Decisions of the Supreme Court are final. Employment Insurance represents one of the largest programs in the federal government in terms of cost and revenue. While both administered and guaranteed by the government, the program is intended to be self-sufficient in the long-term, with employee and employer contributions completely covering administrative and benefit costs. This included regular benefits, fishing benefits, and special benefits for sickness, maternity, parental leave, and compassionate care.
Regular and fishing benefits accounted for approximately 70 percent of total benefits paid, while special benefits accounted for approximately 30 percent. It is important to note, however, that the cumulative surplus does not represent actual cash in the Employment Insurance account, but simply a record of annual surpluses which the federal government has subsequently invested in its general budget.
The large cumulative surplus reflects a long period, beginning in the early s, in which the EI program has recorded greater revenues than expenditures on an annual basis. With the economic recession of , however, the program will go into considerable deficit. Lower economic activity and higher levels of unemployment will result in a decline in premiums collected, and a sharp increase in benefits paid.
These shortfalls are expected to continue for several years, and will require advances from the federal government so the program can remain solvent on an annual basis. Moreover, employment insurance premiums may be raised in the short term to partially cover these deficits. A basic issue surrounding insurance for the unemployed centres on the validity of the idea itself and, in particular, the notion that the state should provide financial benefits to workers who lose their employment.
Supporters of unemployment insurance often underscore the vulnerability of workers in an era of rapid technological change and sudden movement of capital from one country to another. As such, workers often face unemployment through no fault of their own, and should be provided with short-term financial support as they seek new employment. In addition, some view unemployment insurance as an important mechanism for promoting social equality, where wealth is redistributed more equally between employers and affluent workers on the one hand, and, on the other, those at the periphery of the mainstream economy.
Critics of the idea of unemployment insurance tend to emphasize its moral assumptions and practical economic implications. In a more economic vein, this sort of criticism focuses not on the moral implications of unemployment insurance, but its practical impact on economic growth and productivity. A corresponding argument is that unemployment insurance, through its very existence, encourages higher levels of permanent unemployment, or entrenched seasonal employment, as individuals will choose to receive benefits as opposed to entering the labour force on a full-time basis.
This systemic unemployment, in turn, is a detriment to economic growth and productivity. There is also a regional component to this argument.
Employment Insurance reduces the incentive for workers to move from places where employment is seasonal or unstable to places where there are labour shortages.
Another key issue centres on the existence and appropriation of past surpluses in the EI program. Unemployment insurance is intended to be self-sufficient, with annual employee and employer premiums covering benefits over the long term. This was due to the fact that premiums paid into the system were reduced at a slower pace than benefits paid out.
This led to criticisms of the federal government, particularly in allowing the surpluses to accumulate to the level that they did. In this context, critics have argued the federal government should have recognized that contributions were much too high relative to what was required to cover annual benefit payouts. As such, the government should have either reduced premiums to a more appropriate level, or increased benefits to take advantage of the surpluses. The issue of Employment Insurance surpluses has received both legal and political attention.
In , unions in Quebec took the federal government to court over its appropriation of Employment Insurance funds, asking that the monies be repaid to the workers. In , the Conservative government, helmed by Prime Minister Stephen Harper , reformed Employment Insurance to address some of these criticisms.
In setting rates, the Board is also mandated to ensure that only enough revenue is collected to sufficiently cover annual expenditures. Another issue concerning Employment Insurance has centred not on its revenues, but its benefits.
This issue received substantial public attention in with the recession and allegations the EI program failed to provide adequate support to workers during the economic crisis.
Calls for reform in this context have focused on a broad range of areas. One issue has been the eligibility requirement needed to access benefits. As of September , individuals could only claim benefits if they worked a certain number of insured hours in a one-year period. Another issue is that this hourly threshold varies from one region to another, depending in part on regional levels of unemployment.
In areas with lower unemployment rates, individuals were required to meet a higher hourly threshold in order to receive benefits. Critics have argued this system is unfair, not only because it excludes individuals who need benefits but have failed to meet the hourly threshold, but also because it results in different levels of access for individuals based on where they live.
Another issue has centred on the amount of benefits and the length of dispensation. Critics have suggested the current system does not provide a sufficient living wage for claimants, and that the current maximum period for regular income benefits is far too short to allow for many workers to adjust to changes in the labour market and find adequate employment.
In this context, critics have advocated significant changes to Employment Insurance. Further, they have proposed that the maximum allowable period for receiving benefits be extended to 50 weeks. The issue of benefits has received significant political attention. What is now called Employment Insurance EI is a key part of this because it kicks in when workers and communities need it most. Employment Insurance helps workers make ends meet and softens the blow for communities hard hit by layoffs—or at least it should!
As can be seen by the following timeline, what was once a central pillar holding up our social safety net has been eroded by successive cuts. October Unemployment Insurance UI established in Canada by federal government of Mackenzie King with unanimous provincial approval. Workers must have contributed to program days over previous two years, benefits last weeks, but only around 40 per cent of the workforce is covered. Benefits for illness and maternity added. Coverage drops to around 50 per cent of workforce.
Enter your suggested edit s to this article in the form field below. Accessed 14 November In The Canadian Encyclopedia. Historica Canada.
Article published February 07, ; Last Edited December 18, The Canadian Encyclopedia , s. Thank you for your submission Our team will be reviewing your submission and get back to you with any further questions. Indeed, post-implementation outlays vastly exceeded forecast costs, and the resulting overrun, which was almost certainly attributable to an underestimation of the moral hazard effects of the enrichment, was huge and embarrassing.
