Evidence of meeting #13 for Status of Women in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was job.
A recording is available from Parliament.
9:05 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Good morning. We have a quorum, so we'll call the meeting to order.
Welcome back to Mr. Pearson. He spent quite a bit of time on this committee before, so it's nice to see you back, Glen.
9:05 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Welcome to our witnesses this morning. We're certainly pleased to have you here and we're looking forward to hearing your testimony. I believe you've probably been told that you will have ten minutes to make your presentation and then there will be a question and answer period.
We will start with Professor Baker, please.
9:05 a.m.
Dr. Michael Baker Professor, Department of Economics, University of Toronto, As an Individual
Thank you. Thank you very much for inviting me. I'm happy to be here.
In the area you're investigating, the area I know about is the impact of the maternity and parental leave provisions of the EI system, so that's primarily what I'll talk to. The research I've done in this area has been performed against the background of what I'll claim are the commonly cited goals of maternity leave policy, which include the following.
These leaves provide mothers an opportunity to recover after giving birth, physically. They provide mother and child a period to bond. They promote pre- and post-natal care of the child. They promote the long-run status of women by facilitating employment continuity when giving birth. And finally, they can promote child development.
The research I've done in this area takes two forms. One is an historical look at what's happened over the last 30 years, and the other research is specifically on what the effects were of the 2000 reforms of the EI system, which extended parental leave benefits. Let me start briefly with the historic perspective, and the research is parsed into three segments.
The first segment looks at the period up to 1990. The EI maternity leave benefits were introduced in 1971, but that only provided income compensation. Your rights to job protection were provided by provincial labour standards. So during this period, a lot of provincial labour standards did not actually agree or weren't the same as the EI provisions, and were slowly, gradually brought up to that level.
Looking at that period, what we find is that those changes in provincial laws did not actually affect the amount of time women were at home with their children post-birth. The provisions were quite modest at that time. We're talking about getting up to about 15 weeks, and presumably women found other ways to stay at home post-birth.
What it did do, however, we found, was increase the probability that women returned to their pre-birth employer after giving birth, and therefore it decreased the proportion of women who quit before giving birth.
The second two major reforms of the EI system in this regard, the 1990 reforms and the 2000 reforms, had to do with parental leave benefits. The 1990 reforms brought in parental leave benefits. The 2000 reforms extended them. These benefits in principle can be taken by either the mother or father, but at least initially they were taken primarily by the mother. That's changing, but changing slowly.
What we found from these two reforms is they had two effects. One is that they did increase the amount of time women were at home with their children post-birth, but also had this effect of increasing the probability that they stayed with their pre-birth employer. That's considered important, because breaks in jobs with birth is one of the reasons women are thought to fall behind men in their labour market earnings as they age. They do not get to accumulate the skills that are specific to a particular job if those keep getting broken off—there are discontinuities, if you want. They're moving up, then they get pushed down, then they move up. So the job continuity is considered an important contributor to the continued economic progress of women.
The second area of the research looks specifically at the 2000 reforms that, if I were to generalize, extended leave from six months to one year. I would argue that when we're thinking of that extension and thinking about why we do that, concerns about child development come to the forefront, and concerns about women's health and women's economic progress take a back burner, because leaves of six months, for most women wanting to return to work, provide the opportunity for the physical recovery from birth and the opportunity to go back to their old employer. So what primarily the extension from six months to one year does is provide more time at home, potentially, with the child.
The evidence we've gotten from looking at this reform includes a number of things—and when I say “we” here, I've completed most of this research with Kevin Milligan, who's an economics professor at the University of British Columbia.
First, we estimate across all mothers that reform in 2000 increased the amount of time women were at home with their children post-birth by about two months, and that was on top of an average stay at home of eight months prior to the reform.
That estimate, though, includes some mothers who couldn't actually take advantage of this. Estimates are that about a quarter of mothers have no insured employment prior to giving birth and therefore cannot qualify for EI maternity leave or parental leave benefits.
When we try to focus specifically on the mothers who were eligible, we estimate that the increase in time at home with children was three months, from a pre-reform average of about six months. This represents a 50% increase in the amount of time these mothers were at home with their children after giving birth.
What would these mothers have been doing otherwise, if they weren't at home? It would be primarily full-time work, and their children would primarily be in unlicensed care provided by a non-relative in someone else's home.
Those two facts are important, because other research suggests it's full-time work by mothers in the first year of life that potentially has detrimental effects on child development, and because unlicensed family care is typically not viewed as the highest quality of child care that's available at those ages.
