Evidence of meeting #17 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was women.
A recording is available from Parliament.
Conservative
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
The comment is that I want to ensure that this does set a precedent, that in a similar circumstance, regardless of the point of view of the witness, we'll see this exact same result.
I'm prepared to give unanimous consent. I think it's reasonable. What I don't want to see are political games being played the next time a witness comes forward and wants to do the same thing, because I've seen it happen the other way, where unanimous consent has been denied on the other side. I don't want to see that happen.
So I expect that this will set a precedent in a similar circumstance next time. That's all I'm saying.
NDP
Yvon Godin NDP Acadie—Bathurst, NB
The next time when you want to make an argument, you make your argument and don't say “your friendly witnesses”--
Bloc
Yves Lessard Bloc Chambly—Borduas, QC
Mr. Chairman, we have always made an effort to ensure that we have in hand the tools that we need to do our job, and to quickly respond to the materials that are submitted. I, for one, have always said that the documents should be provided to us in both official languages. I am not about to change my position today.
I would ask that the clerk be provided with the document so that we may take a look at it and have it translated once the meeting has ended. We will, of course, be using it. We will contact Ms. Ritchie if we have any further questions. If it is only in English, then it should not be distributed now.
Conservative
The Chair Conservative Dean Allison
Okay. So you're not prepared.... I'm sorry, could the interpreter repeat the last part? I apologize.
Would you repeat your last sentence, Mr. Lessard?
Conservative
The Chair Conservative Dean Allison
Okay. So you're suggesting we go ahead and get it translated but don't hand it out at this point in time.
Conservative
The Chair Conservative Dean Allison
All right. We'll move forward in that fashion. Thanks.
Go ahead, Ms. Ritchie. We'll start your ten minutes all over again.
National representative, Canadian Auto Workers Union
Lesson learned.
We're here to support Bill C-265, including the proposal for best 12 weeks, and at the same time acknowledge that a majority of members of Parliament have in fact supported other bills that have tried to address some of the difficulties with our current EI system.
Some of us live and breathe unemployment insurance. Earlier today I had to file an appeal for claims that had been presented out of a closure in Bracebridge. Certainly our industry and many others are reeling from closures and large-scale layoffs.
In our view, the employment insurance hours system was the main villain in the 1996 changes. Nothing of any real substance has been amended since what is now fully a decade ago except for two changes—not without importance to the people they affected but still in some ways tinkering on the edge of the system.
I'm referring first to the reduction of the 700 hours that were originally required for so-called special benefits—parental, sick benefits, those types of benefits. I think many of us can still remember the photograph on the front page of the The Globe and Mail of the woman with child in hand, just short of the 700 hours to qualify. It was amazing how quickly the political will was found to address that and to reduce it to 600. I never heard a very good, rational explanation for 600; it was simply that there were too many people who weren't being covered at 700, so it was reduced to 600.
The other change, though not to the legislation, was the introduction of pilot projects that extended, for 21 truly high-unemployment regions, an additional five weeks, still with the maximum of 45.
Those have been the only real changes. The fundamental structure of the EI grid has not been amended.
When you do get the document, I'd ask you to spend some time on the second page. I know it looks like you cannot fathom it, but what I had hoped to do—and perhaps someone can take the time to walk through that—is go through an example of what happens for people in sectors, in industries, and in regions where they do not have full-time, full-year work. This is not just a rural issue; this is an urban issue.
The example I want to give is of service workers; in particular, I use the example of a grocery store worker. Service workers are critical now in our economy. About 70% of all jobs are in the public or private service sector.
Under the old UI system...and we're not proposing to go back to that, but it's important to understand where some of the billions in the surplus have come from. I've provided Statistics Canada information that shows that the average service worker works 29 hours a week. On that basis, they would need, under the old system, 19 weeks of work prior to layoff in order to qualify in a 6% to 7% unemployment region; currently that would be like Toronto or Montreal. But under the EI system, the way the hours have been rejigged, the same service worker now needs 23 weeks of work prior to layoff to meet what is now a 665-hour minimum.
It is worse still for a grocery store worker, and I've picked that as one of the occupations where it's even lower than the average service sector worker. They average 24 hours weekly, and in their case, instead of needing 19 weeks of work prior to layoff to qualify, they now need 28 weeks of work.
There's a chart there that shows how the requirements have increased. This chart, which shows the old system alongside the new system—we've grafted them together—allows you to study and understand, in your own regions, how this system is functioning to the detriment of workers.
We have a changing job market out there. Many of us would argue that the architects of the 1996 changes had at least some sense that this was coming. Now, without a doubt, we know how many jobs are contract, temporary, and part time, and this applies mainly to women. It also applies to men.
One of the things we're finding with layoffs in auto and other manufacturing workplaces is that men and women are now having to look to a future with fewer options, and many of those options are those temporary, part-time jobs, certainly not full-year, full-time jobs. There are also serious economic impacts for the economy as a whole, serious negative impacts for EI's key role as an economic stabilizer.
