to move across Canada or to take work that doesn't match their skill set. Our goal is to help Canadians find local work that matches their skills."
Job search
The government is providing clarity on what constitutes a reasonable job search. EI claimants’ job search efforts would be assessed based on the following criteria:
Job search and employability activities: Canadians receiving EI benefits will be required to complete the following job search activities while collecting benefits:
•research and assessing job prospects
•prepare for job application (preparing resumé)
•search for job vacancies
•apply for positions
•attend interviews
•other efforts to improve employability (such as workshops, employment agencies, job fairs and networking).
Intensity of job search effort: Canadians receiving EI benefits will be required to look for a job every day. The frequency and diversity of their job search should be consistent with the opportunities available. For example, in a city or community with few job openings or opportunities, the job search should focus on identifying opportunities (researching and searching) and not applying to the same job every day. In comparison, a job search in an area with numerous job opportunities should focus on both identifying and applying for positions.
Type of work being sought: The work being sought by a Canadian receiving EI benefits will have to align with the definition of suitable employment.
Evidence of job search efforts: Canadians receiving EI benefits would be required to keep a record of their job search activities and submit, when requested, evidence supporting all job search activities undertaken.
Temporary foreign workers
The government will introduce co-ordination between the TFWP and EI program to better connect unemployed Canadians with available jobs, in their local area. Canadians should have the opportunity to access these jobs before employers turn to foreign workers. For example:
•In January 2012, Albertan employers received positive confirmation for 1,261 TFWP positions for food counter attendants. At the same time, nearly 350 people made a claim for EI who had cited significant experience in the same occupation and province.
•More than 2,200 general farm workers in Ontario submitted claims for EI in the same month, while employers received approval to hire more than 1,500 foreign nationals for the same occupation.
•On the East Coast, in January 2012, Prince Edward Island collected 294 claims for EI from out-of-work fish plant workers, while 60 TFWs were approved to enter the province to work in the same occupation.
Source: hrreporter.com
“There will certainly be pressure on workers and so called frequent claimants to take low wage jobs,” said Andrew Jackson, chief economist at the Canadian Labour Congress (CLC).
Some of the concern is workers will be required to take jobs at significantly lower wages at a much earlier stage in their claim, said Jackson, who is based in Ottawa.
“The other concern is the ratchet effect there. If you take a short term job at a lower wage, then you lose that job then you can be forced to take a job at an even lower wage.”
But it doesn’t mean the CLC think all of the changes that are proposed are bad for workers.
“There are some positive changes that have been announced,” he said. “People who accept a short term job while they’re on an EI claim, in many cases they will get to keep more of the additional earnings than is the place under the current rules.”
The government is also promising to give a lot more information to the unemployed on available jobs, he said.
“I’ve certainly got no problem with that,” he said. “So not all of the changes that are being made are necessarily bad, but the key ones certainly we have some concerns about.”
Yet some experts think the changes are not going far enough to make the system run more efficiently.
“The current EI reforms don’t deal with any of the major structural problems within the system,” said Matthew Mendelsohn, director of the Mowat Centre at the University of Toronto. “The current changes may play some small role in facilitating a more efficient labour market, it may encourage some people who previously may have chosen not to take a job to take available jobs.”
The changes so far have raised the ire of people in seasonal work and people in Atlantic Canada, he said, although he’s not certain why. The changes will likely have more of an impact in bigger cities — like Vancouver and Toronto — where there are more jobs available. In those areas, unemployed workers will be more likely to take a job they would have refused in the past.
Charles Lammam, associate director at the Centre for Tax and Budget Policy with the The Fraser Institute, agrees the current proposed changes don’t address fundamental problems with the system.
“I mean we have so many issues with EI that cause the system to not operate like a true insurance program,” said Lammam, who is based in Vancouver. “I argue it should operate more like an insurance program and instead of tinkering with small issues as the federal government has done with these changes, they should have made bolder changes.”
Right now, everybody pays the same premium regardless of how often they use the system, regardless of their claim history and what industry they are in.
“That’s one issue that has to be dealt with if we are going to call EI an insurance program, because all insurance programs change their premiums depending of the usage,” he said.
Introducing an experience rating type of system would help eliminate this. It would take into account how many claims people have made in the past, if someone is a frequent user or if they work in a seasonal industry.
“Your premiums should reflect that,” he said.
The result would be similar to auto insurance. With most auto insurance companies if you have an accident you end up paying higher premiums, using this same principle with EI would get at the main issues with the system, said Lammam.
Charles Cirtwill, president and CEO at the Atlantic Institute For Market Studies in Halifax, also thinks EI should be a system based on experience rating.
“Any of us who have car insurance, fire insurance or insurance of any kind are familiar with (that),” he said. “That’s how it’s supposed to work, right? You are high risk, then your premiums are higher.”
If the government went to a true experience rating for employee and employer than there would be one set of rules across the country — retail workers in Toronto would be treated the same as retail workers in Halifax, construction workers in Toronto would be treated the same as construction workers in Fort McMurray, Alberta, said Cirtwill.
“And that makes a lot of sense on both a fairness grounds,” he said.
The challenge is the EI system isn't just about insurance. It also handles parental leaves, retraining and sick leaves, which could not be handled in an insurance environment, said Cirtwill.
