Thank you, Mr. Chairman, and honourable committee members. I'm very pleased to have the opportunity to speak to you today.
The pandemic has exposed existing gaps in our employment insurance program and the need for potential EI reform to build a sustainable income support system. Today, I'd like to highlight gaps related to eligibility requirements and provide recommendations to enhance access to benefits.
Evidence shows that the pre-pandemic access conditions do not provide a broad coverage to support all Canadians who need financial assistance. For example, part-time workers, new entrants to the labour market and workers in low unemployment regions are less likely to meet minimum required insurable hours to qualify for EI.
Labour market statistics show that the crisis has affected hourly paid, low-wage workers the most. These statistics highlight the importance of recent temporary changes to EI requirements to expand eligibility and to fill coverage gaps in employment insurance by reducing the insured hours required and making enhanced requirements more similar across regions.
Several studies have previously suggested a reform to harmonize EI eligibility. One reason is that this change would provide better support for part-time workers since workers in regions with a low unemployment rate need to accumulate more hours, making it harder for part-timers to qualify.
The recent data on regular employment insurance and unemployment shows that the beneficiary to unemployment ratio, which can be seen as a measure of EI coverage, has increased by about 36 percentage points over a 12-month period to 75% in December 2020. This is a significant increase and represents high EI coverage given that a large number of unemployed Canadians, such as gig workers, do not contribute to EI.
Since the previous recession in 2008-09, the so-called gig economy and platform work have been growing, mainly due to rapid economic changes related to technological progress, globalization and demographic changes. The growth of gig and non-standard work can have an important role in a post-COVID-19 economic recovery, but there are concerns about the lack of financial security and predictability, paid sick leave and other benefits.
Previous C.D. Howe Institute research highlights the idea that Canada should focus on policies that provide proper supports for workers in non-traditional jobs—for example, through an expanded employment insurance system—while maintaining a dynamic labour market. Currently, the Canada recovery benefit attempts to address the income support challenges of these workers, but the program is temporary, while the concerns about income-related stability and uncertainty are not.
While an EI system that covers gig workers and the self-employed may be desirable, it is not clear how to build that system. For example, there are workers who have experienced substantial earnings losses without job loss, and self-employed workers whose earnings can be negative. Besides, a challenge is to define the time period in which earning losses and benefits are evaluated for eligibility of self-employed workers.
EI programs that insure various forms of unemployment need to insure earnings in a more flexible way, but this will reshape the labour market, distorting decisions of businesses, employees and the self-employed in a way that may or may not be desirable.
In conclusion, for a broader and further-reaching eligibility increase, the government needs to consider a program that offers a lower yet geographically more uniform hours-based requirement. However, more research and better data are needed to build an EI system for the 21st century that includes all forms of employment.
Thank you for your attention. I look forward to your questions.