When we think, then, of what might have happened to children as a result of these reforms, we look at two avenues. One is any impact of the change in EI provisions, and of changes in provincial labour standards that increase job protection to match the duration of the EI benefits, upon breastfeeding behaviour.
What are the effects? Breastfeeding is widely viewed as very positive for children, and the most recent research—for example, by Michael Kramer's team at McGill—suggests that it may actually have positive effects on IQ. We find that as a result of the changes in the EI and provincial labour standards in 2000, the duration of breastfeeding in the first year of life went up by one month. Increases in exclusive breastfeeding were on the order of half a month.
What does this mean? I can give you more impressive statistics, but I will have to qualify the point. The proportion of women attaining six months of exclusive breastfeeding, which is a recommendation both of the World Health Organization and of various national medical associations in the developed world, increased by 39%. This sounds big, but we have to remember that the proportions actually achieving six months of exclusive breastfeeding are quite low. So it's a big increase in a small number.
We also find no effect on the incidence of breastfeeding; that is, it didn't change the proportion of women who actually started to breastfeed.
Corresponding with this were reductions on the order of 50% in the proportion of mothers who introduced food because they had to return to work or who stopped breastfeeding because they had to return to work. This is important, I think, because when we think of the various strategies governments take to promote breastfeeding, they typically focus on education—either letting mothers know the benefits of breastfeeding or helping them actually establish breastfeeding in the first weeks of life.
That clearly is important, but to achieve goals such as six months of exclusive breastfeeding or two years of breastfeeding with food, clearly education isn't going to do the trick, when most mothers claim that the reason they stop is that they have to return to work. We have to look at a different set of policies.
So this is evidence that maternity leave and parental leave, in terms of both job protection and income replacement, which is the primary function of EI, have a positive effect on breastfeeding behaviour of mothers in Canada.
When we turn to child development or health, we don't find much. Here we are relying on data from the National Longitudinal Survey of Children and Youth. In terms of health, we don't find any strong effects on children's health or mothers' health. This includes information on mothers' depression, on any postpartum problems, on children's overall health, or the incidence of specific ailments, including asthma, bronchitis—primarily respiratory diseases.
We also don't find any effects on children's development—and this is early development: measures of their temperament, their socio-motor development, or their achievement of certain milestones up to 24 months of age.
These are very early measures of development. Because the reform was so recent and data takes a while to come out, we can now only observe children who were exposed to the longer provision, the longer duration of parental and maternity leave, up to about 24 months. Data has just come out—I say this because I was actually working on it last Tuesday—that is now going to let us look at children up to age four and five who were exposed to this new regime. At this point we'll start getting some cognitive developmental indicators: their ability to recognize numbers, their ability to read. This is potentially important, as I said, because there is other evidence that suggests breastfeeding may have important implications for IQ.
So overall, as I said, my specific knowledge in this area is the effect of EI with respect to maternity and parental leave.
9:15 a.m.
Conservative
9:15 a.m.
Professor, Department of Economics, University of Toronto, As an Individual
I'm wrapping.
9:15 a.m.
Professor, Department of Economics, University of Toronto, As an Individual
I'll leave it there.
9:15 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Thank you very much.
We will now go to Professor Lightman, please, for ten minutes.
9:15 a.m.
Ernie Lightman Professor, University of Toronto, As an Individual
Thank you very much.
I'd like to thank the members of the committee for inviting me here this morning to give me the opportunity to talk about one of the most important policy issues affecting Canada, affecting women particularly, today.
I'm an economist by training, but for the last 35 years I've been a professor in the faculty of social work at the University of Toronto. I left mainstream economics because I was very frustrated with its inability to go beyond looking at numbers, and teaching in the school of social work gives me the opportunity to interact with what's going on at ground level, with what's going on in the world.
I'm in regular contact with students who are doing placements in social agencies, recent graduates who are working in social agencies, so I have the opportunity to see and to hear essentially first-hand what the consequences are of cutbacks in the welfare state in general and particularly in the substantial exclusion of women from the EI system.
I've also been doing research for the last seven years, research funded by SSHRC, in which we've been looking at the impacts of precarious work, most specifically in Ontario. By precarious work, of course, I mean work that is insecure, unstable, of limited duration, part-time, contract only, no benefits.
I'd like to begin with two anecdotes that follow from that, both of them experienced yesterday. I stayed at the Lord Elgin Hotel last night, and when I arrived a group of union members were demonstrating outside the hotel. I had to cross a picket line to go into the hotel, which made me very unhappy. They were mostly women. They were employed by the Holiday Inn in Longueuil, and this hotel has the same ownership, apparently, as the Lord Elgin. They've been locked out for eight months. That means over the winter.
