Restructuring, Gender and Social Security Reform in Canada

1. Restructuring, Gender and Social Security Reform in Canada Martha MacDonald

2. Major Changes to UI • Drop from 75% / 66% in 1971 to 55% / 50% today • Increase entrance qualifications from 8 weeks to 12 – 20 weeks depending on unemployment rate in your region. • Today based on hours worked

3. Other Changes • 1971 – Regional extended benefits, maternity, and federal contributions • 1977 – Developmental uses for UI • 1978 – Clawback and higher entrance requirements new entrants / re-entrants

4. Other Changes • 1983 – Adoption benefits • 1990 – 10 weeks parental, penalties for quitters, increase developmental uses, and end federal contributions • 1996 – UI becomes EI, weeks to hours, penalties for repeat users, and no bens for quit or fired

5. Changes to UI • In 1971 UI became a much more generous program and subsequent changes were designed to make it more like an insurance program and less like welfare. • With the more generous benefits after 1971 there was pressure to increase the entrance requirements, so the end result was a variable entrance requirement and duration based on the region’s unemployment rate.

6. Changes to UI • UI was under constant revision to shorten the time job beneficiaries took to get back to work. • Federal contributions ended. • Despite the tightening of the program, Canada is more generous than the US. (20 weeks to qualify, 26 weeks benefits). • Changing to the US system was estimated to reduce income in the lowest quintile by 12%.

7. Changes to UI • Suggestion of means-testing for families was rejected as being prejudicial but the clawback for personal income was passed. • Despite the change to hours (non-standard job friendly), the entitlement for women worsened after the 1996 changes to EI.

8. Eligibility for Benefits • From weeks to hours – part time workers were now covered. • But the increase in hours makes it virtually impossible for non-standard employees to qualify. • A greater proportion of non-standard workers are female, biasing EI to males.

9. Eligibility for Benefits • The change to hours reduces the employer incentive to hire part time employees to avoid paying EI premiums. • But it also encourages workers to have more than one non-standard job, supporting the principal of non-standard employment. • Seasonal workers would have trouble qualifying for EI with less than full time hours.

10. Benefit Levels • Variable formula for calculating benefits. • The benefit rate starts at 55% but decreases for repeat users. • This is designed to target seasonal workers – argued by HRDC to be predominantly male. • But while the entrance is based on hours, benefits are calculated by weeks affecting non-standard (predominantly female) employees.

11. Benefit Levels • Some people will benefit more by taking less work as it will reduce their average weekly wage and thus benefits. • There is a means test to improve the benefits for low income persons (against the insurance principle). • There is disagreement to whether this affects women positively or negatively.

12. Length of Benefits • Length of benefits is based on weeks worked and the unemployment rate to a maximum of 50 weeks. • Thus part time employees could have longer durations but lower benefits than full time employees. • Benefits to female PT workers fell by 17% due to the new regulations.

13. Premiums and Programs • Premiums were reduced, low income and small employers get a refund of premiums (full or partial). • The hourly system encourages job sharing. • 15% of EI expenditures can be used for self employment funding. • There is EI funding for non-EI clients.

14. Summary of Impacts of EI • Full time long term employees will receive lower benefits under EI than UI. • Part timers with irregular hours could get less than before with the averaging over a fixed period of time. • High income earners are penalized by the clawback. • Seasonal workers are penalized by the intensity rule.

15. Websites • http://www.hrdc-drhc.gc.ca/ae-ei/loi-law/eimar.shtml • http://www.hrdc-drhc.gc.ca/ae-ei/employment_insurance.shtml