The federal government last fall, in the economic and fiscal update that they provided, looked right through to year 2011-12 for risks to their fiscal projections, and they mentioned volatile commodity prices, weaker U.S. consumer spending—they didn't know the half of it—global current account imbalances, and a further appreciation of the Canadian dollar. This is not the end of history. We may well yet have another recession in this country. Certainly we have a downturn, and that, by all accounts, goes to explain the Bank of Canada rate drop, unusual as it was, this week. There is in some of the papers today the suggestion that the job numbers coming out tomorrow will have some grim information for all of us. We cannot sit easy.
Again, as part of the documents, we've compared the hours that were needed to qualify for employment insurance or unemployment insurance during economic downturns. We used a regional rate of 8% to 9% unemployment, which would not be unusual in a downturn. We've gone from a formula that would allow somebody at 165 hours to at least get a minimum entitlement; then, in the early 1990s, a formula that meant 255 hours; and now a formula in this same region that would require a minimum of 595, and that's just to get a bare minimum entitlement.
There is a very important study that was commissioned by Human Resources Development Canada—I can never remember its name in its various changes. This was a study of the UI system as an automatic stabilizer, identified as the single most important stabilizer, and to prevent downturns going much deeper.
Finally, this week is also the anniversary of the first death from the SARS epidemic. There was a great deal of puzzlement amongst the honchos within EI about why so few people were applying and getting EI. Those of us who know what has happened in the hospitality sector and in the health care sector and homes for seniors and the aged, what is happening in hotels and restaurants, understand very well why people could not apply or qualify.
Our system has been problematic since the beginning; it has gotten worse with recent developments in the labour market, and we urge you to fix it.
Conservative
The Chair Conservative Dean Allison
Thank you, Ms. Ritchie, for your presentation.
As I mentioned before, all of you have come on fairly short notice. Mr. Cirtwill, you've actually been the one with the shortest notice; you were just notified on Tuesday. We appreciate your flying in from the east this morning to be with us. I know you just got off the plane to be here, so thank you once again for accommodating our group.
Conservative
The Chair Conservative Dean Allison
Did you want to distribute some documents in English or French?
Mr. Cirtwill, you have 10 minutes. Thank you for being here.
Charles Cirtwill Acting President, Atlantic Institute for Market Studies
Well, I'll waste a few of my 10 minutes to point out to Yvon that since we both come from Atlantic Canada, if he's buying the beer, I'm his friend.
I appreciate the invitation to come today to comment on Bill C-265. As you say, I did just arrive from the airport. As proof of the wonders of the modern transportation age, it took just as much time to get here from the airport as it did to fly from Halifax to Ottawa.
For those of you who are unfamiliar with AIMS, we are an independent economic and social policy think tank. We are based in Halifax, Nova Scotia. Our chief objectives include initiating and conducting research, thus acting as a catalyst for informed debate on public policy matters, and communicating the conclusions of that research and the resultant policy prescriptions in a clear, non-partisan way via publications, conferences, seminars, and sessions like this one.
AIMS is a Canadian federally incorporated non-profit non-partisan organization with charitable status from the Canada Revenue Agency. We are financed by contributions from individuals, corporations, foundations, and other organizations, as well as by the sales of our publications. AIMS does not, to put a point on it, take any money from government.
I'd like to start my comments today with a couple of fairly straightforward points. Since the sponsor of this bill, as I understand it, is from New Brunswick, I thought I'd put those comments in the context of New Brunswick, but I want to emphasize that they do in fact apply nationwide.
If someone had asked me yesterday to come up with a list of the three or four things the federal government could do to put the biggest possible wrench in New Brunswick's plan to become self-sufficient, this suggestion, this bill, would have been in the list of the top three. Basically the reason is quite simple: if you pay people not to work, they will not work, and of course Bill C-265 does suggest that we get back to that very model.
AIMS has commented frequently on the problems with Canada's employment insurance system, and our key criticisms follow.
While the basic intention of EI should be to provide short-term assistance to those who find themselves temporarily unemployed due to the vicissitudes of life or a dynamic economy, the EI program has become instead a system that creates unemployment and provides disincentives to work. The Atlantic region is an example. Employers in large centres such as Halifax, Saint John, and Moncton are experiencing tremendous difficulties finding workers, while double-digit unemployment remains constant in other areas, such has northern New Brunswick and Cape Breton. For example, StatsCan just in January reported an unemployment rate for Halifax of 4.3%, while in Cape Breton that number is 13.8%. An overly lax and generous EI system deters unemployed people from moving from where the work is unavailable to where jobs are going unfilled. This problem is only going to get worse as our society ages and labour shortages become more severe.
The EI system also distorts wages upwards as firms are forced to compete not only with other employers, but with a system that allows workers to work for only a small portion of the year and then collect EI for the remainder. This distortion negatively affects firms' competitiveness and makes business investment less attractive in those regions where the effect is most prevalent, and that includes Atlantic Canada.
Further labour market distortions occur in that the value of work experience, training, and education—all of which lead to better long-term employment prospects—is diminished when the ability to live a state-subsidized life in exchange for only a few weeks of work each year remains available.