I talked to them for a while before I crossed the picket line, which I thought was the best thing to do under the circumstances, and they're mostly women and they are asking for a salary increase of 3% a year for four years, which does not strike me as unreasonable. They have been offered 2% a year for six years, which of course will just further lock them into poverty.
Anecdote number two: I came into my room, turned on my TV, and saw that Premier McGuinty had just announced $9 billion in infrastructure, essentially in construction, that's going to help the TTC build a lot of streetcars and things like that, and of course this is all men who are going to benefit from this. I believe women constitute about 7% of the labour force in the construction industry.
The important thing to understand is that impacts of the cuts in EI are not gender-neutral. They affect women far more than they affect men. Historically, EI was an intermediate.... I view it as a trampoline, that if people lost a job, they would bounce onto EI. If they were lucky, they could use that time on EI to go back into the labour market. But if that middle tier, that tier of EI, is removed, they go directly onto welfare, and welfare is what I've been studying for the last seven years. It's not something a lot of people study, but its experience is subject to a wide variety of different rules and regulations and constraints and intrusions that people on EI don't experience.
Not very long ago women on welfare were subject to the spouse-in-the-house rule. An unnamed former premier of Ontario made the comment after he was elected in 1995 that a one-night stand was sufficient to constitute an ongoing support relationship. This is what life on welfare is like.
In Ontario today, a person on welfare is subject to an asset ceiling of $500. That means that if someone loses their job and they don't qualify for EI, as large numbers of women don't, they go right to welfare. Before they can claim welfare, they have to divest themselves of all assets except for $500. That means in many cases they can't even keep a car, which they need in order to look for a job. Welfare unfortunately is still caught in the Victorian poor law mentality of blame the victim, not really wanting to give people a hand up, but rather more like giving them a kick in the head.
If EI is not there to protect them, they go right on to welfare. Once they're on welfare, it is a hard system to get off. It is increasingly a hard system to get off as the economy deteriorates.
I have some data that looked at the welfare caseloads in the city of Toronto. In December 2008, 71% of the people who applied for Ontario Works were recycling, meaning they had been on it before. Why? What does that mean? What that means is that 71% of the people who go on welfare have not been able to make a break from welfare. They are stuck; they are trapped. They get a precarious job--they get hired by Sears in November and then they get laid off in January, or they only have part-time work.
I did manage to run off some data--and I'm sure you're familiar with this data and you've had it presented to you--that is based on the 2006 SLID survey. One-third of women work less than 250 hours. That compares to 21% of men who work under 250 hours. So women aren't going to qualify for EI. Among those who have permanent jobs, it's men who have the full-time jobs and women who have the part-time jobs. I've got the numbers, but if I just read them out, they won't mean much. With the part-time jobs, again, they don't qualify for EI.
If we think about going forward and the kinds of recommendations--because I want to get these out on the table--the idea of extending the eligibility for those who receive is not going to help women, because women don't receive it in the first place. It's a male-supportive policy from a government that seems singularly insensitive to the needs of women.
Increasing the replacement rate is also not going to do it, because increasing the replacement rate will only benefit those who get on the system. The way to benefit women is to reduce the hours of eligibility. That's the solution. That's the only way that the EI system is going to start to meet the needs of women.
The other issue, of course, is that women often can't do the work they're expected to do, or would like to do, because of child care problems. One hundred dollars a month is not going to buy child care for anybody. In Quebec, the situation is different. They're very fortunate, and I am envious. I wish the rest of Canada had a program like that. In the rest of Canada, because women don't get child care, because this government killed the child care program that was in place and replaced it with nothing, women are increasingly put in a situation where they won't be able to work, and they won't be able to qualify for the hours.
I think that probably takes care of my ten minutes. I'll quit there. Thank you very much.
9:25 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Thank you.
We'll now move to Professor MacDonald, please, for ten minutes.
9:25 a.m.
Dr. Martha MacDonald Professor, Economics Department, Saint Mary's University, As an Individual
Thank you very much for inviting me. I am very pleased to be able to present.
I'm an economist also, and I have written widely on how every income security policy plays out differently for men and women, given that they have different labour market patterns and caregiving responsibilities. One has to be very careful to avoid implicit gender biases in the parameters of the program.
I began looking at EI when it was first introduced, and early on I wrote an article on expected impacts of the reform, including gender differences. In general, the new program parameters reflected a male norm of full-time, continuous work, which made it more difficult for women and others whose work patterns differed from this.
