I thought I had 10 minutes, but I'll try to cut it down.
Thank you, Mr. Chair and honourable members, for the invitation to be here today. I plan to spend roughly half of my time talking about recent changes to the EI program, particularly the more controversial pieces. I want to spend the other half of my time talking about the topic of EI access, which I understand the committee is interested in. I'm going to focus my comments mainly on the concept of regular benefits.
Two recent changes to EI in particular have received a tremendous amount of public attention. They are the connecting Canadians with available jobs initiative and the variable best weeks approach to calculating EI benefits.
In 2012, Bill C-38 included the connecting Canadians with available jobs initiative. Its intention was to ensure that unemployed Canadians would be better connected with Canadian jobs—jobs in their local area—and to clarify their responsibility to undertake a reasonable job search for suitable employment while receiving benefits.
I think the first two aspects of the reforms, which intend to improve labour market information and job matching with employers, and ensure that temporary foreign workers are not replacing Canadian workers, are reasonably admirable aspects of the policy, and I think they have reasonably broad support.
The aspect of the reform that obviously bolstered the responsibility of workers to undertake a reasonable job search did, however, spark a considerable uproar. The new rules, as most of you know, set different job search efforts and requirements, as well as willingness to accept job vacancies based on categories of claimants.
On one end of the scale, frequent claimants are required to face stronger search processes earlier on in their claims, whereas what are called long-tenured workers—workers with very little history with EI—face pressures that really pick up later on in their claims but also start off a little bit more rigorously than they used to.
I think it would be fair to classify these rules as what economists traditionally refer to as a type of experience rating, which is meant to adjust the parameters of the program based on one's history as a way of discouraging dependence and reliance on the program. However, I would argue that this is a very watered down and convoluted type of experience rating. There is probably a good reason as to why. There is a very long history of trying to implement experience rating in employment insurance in Canada and to gradually reduce the dependence of seasonal industry workers on the program, although nearly all attempts to do so have been reversed.
Employer-based experience rating was deemed too politically difficult to implement in the early 1990s, and employee-based experience rating, introduced in the late 1990s, which alters benefits according to history, was reversed in 2001 under intense pressure, pressure that remains to this day. For instance, in 2012, when these changes were announced, the Atlantic Canadian premiers held a joint press conference to criticize the changes. I'm going point out that most troubling here is really just how modest these reforms are. I will go on to discuss how I think it portrays a really rather sober context for the possibilities of widespread EI reform in Canada.
I think there is indeed significant evidence supporting the rationale for the announced reforms. A large number of EI claimants likely do not fulfill their job search obligations while collecting benefits. A study by HRSDC, currently ESDC, calculated in a reasonably conservative way that around 15% of EI regular claimants did not look for work while receiving benefits and did not have a good reason for not doing so. Of these individuals, the vast majority, around 85%, were waiting to be recalled to a former job. In other words, they were waiting for seasonal employment to recommence.
In fiscal year 2013-14, the year in which the new rules came into effect, there were around 1,080 total disentitlements because claimants failed to search for work or refused suitable employment. These represent only 0.08% or around one-tenth of 1% of all EI regular and fishing claims that year. Further, the number of additional disentitlements relative to the prior year was 580, which makes for a total impact of one-twentieth of 1% of all EI claims.
Prior EI monitoring assessment reports have highlighted that a deeper review is under way and should have been completed by the end of 2015. I have no access to those documents, but I'm sure the clerk and your analysts are well ahead of me in getting their hands on them, and I strongly encourage the committee to get their hands on that work prior to coming up with the recommendation.
There are indications that those changes might have been very expensive given the results that we've seen and the intended behavioural changes. The greater issue I have with the prior reform is that not only does it appear to have a limited influence in dealing with the issue of frequent claimants, but it has made the administration of the system much more complex and cumbersome.
Furthermore, it's not clear to me as to why long-tenured workers, who have no history or very little history of claiming EI, should fall under stricter rules than those that existed prior to reform. There is no evidence to suggest that these workers are at risk of becoming frequent claimants, plus there is every indication that these workers have high attachment to the labour force.
Now to the question of EI access, and I'll be brief.
As this committee goes forward, I want to point out that these concepts are fraught with pitfalls and conventional misunderstandings, so one must be very careful when framing the issue of EI eligibility and EI access. The oft-mentioned 40% figure refers to the ratio of EI beneficiaries to unemployed Canadians. It is a snapshot of the number of workers receiving EI benefits divided by the number of individuals who are unemployed. This ratio is, however, just simply an indicator of how large the federal role in overall income support programs is, independent of the EI program's role as an insurance program against unexpected job loss.
It is true that relative to the 1970s and 1980s the federal role in overall income support programs is smaller today. But this is true mainly because there have been important changes to the composition of unemployed workers and because of reforms to the program in the 1990s. There have been no large changes to EI access criteria since the mid-1990s, and there's been no movement in the beneficiaries-to-unemployed ratio since then.
