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.