Like others who you've probably heard present, I anticipated the impacts as being, first, that the eligibility requirements and duration of benefits were calculated such that the change to hours hurt anyone working less than 35 hours per week, and as we have heard, that is disproportionately women.
Furthermore, in terms of the re-entrant rules that were introduced, the big increase in hours needed for re-entrants made it particularly difficult for women who may have more labour market interruptions due to caregiving responsibilities.
Third, the formula to calculate benefits, especially the use of a minimum divisor—about which we can talk in more detail later—penalized anybody with irregular or fluctuating earnings. Again, that was an issue for women as well as other precarious workers, as Ernie has mentioned.
The application of the new EI parameters to parental and maternity benefits was also problematic.
And finally, access to training became more tied to EI eligibility, which also meant that women and other precarious workers were having more difficulty accessing the kind of programs that might help them get into better jobs.
Since that article, I conducted three evaluation reports for HRSDC on EI, each of which emphasized impacts on women. The first one I won't talk about, unless you're interested later. The first one looked at the family supplement which tops up benefits for low-income families with dependent children.
The second evaluation study I worked on addressed El's impact on work/life balance. When we were asked to do this, the anticipation was that we would look at maternity and parental benefits, which clearly relate directly to work/life balance issues, but we chose to focus mainly on regular benefits. The main issue with the regular benefits is the structure of work incentives embedded in the program. In that study we noted that the EI rules reward work patterns that can be shown to be associated with increased stress and work/life balance difficulties, such as long hours and multiple job holding. The rules encourage the more work, the better, the packaging of jobs to get up to the hours you need, and so on. Whether it's the long hours of the male or the female spouse, those are problematic for families.
Work patterns that might be helpful with work/life balance, such as working part-time, are not well protected by EI, nor is any support provided for the work/life balance stresses parents face beyond that first year of parenting. Of course, we found the stresses with slightly older children to be very great. It is not just the first year that is an issue.
The third HRSDC study I worked on focused on EI and seasonal workers. I have done a lot of research with workers in resource-dependent rural communities, particularly in Atlantic Canada. So among the group of precarious workers that Ernie mentioned, I'm particularly interested in seasonal workers. Many seasonal workers actually benefited from the EI switch to hours, as they often work long hours for short periods; however, women did less well under that system. In seasonal industries, women are more likely to work fewer hours and are more likely to have fluctuating earnings, jeopardizing their eligibility and benefit rates compared to men.
The benefit formula with the minimum divisor makes it especially difficult in seasonal industries. It makes it difficult for employers who can't fill jobs unless they can offer 14 steady weeks of work, and it lowered the benefits workers received.
Some of these issues have been addressed, particularly with the pilot project that will calculate benefits based on the best 14 weeks of earnings, but that's only in certain high-unemployment regions.
The re-entrant rules make it almost impossible for a seasonal worker to qualify again for EI if they have a bad year or miss a year, whether that's for caregiving or because of something that happens in the industry. So there's a great incentive to stay on this EI work treadmill.
The final study that I did recently related to EI reviewed the changes that have been made since 1996, in terms of how well they serve women and whether the gender concerns that have been identified since the beginning have been addressed. In that research, I looked at both regular EI and the caregiving benefits under special benefits: maternity, parental, and the compassionate care benefit.
In general EI as a whole reinforces women's responsibility for caregiving. Women's entitlements are still primarily based on their caregiving role. If you look at overall EI, women are now getting as much, or more, of those dollars than men, but it's all entirely due to the special benefits, while their share of regular benefits and the percentage of unemployed women who receive regular benefits have declined.
The changes made during that ten years do not respond to the gender-related complaints that have been raised over ten years.
One other point from that study is that the program parameters for the caregiving benefits reinforce women taking the leaves rather than men. The low-income replacement rates, for example, reinforce the lower earner taking the leave. So the parameters of the existing parental maternity benefits are not doing a good job of sharing the caregiving workload. And on the regular benefits side, the program is not facilitating women being equal labour market participants.
I think I have a couple of minutes, so I'm going to—
9:30 a.m.
Professor, Economics Department, Saint Mary's University, As an Individual
Those just give you an idea of the kinds of areas I've looked at.
I thought about some recommendations, some of which we can return to in the discussion. But I'll just mention a few, based on my research.
For all benefits, both regular and special benefits, I would recommend dropping the minimum divisor in calculating average earnings and therefore benefits. It's an extra penalty, again rewarding longer hours. It's particularly difficult for any precarious workers, what they actually get—my students keep saying, well, you get 55% of your earnings. But you don't, at the end of the day, and the minimum divisor contributes to that.