Further rapid increases occurred during the recessions of the early s and s, when, as shown in figure 1, outlays doubled and then redoubled. Given the actuarial requirements of the program, these burgeoning outlays triggered increases in premiums, which from to more than doubled, those for employees rising from 1.
As the economy recovered from recession, the fund moved into surplus, and premiums once more fell back to more sustainable levels under 2 percent. Equally unsurprising, this escalation of outlays led to a series of measures to reduce the total cost of EI, most particularly the cost to the federal government. In the Act was amended to raise entrance requirements for new entrants and re-entrants to hours, and the qualifying period for special benefits was set at hours.
Repeat claimants were faced with a benefit clawback of up to percent if earnings on claim exceeded maximum insurable earnings, and the replacement rate was reduced. Despite these moves to control outlays, there were still some important extensions of coverage parental benefits, for example, were phased into EI, with the December changes extending the total period of maternity and parental benefits from 25 weeks to 50 weeks. Also, the Act effectively distinguished between unemployment benefits and employment benefits i.
Despite these developments, the general thrust in terms of regular benefits was toward increased restraint. Since any unshifted premium burden is likely to encourage or force employers to adopt more capital-intensive and labourdisplacing production processes, the presumption is that the burden of employee and employer premiums will largely be borne by employees in the form of lower wages than would otherwise prevail.
The rationale for requiring employer premiums to be 1. In consequence, the entire cost of the system is now underwritten by employers and employees. The fall parliamentary sitting will presumably be the next iteration in EI reform. The clear difference from the recent past is that all the pressures on EI point to an expansion of the program the chief contenders for this expansion were highlighted in the introductory paragraphs of this article.
Unfortunately, none of these options goes beyond the confines of the parameters of the existing EI program to situate the program in a larger and more appropriate context. Accordingly, we now consider the recommendations of the two Royal Commissions that proposed more radical reform of the EI system, recommendations that condition our own proposals for reform.
The first of these is from an unexpected source — Newfoundland and Labrador henceforth NL — the report of the Newfoundland Royal Commission on Employment and Unemployment.
With by far the highest ratio of benefits received per dollar of premiums paid, NL was arguably the province that benefited most from the operation of what was then still UI. The Commission was nonetheless rather scathing in its condemnation of the impact the program was having on the provincial economy. While the devil is always in the details when it comes to overarching approaches that bridge program areas and levels of government, this conception of a reworked social Canada still has merit, especially given its provenance.
The second reference document is the report of the Royal Commission on the Economic Union and Development Prospects for Canada, generally referred to as the Macdonald Commission. Among other things, it would have provided on-the-job training, earned income tax credits, and mobility grants.
It would be funded inter alia by the diversion of resources from what were then CAP transfers, family allowances and the personal exemptions and credits in the income tax system. At first blush, these challenges are clearly short-term; namely, how to rework aspects of EI so as to accommodate the needs of Canadians who either are or soon will be unemployed as a result of the global financial and economic crisis.
However, this framing of the issue is inadequate in at least two respects. First, and most important in the short term, the challenges of the unemployed transcend EI, especially for those who are not EI-eligible or have exhausted their EI benefits. Second, the manner in which we deal with these short-term challenges may not be consistent with the longerterm evolution toward an integrated welfare-work system.
In turn, these considerations suggest that the preferred way to approach EI reform is to begin by elaborating on the characteristics of an integrated welfare-work subsystem as part of our overall social envelope. Our view is that most of what falls under these benefits is better viewed as part of the larger Canadian social envelope.
These benefits should, therefore, be funded from general revenues; to the extent possible, they should be available to all Canadians rather than only to those who are EI-eligible; and most certainly they should not be run through the current regime, where employers pay, at least in the first instance, 58 percent of EI costs.
Our starting point is to note again that the EI Act distinguished between unemployment and employment benefits. Focusing on the former and, specifically, on regular unemployment benefits, our first point is that these should be funded by premiums set in general accordance with insurance principles.
In our view this means not only a uniform entrance requirement but, as well, a uniform way of calculating the duration of benefits. A more generous approach would be 1 week of benefits for each week of contributions for the first 15 weeks of work, a further 1 week of benefits for each two 2 weeks of work for the next 30 work weeks; and beyond that, 1 additional week of benefits for each 3 additional weeks of work, to an overall maximum that could be the current 50 benefit weeks or could follow international practice and provide longer maximum benefits.
This would ensure equality of treatment for all unemployed Canadians and it would guard against the risk of short-term labour-force attachment triggering long-term benefits. In terms of buttressing the proposal for a uniform entry requirement, in addition to the obvious equity case, several commentators have noted that in this recession it is not evident that it is any easiertofindajobinalow-thanina high-unemployment-rate region, which was presumably a major part of the original rationale for the easierentry and longer-duration provisions in high-unemployment regions.
Second, with these insurance principles in place, together with the principle that benefit weeks can only be triggered by weeks worked, one would presumably want the uniform qualifying period to be set quite low, e. As an interesting aside, there would no longer be an incentive, on becoming unemployed, to move back to a high-unemployment region to collect benefits.
Fourth, whether the model proposed here is adopted or not, there seems to be little reason for employers to be saddled with higher premium rates than are employees.
Since any unshifted premium burden is likely to encourage or force employers to adopt more capital-intensive and labour-displacing production processes, the presumption is that the burden of employee and employer premiums will largely be borne by employees in the form of lower wages than would otherwise prevail.
Fifth, on moral hazard grounds we would not include the self-employed in the EI program relating to regular unemployment benefits. Finally, because EI for regular benefits will be driven more by insurance principles, premium rates will fall dramatically.
0コメント