Human Resources Committee on March 23rd, 2021

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

Okay, now I can hear you, but I can't see you.

[Deb Schulte, Liberal, King—Vaughan, ON]

You can hear me now. You can't see me, but you can hear me.

Okay, so I'll just keep going. Everything's back.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

It has come back to normal now.

[Deb Schulte, Liberal, King—Vaughan, ON]

You can see how important Internet is now. It's like the road of today. It's the replacement of the roads. Everybody needs to be connecting to get their health information, for students to get education, for their classes. You're seeing it with seniors being able to connect to their communities. It's very powerful.

It was nice to hear the leader of the Bloc thank the government today for that announcement in Quebec. I was able to do an announcement last week on the rapid response for broadband connecting almost 500 more families in my riding.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

Wow.

[Deb Schulte, Liberal, King—Vaughan, ON]

It's a very powerful program, the national broadband improvement. I'm very proud of the government's focusing on what's essential for Canadians and putting the investments in those locations and communities all across the country. It focuses on rural and remote because that's where we really don't have good coverage, because it's so costly to put in place. We're making that happen. Thank you.

[Stéphane Lauzon, Liberal, Argenteuil—La Petite-Nation, QC]

It's a very good point.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Lauzon.

That completes the rounds of questions.

Thank you so much for being with us, Minister.

I think we should also probably offer a tip of the hat to the IT ambassadors who kept you with us and on the screen. There were only a couple of times when there were brief breaks, but overall the quality was quite good. We appreciate your being here and the comprehensive way in which you answered the questions.

I would be remiss if I didn't mention, before we let you go, the fact that this will likely be the last time we'll have Mr. Perlman in front of us. He indicated during the sound checks that he is due to retire fairly soon. Mr. Perlman, thank you for your service to the department, to parliamentarians, to the country, especially in the last year. I wish you a happy retirement and a great next chapter.

With that, colleagues, we're going to suspend for three minutes while we do a sound check on the next panel. We'll be back to you.

Thanks again, Minister, and to your team.

[The Chair, Liberal, Sean Casey]

I call the meeting back to order.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Wednesday, October 28, 2020, the committee will resume its study of the review of the employment insurance program.

I'd just like to make a few comments for the benefit of the witnesses. Before speaking, you can click on the microphone icon to activate your mike. Interpretation in this video conference will work very much like a regular committee meeting. You have the choice, at the bottom of your screen, of floor, English or French. When speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute.

I would now like to welcome our witnesses to continue our discussion with five minutes of opening remarks, followed by questions. We have with us today Dr. Evelyn Forget, professor at the University of Manitoba; and with the Canada Employment Insurance Commission, Pierre Laliberté, the commissioner for workers.

We're going to start with Dr. Forget for five minutes, please.

Welcome to the committee. You have the floor.

[Dr. Evelyn Forget, Professor, University of Manitoba, As an Individual]

Thank you for inviting me to speak to you today.

Changes in the global economy over the past 40 years, and most recently the financial shocks of 2008 and the COVID-19 pandemic, have undermined a lot of the institutions that Canadians rely on to keep the world a reasonably just place. Renewing the social contract is essential if we are to rebuild the mutual trust that creates resilient societies.

Employment insurance is one of those institutions. Transforming it to meet the realities of today's job market is an important task. I'm here to suggest that basic income is an essential partner to a renewed employment insurance program.

By basic income, I, along with most basic income advocates in Canada, mean a guaranteed livable income that is targeted to working-age recipients based on their other income—their current income. It's designed to streamline cash transfers from the various levels of government, but it does not replace essential public support services such as health care and supports for people with disabilities.

Basic income provides income support for people without work and it supplements the wages of low-income workers. Most importantly, it does not depend on hours worked in the previous year, so it can be accessed by people in non-standard employment.

The CERB—a response to the pandemic shutdowns—has given us a pretty good idea of who has not been well served by EI. We need to introduce permanent programs that serve the needs of workers who do not fit into the standard definition of work, such as family caregivers, workers in the cultural sectors and food production workers, including farmers. Non-standard jobs or gig work has become much more prevalent. Young and racialized workers are overrepresented in these sectors, as are newcomers and people with invisible disabilities who have difficulty finding accommodation in standard workplaces.

COVID-19 is likely to accelerate the changes we've already been seeing in the labour market that were well under way before the pandemic.

Employment insurance can work relatively well for workers—especially unionized workers in standard jobs—although it does need to be modernized. However, the more it's transformed to support workers in standard jobs, the less well it meets the needs of workers in the other forms of employment.

The health and social benefits of basic income are well established. The myth that basic income creates work disincentives has been debunked. There's a wealth of evidence that's been collected over the past two or three years about the sector-specific impact that basic income would have, and about how it might be designed, implemented and, especially, paid for in the current economic climate.

I'd like to suggest that if this committee is committed to a well-informed conversation about income supports, it's essential that you take this evidence into account in order to create permanent programs that can support all Canadians.

Thank you.

[The Chair, Liberal, Sean Casey]

Thank you, Dr. Forget.

Next, we're going to hear from Mr. Laliberté on behalf of the Canada Employment Insurance Commission.

You have the floor for five minutes, sir. Go ahead.

[Pierre Laliberté, Commissioner for Workers, Canada Employment Insurance Commission]

First of all, I simply wanted like to thank you for inviting me, and especially for your decision to conduct a study on reforming the employment insurance.

As you know, hundreds of thousands of Canadian workers use the program every year, yet the program suffers from shortcomings that aren't new and that persist because of our collective neglect, if I can put it that way.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

I have a point of order, sir.