Also in terms of benefit amounts, I agree with using the best weeks of earnings as the basis of calculating that, and that's what's in the pilot project now, with the 14 best weeks. So I think that should be extended. The formula, basically, for calculating average earnings should be neutral with regard to the timing of work. It shouldn't be rewarding one work pattern and penalizing another.
For regular benefits, obviously the key thing is adjusting the formulas for eligibility, which Ernie mentioned. So the way the hours formula plays out for any part-time workers is an issue. Also, the hours formula on the duration side of things is problematic. So part-time workers are having trouble qualifying, and they're penalized on the duration side as well. They already get benefits proportional to their earnings, so they're already getting that difference. But the double penalty on the duration side that came with EI is problematic.
The hours needed for re-entrance are very problematic for anybody who's been out of the labour market with caregiving responsibilities or for seasonal workers, unless you're just coming off a parental leave, and then you're exempted. But there are other reasons that people take time out of the labour market beyond that first year. So those should be reduced—
9:35 a.m.
Professor, Economics Department, Saint Mary's University, As an Individual
Okay. I'll just make one comment about special benefits generally and we can come back to that.
In general, special benefits should be designed with a different logic from that of regular benefits. The program elements that are intended to improve work incentives in the regular EI program make no sense in a program like parental leave, where the intent is actually to facilitate leave taking. We're not trying to ensure that people don't abuse the program and that they get back to work. We are saying we want people to have this leave. It has these health benefits. Yet many of the program parameters are applied to the parental maternity leave. That would include things like the waiting period. It would include things like the logic of not covering self-employed workers. There's no logic for that if we're talking about parental maternity leave.
Again, the final thing there would be some flexibility in terms of how parents want to use that. A model for that would be the Quebec program, where you can have higher replacement rates that encourage higher earners to take it with shorter periods, or you could have a longer leave with a lower replacement rate, etc., but some flexibility.
9:35 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Sorry to cut you off, Professor, but we have to share the time here.
9:35 a.m.
Professor, Economics Department, Saint Mary's University, As an Individual
I'm fine. I'm finished.
9:35 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Thank you very much. Perhaps some of the things can be fleshed out in the question and answer period.
We'll move now to Professor Schirle, please.
9:35 a.m.
Dr. Tammy Schirle Assistant Professor, Department of Economics, Wilfrid Laurier University, As an Individual
I would like to thank you for providing me with the opportunity to present my views on the employment insurance program.
I plan to address two questions here. First, and very briefly, given access to benefits, what are the effects of various EI provisions on women in terms of the labour market behaviour of their outcomes? Secondly, should we be concerned about whether men and women have equitable access to EI benefits?
These questions should be examined within the context of the objectives of the EI program. EI's objectives do not appear to be clearly defined within the legislation. However, I would suggest there are three goals here. First, EI protects individuals from unexpected earnings losses associated with unemployment. Regular EI benefits provide this type of income support. Secondly, the programs help unemployed persons be productive participants in the labour force. To this end, for example, we have provisions that allow some individuals to receive support for training and education. Thirdly, EI promotes continuity in employment and attachment to the labour force. To this end, the provisions for maternity and parental leave, the allowances for seasonal employment and temporary layoff, may facilitate continued employment with the same employer.
Most often, economists are concerned with the extent to which policy will distort the decisions made by individuals. In the literature you can find several examples of how particular EI provisions change the labour market decisions and outcomes of individuals. For example, a study by David Green and Craig Riddell at the University of British Columbia demonstrated that when you extend the qualifying period for unemployment insurance, individuals will remain employed longer. David Gray's work at the University of Ottawa suggests that frequent EI users are sensitive to changes in benefit calculation formulas such that expansions of the program to cover non-standard employment arrangements may have unintended repercussions.
To my knowledge, we do not have a great amount of evidence on whether there exists a gender difference in the extent to which individuals will adjust their work arrangements to qualify for regular EI benefits. Obviously, we expect to see gender differences in the effects of EI maternity leave provisions. Michael Baker has already spoken to that extensively, where his research with Kevin Milligan has shown that the expansion of maternity and parental leave allowances in the late 1990s led to a substantial increase in the time mothers got to spend at home. More importantly, the provision of maternity leave benefits of any length will increase job continuity with the same employer.
Consider that any policy that increases women's labour force attachment and continuity with employers will have important long-run implications. In my recent research I have shown that the most recent groups of women entering retirement have greater access than previous groups to employer-provided pension plans and Canada Pension Plan benefits. This came with a greater attachment to the labour force in career employment, which in turn can be attributed in part to the legalization of the birth control pill. EI maternity and parental leave policy should lead to even greater access to public and private pensions among women.
