Cliff C. Groen Senior Assistant Deputy Minister, Benefits and Integrated Services Branch, Service Canada, Department of Employment and Social Development

Corinne Pohlmann Senior Vice-President, National Affairs and Partnerships, Canadian Federation of Independent Business

Leah Nord Senior Director, Workforce Strategies and Inclusive Growth, Canadian Chamber of Commerce

April 15th, 2021 / 4:45 p.m.

Liberal

Adam Vaughan Liberal Spadina—Fort York, ON

We have learned from the previous government's fiasco around Phoenix, then?

4:45 p.m.

Liberal

Carla Qualtrough Liberal Delta, BC

You know my last job, right? Yes, we have learned.

4:45 p.m.

Liberal

Adam Vaughan Liberal Spadina—Fort York, ON

I sat near you. I saw the tears.

4:45 p.m.

Liberal

The Chair Liberal Sean Casey

Thank you, Mr. Vaughan and Madam Minister.

That concludes a full two rounds of questions. Thank you for your availability, and thank you for your patience. That is also extended to your team, who consistently and ably support you. Thank you so much for being with us.

Colleagues, we're going to suspend for two minutes while we get ready for the next panel.

Thanks again, Minister.

4:45 p.m.

Liberal

Carla Qualtrough Liberal Delta, BC

Thank you, Mr. Chair.

5:05 p.m.

Liberal

The Chair Liberal Sean Casey

I call the meeting back to order.

Today the committee is meeting to resume its study of the employment insurance program.

Ms. Pohlmann, I just want to make a few comments for your benefit.

Before speaking, please wait until I recognize you by name. When you're ready to speak, you can click on the microphone icon to activate your microphone.

Interpretation in this video conference will work very much like in a regular committee meeting. You have the choice, at the bottom of your screen, of either floor, English or French audio.

When speaking, please speak slowly and clearly. When you're not speaking, your microphone should be on mute.

I'd like to welcome you to the committee, not just welcome you but also thank you for providing a brief in advance. It actually has been circulated to the committee, just so you know.

Colleagues, this is Corinne Pohlmann, senior vice-president, national affairs and partnerships with the Canadian Federation of Independent Business.

You have the floor for five minutes. Welcome.

5:05 p.m.

Corinne Pohlmann Senior Vice-President, National Affairs and Partnerships, Canadian Federation of Independent Business

Thank you very much, Mr. Chair. Thank you for the opportunity to be here to provide the perspective of small businesses when it comes to EI.

As you may know, the CFIB represents about 95,000 small and medium-sized businesses across Canada. As we have this discussion, it's important to keep in mind the current plight of small businesses in Canada. COVID-19 has hit them hard. Just yesterday we released new data showing that, as of April 13, 56% of small businesses were fully opened, 40% were fully staffed and just 29% were back to normal sales. We also know that one in six—about 180,000—small businesses are at risk of closing, putting as many as 2.4 million jobs at risk, and that almost three-quarters of businesses have taken on new debt—on average, $170,000 in new debt. They simply cannot afford to take on any new costs now or in the near future.

Now, EI premiums add to the cost of hiring, along with CPP, and are considered profit-insensitive, so they must be paid regardless of whether the business is making money. As smaller firms tend to be more labour-intensive than larger firms, they also tend to be more sensitive to the costs associated with EI, given that employers pay 1.4 times what employees pay.

In early February, the CFIB did a survey of our members on EI and found that over 90% support EI as a job-loss insurance program that covers those who pay into it. About two-thirds also support having maternity and parental benefits and sickness benefits paid for through the EI system, but only one-third support having employee training paid for through the EI system. This is likely because the EI-paid employee training that exists rarely incorporates the needs of small businesses, and that is why 90% want EI-paid training programs to be more aligned with business needs and priorities.

As you review the EI system, there are several things our members would like to see addressed.

First, over two-thirds support premium rebate-type programs that can help alleviate some of the costs associated with EI. For example, EI premium rebates can be used to encourage smaller firms to hire youth, such as what was proposed by the Liberals during the last election campaign, or they can be used to offset training costs for new and existing employees. There's also strong support from smaller businesses to make the EI system more equitable by moving to a fifty-fifty split in EI premiums and by refunding EI over-contributions to employers. EI over-contributions are refunded to employees when they do their taxes, but the employer amounts remain in the EI system. At the very least, these funds could be redirected to a premium rebate program to enable employers to offset EI costs.

We understand that the current government is looking to add EI coverage for the self-employed. When we asked about whether regular EI coverage should be made available to the self-employed, only 8% supported mandatory coverage. However, 73% were open to having it be voluntary.

In a survey we did last week, we asked our members if they would use a voluntary EI program for the self-employed, and we found that 41% said that they might use it, 34% would not use it and 24% were not sure, likely waiting to see how such a program would work and how much it would cost. We'd be happy to work more with the government on making sure that EI for the self-employed is something that will address the needs of small business owners who are all self-employed themselves.

Another issue that has been discussed is the extension of sickness benefits. Small business owners are in a unique position, as many of them do not have health insurance coverage for their employees or themselves, so some rely on the EI system for that purpose. We asked our members in February whether sickness benefits should be extended to 26 weeks. We found that 45% of our members supported that; 45% were opposed and the remaining 10% were unsure. More recently, we asked about extending sickness benefits to 50 weeks, and we found that 46% remain opposed. However, the level of support went down to 35%, while those saying they were unsure doubled to 20%. Clearly, then, more information is needed for smaller employers to understand what the costs and benefits of extending sickness benefits would be for the EI system.

Finally, I want to touch on some of the temporary supports being provided by the EI system and how they would be perceived by small businesses should some of these features be made permanent. Like with the extension of the sickness benefits, our members are fairly split about increasing the minimum amount of time workers can access EI regular benefits, increasing the replacement rate to more than 55%, and making a COVID-related sick days policy of $500 per week for two weeks—now four weeks—paid for through the EI system. However, the one COVID-related measure that was strongly opposed by three-quarters of small businesses was permanently providing a minimum of $500 per week regardless of the amount previously earned by the worker.

This is likely because many see this approach as a disincentive for some to return to work. In fact, 43% of small business owners said they had difficulty retaining and/or hiring people because they suspected that they would rather collect EI or other COVID-related income supports. This went up to 64% among those in the hospitality industry. During pre-pandemic times, only about 17% felt it was difficult to attract workers as they suspected they would rather stay on EI.

It's important that any permanent changes to the EI benefits not make anyone better off than if they were working.

All the details I shared can be found in our new report, which was released today, but they are also part of the submission that has already been circulated to all of you.

I would like to leave you with one last recommendation: Now is not the time to be making permanent changes to the EI system. Many small businesses are struggling and are singularly focused on finding ways to keep their businesses solvent to retain their own livelihoods and that of their employees. Should permanent changes be contemplated, then the vast majority of our members ask that there be full consultation with workers and employers that includes a detailed cost analysis. As the funders of the EI system, employers and employees deserve to be fully informed of the costs and benefits of any proposals, and should be given lots of opportunity to provide input.

Thank you. I look forward to your questions.