Access, benefit duration and income replacement below EI levels in past recessions
Employment insurance benefits in
"Since low-wage individuals are especially likely to experience unempolyment, the downloading of recessionary risk is having its biggest impacts on disadvantaged Canadians," said Lars Osberg, a Dalhousie University of economics professor and author of the report Canada's Declining Social Safety Net: The Case for EI Reform. "These impacts will only increase as EI benefits are exhausted in the coming months."
And while the federal budget extended the maximum duration of EI benefits by five weeks, entrance requirements and the replacement rate remained unchanged. This response is “distinctly tepid,” said Osberg in the report.
“From the perspectives of macroeconomic stimulus, the $575 million which is estimated to be the cost of these five additional weeks of EI benefits amounts to about 1/28th of one per cent of Canadian GDP,” said the study. “The increase in benefit duration (which is only temporary, for two years) is easily affordable from program revenue — (meaning it is) projected to cost about 3.42 per cent of EI premium income in 2009-10.”
The CCPA recommends the easing of entrance requirements and the creation of a second tier of unemployment benefits to address the problems of those who are unemployed for long durations.
Canada’s Declining Social Safety Net said high-income earners are also exposed to unemployment risk, because of the maximum insurable earnings covered by the EI program.
“Just under one-half (in 2009, 44 per cent) of claims are at the maximum, implying a lower aggregate replacement rate for all such individuals,” said Osberg. “Employment insurance in Canada in 2009 does not, therefore, replace nearly as much of lost employment income as UI/EI used to in Canada, or as compared to similar unemployed people in the vast majority of OECD nations.”