Consider, then, the second question: Do men and women have equitable access to EI benefits? To examine access to regular EI benefits, I took a sample from the employment insurance coverage survey and measured the number of individuals who had received EI benefits since their last job as a portion of involuntarily unemployed individuals aged 25 to 44. Here in the sample, to note, I've excluded any mothers of infants and anyone who was self-employed.
A gender gap in the likelihood of receiving EI benefits when unemployed clearly exists. In my sample, 68% of unemployed women and 75% of unemployed men had received EI benefits since their last job.
I undertook a simple decomposition of that gender gap, and not surprisingly found that nearly 40% of the gap could be attributed to gender differences in work arrangements. Note that roughly 80% of employed women work full-time. Nearly 10% of unemployed women and only 2% of the unemployed men in my sample worked in permanent part-time jobs. Thirty-two percent of women work in non-permanent positions—this is not including the seasonal jobs—compared to 23% of men in such non-permanent positions.
Clearly, we expect that any individual in a full-time, permanent position will be more likely eligible for EI benefits than those in part-time, casual employment. This clearly fits EI objectives to provide income support for unexpected earnings losses associated with unexpected periods of unemployment. From the decomposition I also found that more that one-fifth of the gender gap in access can be attributed to gender differences in career paths, as characterized by the industry and occupation of their previous employment. While men tend to work in construction and manufacturing industries, particularly in positions of transport or equipment operations, women are more likely to work in retail, accommodation, and food services, in sales and services positions.
The resulting gap in EI access might be attributed to the industry differences in average hours within full-time or part-time classifications. I suspect there are also some industries and occupations where casual workers' hours are less likely insured.
Should we, then, modify EI to close the gender gap in EI access?
Overall, if you were to compare access to EI among comparable men and women—that is, men and women with the same work arrangements, same career paths, and so on—you would find that men and women have equal access to EI benefits. The differences in access are easily explained by the different labour market choices made by men and women.
Let us assume that on average women are rational, with a basic understanding of probability. Then we can say that when a woman chooses to take on part-time or casual employment instead of full-time permanent employment, she is aware of her lower likelihood to have access to many employment benefits. She is unlikely to have a pension plan or health benefits, she will not contribute as much to her Canada Pension Plan, and she will be less likely to qualify for EI benefits if she is out of work. These are the costs associated with her choice.
The benefits of her work arrangement will include more flexibility with her time, in many cases allowing her to take on home-production activities, such as child care and other family responsibilities. This choice is optimal in the sense that it is best for that individual.
Note that only a small portion of women working part-time jobs do so involuntarily. Within my sample of unemployed individuals in the Employment Insurance Coverage Survey, only 9% of those women are involuntarily part-time.
To suggest that we need to change the EI program so that the women working part-time or casually are more likely to qualify suggests one of two things to me. First, it might suggest that we do not believe women are able to act rationally or understand the implications of their choices. I do not think we have any reason to believe that and I would personally take offence at that suggestion. Second, it might suggest that Canadians want to encourage home-production activities by subsidizing the choice to take part-time and casual employment. This is certainly not a policy objective of the EI program, and achieving such objectives is best left to other policy levers.
A more appropriate policy action would be to ensure that women have equal access to the full-time permanent jobs in those careers likely to lead to EI benefit access. This has generally been the goal of affirmative action programs and even of pay equity legislation. Again, this does not require modifications to the EI program.
Over the years we have seen a greater tendency for women to take on full-time employment and have seen some reductions in occupational gender segregation. If we expect these trends to continue, we should expect the gender gap to narrow over time. As long as women are primarily responsible for home production, however, some gap will remain as women choose to take part-time employment. Further reductions of that gap could be achieved, for example, through the implementation of national child care programs.
It is important to remark on the fact that modifications to EI to accommodate non-standard work arrangements will have important impacts on the choices made by men and women. Any accommodation will likely create an incentive for men and women to take on less secure employment and develop a long-term dependency on the EI program. This will make the program much more expensive, will make its role as insurance questionable, and certainly does not meet the objectives of promoting labour force attachment or job continuity. Furthermore, as all modifications to the program must apply to men and women equally, the gender gap in EI may persist regardless.
Overall, I would strongly recommend against modifying the EI program to accommodate non-standard work arrangements, as it is not clear that such modifications will support the objectives of the program, and other policy options appear more desirable to support the interests of women.