Mr. Laliberté, you should raise the microphone on your headset.

[Pierre Laliberté]

Okay, I apologize.

The program has deficiencies that I believe are due to negligence on all our parts. The program needs a little love, and as we know, demonstrating one's love is often more important than proclaiming it grandly.

We can agree that the COVID-19 pandemic crisis has confirmed the need for the program to be reformed. Given the significant number of changes that have been made, it appears that a thorough review of the program cannot be avoided. Even the International Monetary Fund, the IMF, agreed in the report on Canada it released last week.

As it stands today, the program no longer adequately meets its objective of providing sufficient income support to Canadians who lose their jobs and must face a shifting labour market. At the core, it's important to remember that the employment insurance program is a social insurance program and should therefore absolutely be there for people who lose their jobs. However, since the last reform, only a minority of unemployed people have been eligible for benefits. Of those who pay into the system, only six out of 10 receive benefits. As we emerge from the crisis, it's therefore important that we make it easier to access the program, and that would include reducing the number of hours of work need to qualify.

As for the level of support, clearly the current formula, which replaces 55% of the income up to a maximum insurable earnings amount of $56,000, is inadequate and causes claimants to receive amounts that are often too low. Increasing these thresholds to improve the level of support should therefore be explored.

Also, the sickness benefit is no longer sufficient. We've heard a lot about this in recent years. Many claimants run out of benefits before it is possible or desirable for them to return to work. Extending benefits to 35 weeks, for example, would cover most cancer treatment periods.

In addition, over time, the program has become increasingly complex to administer, and we're seeing a real and urgent need for simplification. When the program crashed last March, the complexity was largely the reason. If the department had had to manage all the applications in the usual way, it would have taken Service Canada no less than a year to process them all. In fact, it's worth nothing that the program could only be reintroduced in September after the rules were greatly simplified. Many of the simpler rules should be maintained.

I would point out that, over time, the lack of real autonomy that the Canada Employment Insurance Commission has over program administration has hurt the program, to the extent that necessary updates are often postponed due to an inopportune political context. This is the case for several rules, but also for the replacement of the computer system itself, which has become thoroughly obsolete due to neglect. I like to think that, if the commission were more independent, it could be more responsive.

The issue of funding is obviously an important part of the equation. The current non-cyclical mechanism is inadequate. Similarly, the lack of any contribution from general revenue is increasingly problematic, especially when the system is being asked to manage benefits that are more like a social program.

Finally, as has often been said, we need to bring the program into the 21st century. While we often hear people talking about the need for continuing education and lifelong learning, somewhat surprisingly, the employment insurance program does not provide much assistance in that regard. Workers who quit their jobs to take training automatically lose eligibility for support from the employment insurance program. Yet it would be easy to open a door so that, after a certain degree of participation in the program, an individual could be eligible for a significant period of time to take training. I know the government made a proposal about this in its 2019 budget, but the outcome remains to be seen.

I will stop my comments here, but I welcome your questions and comments.

Thank you for your attention.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Laliberté.

We will now begin the round of questions.

We'll begin with Mr. Vis, please, for six minutes.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Chair.

Thank you to both witnesses.

Mr. Laliberté, you mentioned a lack of autonomy for the board. In addition to the technological example you laid out, what other area of autonomy do you think would be beneficial to you and the other members of the board?

[Pierre Laliberté]

I have to say that a good example of this would be the updating of the EI regions. As you know, apart from the addition of four capitals back in 2012, the map has stayed the same for the past 20 years, yet the reality on the ground has changed in many ways. The problem, of course, is that—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Actually, let's expand on that point a bit about EI regions. In your remarks, you also mentioned that some of the shortcomings include the $55,000 threshold.

In my riding, for example, the average price of a single family home is over $900,000. Someone with a mortgage in my community who loses their job is likely not going to be able to cover their basic needs, as compared to someone in another province.

Would that be an area that the board would like to have more of a say over?

[Pierre Laliberté]

When it comes to the broad parameters of the program, I think that's the prerogative of the government in place. As I intimated in my comments, I do think that 55% of $56,000 is inadequate for most Canadians. If you were to increase....

If that threshold had been indexed, non-stop, we would be past $80,000 as we speak, instead of $56,000. You can imagine that 55% of $80,000 would be already a little better, and you could argue that a formula that would have a higher replacement rate, especially for those who are at the bottom of the income ladder, would be necessary.

For instance, if you worked for a minimum wage, the only way you could beat the poverty threshold as defined by the market basket measure is really if you had a 75% replacement rate at that level.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you. That's helpful.

I'll turn to the EI account. Can you provide the committee with the status of the EI operating account?

I believe the most recent report was from September, and the government has not been very forthcoming in up-to-date data. Can you let us know how big the deficit is right now?

[Pierre Laliberté]

As you know, this is a moving target. You'll remember that initially the money that was taken for the CERB came out of the account but then was covered by general revenues. We're thankful to the government for having done that, because in a typical year we rake in about $21 billion or $23 billion; it depends. That would have been unabsorbable.

Basically, right now, as we speak.... As you correctly pointed out, the last exercise was done back in September. This was with the initial version of the transitional EI. The transitional EI has the features that we're all familiar with, but it also adds a rate freeze for 2021 and 2022.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Okay, so we're waiting for an update.

[Pierre Laliberté]

That's correct.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Okay.

[Pierre Laliberté]

You can expect a deficit at the end of 2022 if—