“None of those things should be handled through an insurance process,” he said. “And because they are being handled in an insurance process two things happen. One, access to them gets restricted — unduly restricted in my view — and, two, the cost of the entire program goes up for people who are paying the rates.”
Lammam agrees.
“It’s fine if as Canadians we want to provide compassionate care leave and parental leave, but I don’t think it should be done through the EI program, I think it should be a separate social program that deals with tackling those issues.”
Melissa Mancini is a Halifax-based freelance writer.
What are the EI changes?
The federal government is revising employment insurance (EI) to include changes to the definition of “suitable employment” and a “reasonable” job search and deal with the issue of high unemployment alongside job shortages.
The improvements will enhance the assistance provided to people collecting EI benefits, according to Diane Finley, minister of human resources and skills development.
For example, Canadians receiving EI benefits will now receive job postings on a daily basis from multiple sources. And the Temporary Foreign Workers Program (TFWP) will be better connected to EI to ensure Canadians are aware of and can apply for local jobs before employers hire temporary foreign workers.
Suitable employment
The current legislation lacks clarity with respect to what constitutes suitable employment and a reasonable job search, said the government. Should the Jobs, Growth, and Long-term Prosperity Act receive royal assent, the government will define both in new regulations.
Several factors will determine the definition for suitable employment: personal circumstances, working conditions, hours of work and commuting time.
Two additional criteria will vary based on the claimant’s EI history and duration of the claim. They are type of work (responsibilities, tasks, qualifications, experience) and wages.
In determining these criteria, EI claimants will be placed in one of three categories:
Long-tenured workers: Includes claimants who have paid into the EI system for the past seven of 10 years and over the last five years have received 35 or fewer weeks of EI regular/fishing benefits.
Long-tenured workers would be required to expand the scope of their job search the longer they receive EI benefits. However, they would be provided with significantly more time to search for a job within their usual occupation and at a similar wage (starting at 90 per cent of previous hourly wage). After 18 weeks on EI, they would be required to expand their job search to jobs similar to the job they normal perform and to accept wages starting at 80 per cent of their previous hourly wage.
Frequent claimants: Includes claimants who had three or more regular or fishing claims and received more than 60 weeks of regular or fishing benefits in the past five years.
Frequent claimants would be required to expand their job search to jobs similar to the job they normally perform at the onset of their EI claim (one to six weeks) and accept wages starting at 80 per cent of their previous hourly wage. After receiving benefits for seven weeks, they would be required to accept any work they are qualified to perform (with on-the-job training, if required) and to accept wages starting at 70 per cent.
Occasional claimants: Includes all claimants not captured by the definitions of frequent and long-tenured claimants. They have limited experience of being unemployed and looking for work.
Occasional claimants would be allowed to limit their job search to their usual occupation and wage (at least 90 per cent of previous hourly wage) for the first six weeks. After receiving benefits for seven weeks, they would be required to expand their job search to jobs similar to the job they normally perform with wages at 80 per cent of previous earnings. After 18 weeks, they would be required to further expand their job search to include any work they are qualified to perform (with on-the-job training, if required) and accept wages starting at 70 per cent of their previous earnings but not lower than the prevailing minimum wage.
People will not be forced to move to get benefits but will be expected to commute up to one hour if they have the means of transport.
"Let me be crystal clear," said Finley. "The changes that we are proposing to EI are not about forcing people to move across Canada or to take work that doesn't match their skill set. Our goal is to help Canadians find local work that matches their skills."
Job search
The government is providing clarity on what constitutes a reasonable job search. EI claimants’ job search efforts would be assessed based on the following criteria:
Job search and employability activities: Canadians receiving EI benefits will be required to complete the following job search activities while collecting benefits:
•research and assessing job prospects
•prepare for job application (preparing resumé)
•search for job vacancies
•apply for positions
•attend interviews
•other efforts to improve employability (such as workshops, employment agencies, job fairs and networking).
Intensity of job search effort: Canadians receiving EI benefits will be required to look for a job every day. The frequency and diversity of their job search should be consistent with the opportunities available. For example, in a city or community with few job openings or opportunities, the job search should focus on identifying opportunities (researching and searching) and not applying to the same job every day. In comparison, a job search in an area with numerous job opportunities should focus on both identifying and applying for positions.
Type of work being sought: The work being sought by a Canadian receiving EI benefits will have to align with the definition of suitable employment.
Evidence of job search efforts: Canadians receiving EI benefits would be required to keep a record of their job search activities and submit, when requested, evidence supporting all job search activities undertaken.
Temporary foreign workers
The government will introduce co-ordination between the TFWP and EI program to better connect unemployed Canadians with available jobs, in their local area. Canadians should have the opportunity to access these jobs before employers turn to foreign workers. For example:
•In January 2012, Albertan employers received positive confirmation for 1,261 TFWP positions for food counter attendants. At the same time, nearly 350 people made a claim for EI who had cited significant experience in the same occupation and province.
•More than 2,200 general farm workers in Ontario submitted claims for EI in the same month, while employers received approval to hire more than 1,500 foreign nationals for the same occupation.
•On the East Coast, in January 2012, Prince Edward Island collected 294 claims for EI from out-of-work fish plant workers, while 60 TFWs were approved to enter the province to work in the same occupation.
Source: hrreporter.com