As a final note, I would like to point out that there are several people, male and female, who will never qualify for EI benefits yet who have to make contributions. It seems unreasonable to require that people pay insurance premiums toward insurance they could never benefit from.
For example, to be eligible for regular EI benefits in a high-unemployment region, a typical person must have had 420 insurable hours in the previous 52 weeks. On average, this person must have worked more than eight hours per week at all jobs combined. Introducing a year’s basic exemption to EI premiums based on an individual’s annual earnings with all employers, not a single employer, might be a reasonable solution to consider here. The provision of benefits to these individuals would otherwise require benefit qualifications to depend on weeks worked rather than on hours, and it is not clear how the number of weeks should be defined.
That is all I have to say for now.
Thanks.
9:45 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Thank you very much.
We will move now to our last presenter, Carole Vincent, please.
April 2nd, 2009 / 9:45 a.m.
Carole Vincent Senior Research Associate, Social Research and Demonstration Corporation
Good morning.
Ms. Vice-Chair and members of the committee, I want to thank you for inviting me today to speak here, and for giving me the opportunity to present some lessons that arise from SRDC's—the Social Research and Demonstration Corporation's—research about the complex realities of patterns of work and reliance on employment insurance benefits.
I'm also an economist, and over the past eight years I've been involved in a number of research projects at SRDC that looked at the adequacy of the EI program, which have led to a number of suggestions for improving the program.
I hope my presentation will contribute to a better understanding of the extent to which the EI program reflects current labour market realities and provides adequate support to the increasing number of Canadian women who participate in the labour market and often need to balance their work and family responsibilities.
The examination of a program like EI is one of the most challenging tasks facing the government in the area of income security, since various and often competing factors come into play. It's important at this point to re-examine the role the EI program plays in supporting the economic security of all Canadians, and in particular the economic security of Canadian women.
It's interesting to note that the subject of these hearings is to examine the effects and consequences of the EI programs. And I emphasize the plural form of program as the EI program is usually referred to in the singular. I agree that there is indeed more than one EI program to the extent that different EI benefits are paid to different people in different circumstances and in many different ways.
The EI program pays over $10 billion each year in income benefits to individuals, providing financial assistance every month to thousands of workers who find themselves without a job. And through the provision of sickness, maternity, parental, and compassionate leave benefits, EI also provides assistance to workers who have interruptions in employment for personal reasons, making the program more integral to all Canadians' life decisions.
The major reform of 1996 introduced what is called an hour-based system; however, not every hour of work is treated equally under EI. The EI rules, which are quite complex, give rise to major disparities—and some may call them inequities—in the extent to which workers who pay premiums into the program can benefit from it. Workers who have work patterns or work schedules that best fit the EI rules for eligibility and calculation of benefits will benefit more from EI.
In recent years, considerable debate has taken place about whom the EI program is intended for and how successful it is in protecting its target clientele. Since all paid workers and their employers are required to contribute to EI, but the receipt of benefits is restricted to those who meet its eligibility requirements, an outcome of particular interest is the extent to which unemployed Canadians have access to benefits.
There are different ways to look at it and, Tammy, you presented it in one way. But often we look at the benefit to unemployment ratio, so the proportion of the unemployed who are eligible for benefits under the program rules has been in decline since the early 1990s, down to about 45% according to the Statistics Canada EI coverage survey. This proportion is even lower in certain regions where the unemployment rates are lower and the minimum number of hours to qualify for benefits is higher.
The unemployed who are not eligible for EI benefits are not eligible for different reasons. Some of them did not accumulate enough hours to qualify for benefits, even though they are insured under EI and pay premiums. Others are not receiving benefits because they are not insured under EI, since they have never worked, have been unemployed for more than a year, or because they are self-employed and so do not contribute to the program. Others have left their job for reasons not deemed valid under the program rules, including going back to school.
Who are those workers who contributed to the EI program but do not work sufficient hours to receive benefits? As you know, women represent a disproportionate share of paid workers who don't qualify for EI. In 2006, 15% of female paid workers contributed to the EI program but did not work sufficient hours to qualify for benefits, compared with only 8% of men. Young people are another large group.
Many of those who receive EI benefits are workers who experience predictable—often seasonal and recurrent—breaks in employment. Over recent years, the proportion of claimants of regular EI benefits who were frequent claimants has increased, representing close to 40% of all claims for regular benefits.
Frequent reliance on EI can result from workers becoming familiar with the program and learning how to take advantage of its rules and provisions. To some extent, the EI program itself may be part of the problem because of specific rules and provisions that actually reward workers and employers for adopting certain behaviours that lead to reliance on EI.