For these reasons, the general thrust of Bill C-265 to make access to EI easier is of clear concern, especially the question around the removal of the new entrant condition—the one that's meant to actually engage young Canadians' attachment to the workforce early on—and the dramatic change in eligibility requirements that would occur in areas of lower unemployment. Again, if we return to the Halifax example for a minute, which Mr. Savage might be relatively familiar with, and take a look at Halifax's vibrant labour marketplace, right now under this bill we would end up with the amount of work required to qualify for EI dropping from 17.5 weeks at 40 hours a week to only nine weeks. Now, is a nine-week qualification for employment insurance really necessary in a labour market with 4.3% unemployment?
The proposal to enrich EI benefits generally by basing the benefit on the calculation of the worker's best 12 weeks is also a disincentive, because it will again result in paying people more money not to work. Even worse, it increases the incentives to gain the system.
Now, with regard to the expansion of accessibility to special benefits, I don't think anyone should be opposed to the intention of this measure. Given the demographic challenges that we have and that the country faces in the years to come, measures of this type make it very much easier for parents to have children, for individuals to contribute to the care of family members. These kinds of proposals and services are absolutely critical in the future years in Canada, but I want to point out a couple of things around how we're funding it.
First, we have really done no significant research into the impact of these kinds of benefits on the employer side of the question, and certainly we haven't had a conversation yet about whether or not EI is truly the appropriate place to pay for these services. The benefits for these programs accrue to society as a whole, so we really need to question whether or not the burden for these services should be placed only on employers and employees by paying for them exclusively through EI.
Now, there is one point where the Atlantic Institute for Market Studies and this bill come to agreement on, and that is that Bill C-265does effectively remove regionally extended EI benefits, but it does it by basically giving extended benefits to everybody. We think the conversion should run in the opposite direction, that the objective should be to tighten the requirements in the areas where they're loose, not loosen them where they're currently tight.
Full-time jobs are going unfilled in Atlantic Canada because, among other reasons, the wages offered for them cannot compete with seasonal work and subsidized EI benefits. The balance needs to be changed decisively in favour of work, so that people see that they would be better off, not worse off, to accept the work that is available and to acquire the training and education needed to secure even greater opportunities.
Before I close by quoting a couple of other organizations, let me just say that AIMS does not think the EI system currently in place is perfect. Certainly it requires lots of tinkering around the edges, if not fundamental change.
We have just three quick suggestions for changes that you might want to consider, either attending to this bill or doing something else in its place.
First, the requirement for new entrants to access EI needs to be higher, not lower. We want people to engage in the employment field and stay there for a while, get used to the benefits of working, know what they are, and be able to appreciate them.
We need to take a serious look at experience rating. If in fact you spend a lot of time using unemployment insurance, perhaps your rates should be higher or your benefits should be lower, or both. That applies both to employers and to employees. We cannot afford a government system that encourages employers to set up a structure where they only employ people for 10 or 12 weeks, knowing that those people are going be taken care of until they need them again 12 months later.
The other thing we need to be thinking seriously about is, if we are carrying forward surplus after surplus in the EI account and we change the EI benefits to the point where we secure some savings, what do we do with those savings? Our suggestion is that the majority of those savings should be targeted at education and training of the workers, so that they in turn are better able to take advantage of opportunities as they come their way.
Acting President, Atlantic Institute for Market Studies
One or two things we agree on, I guess. He's nodding now. He's not going to be nodding in a second.
In closing, EI premiums are a tax on jobs. Organizations like the Canadian Federation of Independent Business and the Canadian Taxpayers Federation have made that abundantly clear time and time again. The higher the premiums and the higher the cost for employers to have employees, the fewer jobs there are going to be. Giving back the accumulated surplus is probably too much to ask, although certainly I think we should continue to ask, but cutting premiums and ending the gouging once and for all is certainly within reason.
You must remember that this is not supposed to be a slush fund. This is an insurance fund, and so when the surplus exceeds actuarial needs, the solution isn't necessarily turn around and find a way to spend all the money. The better way is to take a look at how you can sustain that in the long term and translate that into lower costs for job creation.
That being said, I have just one last idea as I close. If you're desperate to spend some or all of this surplus, maybe we need to take a serious look at rewarding people who have been in the workforce over the long term, perhaps considering giving larger and longer benefits to people who, for example, have worked for 30 or 35 years and suddenly find themselves for the first time in their life trying to transition from a new career, because certainly that represents a far more significant challenge than setting up an EI system that basically encourages people from the word go not to work.
Thank you.
Conservative
The Chair Conservative Dean Allison
Thank you very much once again for taking the effort to be here with us today.
We're going to start with a first round.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
On a point of order, Mr. Chair, I have a question regarding the witnesses we have here. Typically we have a fairly balanced approach to the witnesses who come before us. I don't want to prejudge anybody's position here, but it seems as if we might have three organizations on one side and one on another side of this particular issue.
I notice on the list here that there are a few other organizations. I'm just curious about the timeframe. When did these organizations receive invitations?
Conservative
The Chair Conservative Dean Allison
They were all contacted late last week, early this week, and there were conflicts in the other schedules of when people were able to make it.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Mr. Cirtwill was invited on Tuesday for our Thursday meeting.
