Unemployment Benefits - Canada

Canada

In Canada, the system now known as Employment Insurance was formerly called Unemployment Insurance. The name was changed in 1996, in order to alleviate perceived negative connotations. In 2011, Canadian workers pay premiums of 1.78% of insured earnings in return for benefits if they lose their jobs. Employers contribute 1.4 times the amount of employee premiums. Since 1990, there is no government contribution to this fund. The amount a person receives and how long they can stay on EI varies with their previous salary, how long they were working, and the unemployment rate in their area. The EI system is managed by Service Canada, a service delivery network reporting to the Minister of Human Resources and Social Development Canada.

A bit over half of EI benefits are paid in Ontario and the Western provinces but EI is especially important in the Atlantic provinces, which have higher rates of unemployment. Many Atlantic workers are also employed in seasonal work such as fishing, forestry or tourism and go on EI over the winter when there is no work. There are special rules for fishermen making it easier for them to collect EI. EI also pays for maternity and parental leave, compassionate care leave, and illness coverage. The program also pays for retraining programs (EI Part II) through labour market agreements with the Canadian provinces.

The Employment and Social Insurance Act was passed in 1935 during the Great Depression by the government of R.B. Bennett as an attempted Canadian unemployment insurance program. It was, however, ruled unconstitutional by the Supreme Court of Canada as unemployment was judged to be an insurance matter falling under provincial responsibility. After a constitutional amendment was agreed to by the provinces, a reference to "Unemployment Insurance" was added to the matters falling under federal authority under the Constitution Act, 1867, and the first Canadian system was adopted in 1940. Because of these problems Canada was the last major Western country to bring in an employment insurance system. It was extended dramatically by Pierre Trudeau in 1971 making it much easier to get. The system was sometimes called the 10/42, because one had to work for 10 weeks to get benefits for the other 42 weeks of the year. It was also in 1971 that the UI program was first opened up to maternity and sickness benefits, for 15 weeks in each case.

The generosity of the Canadian UI program was progressively reduced after the adoption of the 1971 UI Act. At the same time, the federal government gradually reduced its financial contribution, eliminating it entirely by 1990. The EI system was again cut by the Progressive Conservatives in 1990 and 1993, then by the Liberals in 1994 and 1996. Amendments made it harder to qualify by increasing the time needed to be worked, although seasonal claimants (who work long hours over short periods) turned out to gain from the replacement, in 1996, of weeks by hours to qualify. The ratio of beneficiaries to unemployed, after having stood at around 40 percent for many years, has recently reached close to 50% (end of 2009). Many unemployed persons are not covered for benefits (e.g. the self-employed), while others may have exhausted their benefits or did not work long enough to qualify. However, it is noted that 80 percent of insured job-losers do initially receive EI benefits in Canada. The length of time one could take EI has also been cut repeatedly. The 1994 and 1996 changes contributed to a sharp fall in Liberal support in the Atlantic provinces in the 1997 election.

In 2001, the federal government increased parental leave from 10 to 35 weeks and allowed workers to take EI for compassionate care leave while caring for a dying relative. Total EI spending is projected at $22.7 billion for 2010 (figures in Canadian dollars).

A significant part of the federal fiscal surplus of the Jean Chrétien and Paul Martin years came from the EI system. Premiums were reduced much less than falling expenditures - producing, from 1994 onwards, EI surpluses of several billion dollars per year, which were added to general government revenue. The cumulative EI surplus stood at $57 billion at March 31, 2008, nearly four times the amount needed to cover the extra costs paid during a recession. This drew criticism from Opposition parties and from business and labour groups, and has remained a recurring issue of the public debate. The Conservative Party, after voicing much the same criticism while in opposition, chose not to recognize existing EI surpluses after being elected in 2006. Instead, the Conservative government adopted in 2008 and 2009 legislation freezing the EI surplus indefinitely and putting EI premiums on a pay-as-you-go basis, so that - starting in 2011 - they will fluctuate in line with changes in unemployment levels. On December 11, 2008, the Supreme Court of Canada rejected a court challenge launched against the federal government by two Quebec unions, who argued that EI funds had been misappropriated by the government.

External links

• History of UI in Canada, since 1930s
• Canadian Government Site for EI
• Canadian Government Site for Maternity and Parental Benefits
• Library of Parliament publication on EI premiums
• CBC Digital Archives - On The Dole: Employment Insurance in Canada