What our research has shown is that in many cases, workers' reliance on EI is a symptom of their difficulty in finding stable or more meaningful employment, due to inadequate skills or inadequate recognition of their skills, insufficient education, or limited job opportunities in their region. Policies that focus narrowly on addressing workers' frequent reliance on EI, therefore, are misdirected. Instead, policies should more broadly address the barriers to employment faced by workers who are not well equipped to realize their full potential in the labour market, whether they rely on EI or not.
Our research indicates that while some workers who face barriers to finding more secure employment are able to find jobs that enable them to qualify for EI benefits, there are many more workers who face those same barriers but are unable to qualify for benefits. Again, a disproportionate share of these non-claimants are women. They are the most likely to be working multiple low-paying jobs, which often only offer part-time employment. They live in all regions across Canada, including regions where better employment opportunities have not necessarily led to more stable employment for them.
Historically, the EI program has been seen as an insurance-based program. However, EI has evolved in ways that have moved it away from its insurance-based principles. The 1996 reform introduced EI part two benefits, which provide direct assistance to the unemployed through various employment benefit and support measures, with a focus on helping disadvantaged groups reach their full potential by supporting their participation in activities that will improve their employability.
In the early 2000s, the coverage of the EI program was considerably extended to provide more generous parental leave benefits, and through the enrichment of parental benefits and the more recent addition of six weeks of compassionate leave benefits, the EI program is increasingly providing assistance to workers who have interruptions in employment for reasons that are to some degree foreseeable, planned, and voluntary. While those benefits are aimed at assisting workers who must balance work with their family responsibilities, they are seen by many as a move away from an insurance-based program.
These moves away from insurance principles reflect a major shift in values that could motivate further EI reform. An important issue, however, is whether there are better ways to improve the income security of Canadians who must balance work and family responsibilities.
In Quebec, a distinct program was introduced in 2006 that provides maternity, paternity, and parental leave benefits to all workers outside the EI program. Its coverage extends to those who are self-employed and those who work fewer than 600 hours, which is the threshold to qualify for maternity benefits under EI, provided they earn at least $2,000 during the year.
This program is more generous and also offers flexibility to insured parents: earnings replacement rates can go up to 75% of insurable earnings, and the threshold of maximum insurable earnings is $62,000, compared with only $41,000 under EI. The program also provides for up to five weeks of benefits exclusively to the father. In 2006, 56% of fathers eligible for paternity benefits took advantage of the program in Quebec, compared with only 10% of eligible fathers in the rest of Canada.
The Quebec government announced this week that benefits paid to parents under the program are higher than expected and that this year the government will have to inject $300 million into the fund out of general tax revenues to cover the cost of the program. The issue of using general tax revenues to pay for those benefits is currently being debated.
In conclusion, when considering possible options to improve the EI program and make the program more responsive to the current labour market realities of Canadian women, we should revisit the rules for eligibility for benefits. Specifically, we should examine means by which these rules could address the issue of the disproportionate share of women who have work schedules that do not qualify them to receive regular benefits, even though they are required to pay premiums into the program.
Also, in light of the increasing proportion of Canadian women who must balance work and family responsibilities, we should examine whether special benefits such as maternity and parental benefits and benefits for compassionate leave should be part of an EI program. We should consider alternative options for eligibility and generosity of those benefits that would lead to more adequate income support to Canadian women during planned and foreseeable interruptions in employment due to family responsibilities. The Quebec program is one example, and other OECD countries offer other models.
Thank you.
9:55 a.m.
Conservative
The Vice-Chair Conservative Patricia Davidson
Thank you very much.
I would like to thank each of the presenters this morning. We certainly have had some good information from every one of you.
We will now go to our first round of questioning, for seven minutes.
Madame Zarac, please.
9:55 a.m.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
My first question is for Mr. Lightman.
According to your studies, the erosion of the social safety net is a consequence of lower-paying jobs. However, you did not mention training. Do you think that training programs may help to counteract this situation? We are fully aware that current training is not aimed at women to the same extent. If you agree with that, I would like to know what type of program would be useful, in your opinion.
9:55 a.m.
Professor, University of Toronto, As an Individual
Certainly training is a large part of any kind of medium-term, long-term solution. I think one of the problems is that in certain conditions people who are on social assistance are essentially prevented from participating in training programs. In Ontario, which is the province I know the most about, the philosophy for people on welfare is the shortest route to a job--that's the phrase--the shortest route to a job, and any job is a good job. So this leads to the cycling on and off, because people go on jobs and can't keep them and they're essentially prevented from entering training programs.
