Thanks.
I'll be making the initial presentation and then Sylvain and I will be sharing the questions.
First of all, I do want to thank the committee for being accommodating of our schedules. Sylvain has a son who is anxious that he be picked up by his father after school, so we did say to the committee that we could be here but that at least Sylvain has to be gone by 4:30. Thank you very much. I think it's really important that the committee showed this consideration.
On behalf of the Canadian Labour Congress and our over three million members across the country, we thank you for this opportunity to come and talk to you another time about unemployment insurance--or employment insurance, as some call it--because we do bring together people from all across the country, from coast to coast, in federations of labour, our affiliates, and our labour councils.
For a long time, the CLC has had three pillars in our UI campaign. We know that a lot needs to be done with employment insurance, but we've said that there are three things that need to be fixed. The first is access. The second is benefit level. The third is duration of benefits.
I'm actually not going to spend a lot of time on the question of access and level of benefits in terms of our presentation, because I want to spend more time on the duration issue. But let it be said that access is absolutely important: there's no point in having a great program that nobody can get into. We have contended for a long time that what we need to have is access of 360 hours. This bill provides for that.
We did not choose the number of 360 hours out of a hat; it's based on 30 hours a week for 12 weeks. In fact, that's actually higher than what the access rate was prior to going from “weeks accumulation” to “hours accumulation”. In fact, it was a lower threshold when you were in hours accumulation; I believe it was 15 hours over 12 weeks. So obviously we support the expansion to 360 hours for all claimants.
Similarly, in terms of level of benefits, the bill would modestly increase EI benefits to 60% of earnings calculated on the 12 best weeks over the previous year. We have to remember that the most recent 12 weeks aren't always the best 12 weeks, so that best 12 weeks is very important. We welcome this move to 60% on the basis of the best 12 weeks.
The average benefit today is very low. Nobody is having a good time on UI--if they ever did. The average is about $350 a week, which is barely enough to support even a single person above the poverty line and, quite clearly, if you are a woman who actually is able to access unemployment insurance, the average is even lower in all areas for women. By the way, again, the rates were much higher before: 70% and 66%. So we haven't even come back to where we used to be.
We want to spend most of our time this afternoon on the question of duration and exhaustees, because this is becoming a much bigger problem. It's estimated that a new claimant today will qualify, on average, for about 38 weeks or nine months of benefits. That's an average of 31 weeks before the recession, plus the extra five weeks added in the budget, plus the extra two weeks guaranteed, on average, by a rise of two percentage points in the national unemployment rate.
We know that jobs are still very hard to find. Between the start of the recession and September 2009, the average duration of a spell of unemployment has risen from 13.6 weeks to 17 weeks.
More than one in five unemployed workers in February 2010 had been out of work for more than six months, clearly placing those on EI at risk of running out of benefits in the very near future if in fact they hadn't already exhausted EI. So although there is a decrease in terms of access and an increase in terms of the level of benefits, the duration of benefits remains a concern that we think needs to be addressed.
The recession has been a stress test for the current EI system, the first test of fast-rising unemployment since the new hours-based system was introduced in the mid-1990s.
Since the crisis began in October 2008, there has been a modest rise in the proportion of all unemployed workers collecting regular EI benefits, driven by two key factors.
First, the initial stages of the downturn were marked by major layoffs of workers who had typically been in stable employment before becoming unemployed. Before the recession, proportionately more of the unemployed were new entrants and re-entrants to the workforce, who needed 910 hours of work. That really disqualified a lot of young workers, as well as parents, mostly women, who were returning to work after a leave, as well as recent immigrants.
Second, the EI system automatically responds to downturns, though with a lag. It doesn't deal with it right away, because the entrance requirements and the duration of benefits depend on the local unemployment rate. By mid-2009, the entrance requirement to qualify for EI had fallen compared to October 2008 in about 40 of the 58 EI regions, accounting for over 80% of workers.
Many workers, though, are still falling through the cracks. Again, it's primarily young workers and women. Since October 2008, the number of unemployed workers who were unemployed but not collecting regular EI benefits rose rapidly. The proportion of unemployed workers collecting benefits has jumped for men, but has barely increased for women. The BU rate between July 2008 and July 2009 went from 37% to 45% for men, but for women it went from 44.7% to 45.2%--barely even a twitch.
The proportion of unemployed workers collecting benefits remains low in many parts of our country. Part of the reason is that it's difficult to gain access when jobs suddenly disappear in what used to be a low unemployment area.
Entrance requirements in terms of hours worked continue to exclude many unemployed workers. We estimate in some of the studies that means about 160,000 unemployed workers in any given month and a much higher number over the course of a year. There was a study by HRSDC of a proposal to temporarily drop the entrance requirement to 360 hours. That would have brought about 184,000 more workers into the system over a year, at a cost of $1.14 billion.
As proposed in this bill, the CLC believes that the 360-hour threshold should also replace the 910-hour requirement imposed on new labour force entrants and re-entrants, because that really excludes recent immigrants and may account for why so many unemployed workers in Toronto and Vancouver are ineligible for benefits.
On top of unemployed workers who never qualify for benefits, many unemployed workers collect benefits for a while but exhaust a claim before finding a new job. Workers who entered the EI system in the early stages of the crisis, in 2008, were starting to run out of benefits in significant numbers by the fall of 2009. The number of exhaustees, we predict, will soar in the months ahead. You have figures there about what the percentages were in terms of people who exhausted their benefits before the recession and after.
It's estimated that a new EI claimant today will, on average, qualify for about 38 weeks or nine months of benefits. That was an average of 31 weeks before the recession--again, plus the extra five weeks added in the budget, plus the extra two, and so on. We think the total number of new regular EI claims in 2009 will hit about two million. If the exhaustion rate remains the same, we could eventually see 500,000-plus people and their families with exhausted claims in late 2009 and into 2010.
At this point in the recession, as I've said, jobs are still very hard to find. Between the start of the recession and September 2009, the average duration of a spell of unemployment had risen from 13.6 to 17 weeks, and more than one in five unemployed workers in September had been out of work for more than six months. I know that some of this was referred to earlier, but I think it bears repeating.
The CLC has called for improved access to 50 weeks of EI regular benefits. We want to make it clear that if the majority of MPs come to an agreement on this bill, we wouldn't want our position on the question of duration of benefits to stop the increase to more access and improved benefits, which are the two improvements I referred to earlier.
We still believe, though, that the benefits need to be paid longer to better protect Canadians and the Canadian economy from the consequences of an economic downturn like the one we are in now.
We urge you to support this important and progressive piece of legislation. Once it has passed, I think we need to come back to the duration issue and deal with it for all those people who are being excluded now.
I went very fast; my apologies to the interpreters. They have the English copy of the document. We will get you the French translation within the next couple of days.
