In 2020, the COVID-19 pandemic made many Canadians eligible for Employment Insurance (EI). For younger workers such as myself, it was the first time they had seen anything resembling a robust EI system. We saw how quickly the government was able to create the CERB program which, while flawed, provided a safety net for millions of Canadians. What would normally take months, or even years, was accomplished in just a few weeks. The substantive changes to the EI system brought in the fall of 2020 was proof just how quickly said safety net could be accomplished when deemed “necessary”.
The pandemic highlighted the flaws that already existed in our EI system: millions of Canadians were suddenly unable to work, yet ineligible for EI. On such a large scale, these issues became impossible for the government to ignore, so they created CERB and temporarily expanded the existing EI program, making it easier for Canadians to access EI, and for longer periods of time. Instead of making these temporary measures permanent or using them as a stop gap to create a more robust system, the government has allowed them to expire, and Canadians are now struggling not only under the threat of COVID-19, but dealing with a soaring cost of living and a possible recession.
A robust, widespread EI program is far from a radical notion. Like many other social programs, our EI system has been slashed and restructured for decades, making eligibility increasingly difficult. There was a point in our history where approximately 90 percent of the workforce was covered. Yet by today’s standard, such a robust system feels almost utopian.
History of the unemployment insurance
The introduction of a national Unemployment Insurance program in Canada was a slow one. After World War I the Canadian government participated in the newly formed International Labour Organization (ILO) and at its founding conference in 1919 the federal government signed a draft document recommending unemployment insurance. It would take over two decades for the government to implement the program.
The country saw high rates of unemployment during the Great Depression. Relief agencies in cities were completely unable to meet the needs of people. The government run relief camps, where unemployed men were forced to go, were miserable and inhumane. The unemployed movement in the 193os organized across the country to resist the indignity and inadequacy of the government’s response. The Communist Party raised the demand of the Unemployment Insurance.
The hardships and organizing of the 1930s highlighted the need for a national unemployment insurance program. This pushed Conservative Prime Minister R.B. Bennett’s government to pass the Employment and Social Insurance Act in 1935. The Conservative government was defeated later that year and the act was never implemented. It was deemed unconstitutional the following year because employment was considered provincial jurisdiction.
After years of increasing pressure from unions, social groups and the social-democratic political party the Co-operative Commonwealth Federation (CCF) and the communist Party, the federal government passed the Unemployment Insurance Act on August 5, 1940. In order to achieve this, Liberal Prime Minister W.L. Mackenzie King required a constitutional amendment that was only accomplished with unanimous provincial support and approval by the UK Parliament. Unemployment Insurance (UI) was finally introduced in October 1940.
When UI was first implemented, workers only received benefits if they’d contributed to the program for 180 days over the previous two years, and their benefits lasted 6 to 52 weeks. Only 40 percent of the workforce was covered (seasonal workers, public servants, and others were excluded)—roughly the same share that are covered by EI today.
Reflecting a stronger labour movement, the system was overhauled in 1955. Benefits were limited to 36 weeks but eligibility was extended to cover almost 75 percent of the workforce.
A new UI Act passed under Liberal Prime Minister Pierre Trudeau in 1971, which broadened coverage to approximately 95 percent of the wage and salary workers, and extended benefits to 50 weeks. The program still excluded migrant workers This act also introduced illness and maternity benefits. In the midst of an inflationary crisis and facing down a strong labour movement the Liberal government saw to curb the power of the unions by chipping away at UI. In 1977 regional variable entrance requirements were added to the UI program, which required workers in low unemployment regions to work longer to qualify. The VAR system made the program less accessible and less universal.
Still, by the end of the 1970s, after decades of expansion, Canada had a robust UI program that insured the vast majority of Canadian workers against unemployment—albeit with regional variations in eligibility. Yet it was only to give way to the brutal cuts of the 1990s, thus beginning the systemic undoing and dismantling of our strong (but not perfect) system.
Starting in 1990, the federal government stopped contributing to the UI program, leaving it entirely financed by workers and employers. Over the next six years benefit amounts and durations were continuously reduced under Prime Ministers Mulroney and Chretien.
In 1996 entrance requirements to the newly re-named Employment Insurance (EI) increased dramatically and coverage fell to approximately 50 percent of the workforce. The lowest unemployment regions saw work hour requirements increase 240 percent from 300 hours to 720 hours of work.
Due to the stricter eligibility requirements, the EI reserves began accumulating a massive surplus. Approximately $57 billion in surpluses from the federal EI/UI fund was stolen by the government between 1996 and 2006. This money was used to balance federal budgets that offered substantive tax cuts to corporations and the wealthy. The money that was taken to pay for these tax breaks, it must be remembered, was deferred workers’ wages.
In 2015 the Harper government took a page from their predecessor’s book and took $2.7 billion dollars out of the EI fund to balance the federal budget and help finance high income tax cuts. Three years earlier, in 2012, the Harper government further restricted access by compelling claimants to accept jobs that had previously been considered unsuitable, while also cutting staff and access to the appeals process. EI coverage dropped to less than 40 percent, where it still sits a decade later.
The flawed EI system today
To anyone who has ever tried to access EI benefits, it is clear how confusing and convoluted the system is. Eligibility is determined by an ever changing number of hours worked, depending on both when and where you apply.
On top of bureaucratic process, the way our workforce is shifting away from full time employment, towards more part time employment and an increased “gigification” of work means less people qualify. Self-employed and gig workers are a huge portion of the labour force shut out of EI access. In 2019, approximately 2.9 million workers—approximately 15 percent of the labour force—claimed self-employment as their main job. This includes app-based gig workers (like Uber drivers and food couriers) who continue to be misclassified as independent contractors.
Migrant workers, who often face the double threat of precarious immigration status combined with insecure work, are also hurt by EI ineligibility. There are over 1.7 million migrants in Canada with precarious or no immigration status. EI is very rarely accessible to migrant workers, even when they find that EI is deducted from their pay. And those in closed work permits are unable to seek other work in Canada if they lose or leave their jobs.
These gaps in EI eligibility disproportionately affect racialized workers, women and people in precarious work.
How to fix it
Knowing just how exclusionary our current system is, and how many working people are being shut out of the program, expanding Employment Insurance eligibility is the only clear way forward. Justice for Workers has laid out clear, attainable measures that the government can implement to improve eligibility and access to EI:
- Extend the temporary EI measures as a bridge to permanent improvements
- Set a universal 360-hour or 12-week qualifying rule for up to 50 weeks of income support
- Ensure migrant workers have access to EI
- End harsh disqualification rules that cut off EI access to vulnerable workers
- End misclassifications that leave employees wrongly called self-employed independent contractors with no EI access
- Improve the weekly benefit rate and include a guaranteed weekly minimum
- Provide income benefits so long as workers are in approved training
- Fund a new, annual federal government contribution to pay for improvements and staffing & ensure EI acts as an economic stabilizer at times of crisis
The current EI system is not working, and it has not been working for quite some time. The idea of a strong and expanded EI system is not some “impractical”, radical leftist idea. It is the bare minimum that workers deserve as cost of living becomes increasingly unaffordable, and the wealthy make record profits off of our labour.
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