In early 2015, I was unable to work for five weeks due to hernia. I was denied Employment Insurance (EI) because I had just received my first Canada Pension Plan (CPP) cheque. I had paid EI for 32 years without receiving a claim. My monthly income had declined by 74%.
I decided to research the history of EI and I discovered the EI train had derailed long ago.
After World War I, the population of urban centers surpassed the rural population. This led to increased problems in the urban work place.
Politicians from across the political spectrum began to advocate Unemployment Insurance in order to provide Canadians with ‘bridge income’ during employment interruptions.
The idea was included in the 1919 Liberal Policy Convention, in the 1933 CCF Regina Manifesto and in the 1935 Bennett New Deal.
In the late 1930’s, the provinces unanimously agreed to let the Federal Government assume this responsibility. In the 1940 Federal Election campaign, Paul Martin Sr. strongly advocated for Unemployment Insurance.
It is important to point out EI revenues are collected from employers and employees for every hour worked. Since its inception, the Employment Rate (unemployment numbers reversed) has been between 87.3 % and 97.8%. In other words, there should always be enough people working to sustain the fund which only pays 55% of the lost income for a short period of time.
The Winnipeg qualifying period of 665 hours forces many seasonable workers to pay into EI with no hope of collecting. The Manitoba university student who works 35 hours a week for 19 weeks every summer does not qualify for EI. They are in effect paying an income tax of 22 cents an hour based on a $11 minimum wage job.
Their employers are paying a Payroll Tax of 29 cents an hour. The $340 combined employee / employer EI premiums should go back to the student.
Working seniors pay but can not collect once they receive Old Age Security (OAS) pension and CPP. Retiring seniors do not get a cent of the thousands of dollars paid into EI during their working years. Would any campaigning politician want to defend this reality at a meet and greet in a seniors residence?
It is totally inaccurate to portray Employment Insurance claims as a cost to taxpayers. Since 1990, there has been no taxpayer funding.
When regional unemployment rates, the availability of other jobs, and quitting a job, are used as reasons for denying EI, the Federal Government is denying people access to their own money.
In the 1995 Federal Budget, Finance Minister Paul Martin made EI much harder to claim. The 1995 Budget Speech states, “A key job for Unemployment Insurance must be to help Canadians stay off Unemployment Insurance.”
The obvious difference between the principles of Paul Martin Sr. and the actions of Paul Martin Jr. indicates the implementation of the plan has taken a wrong turn.
In 2008, the huge EI surplus was diverted into general revenues. The total transfer was $57,859,571,696 (almost $58 billion). This represented almost three years of collected premiums.
Simply put, the budget deficit was reduced through the misuse of the employees and their employers EI contributions.
After raiding the fund, the Harper Government passed legislation outlawing future misuse of EI funds. If the present trend of denying benefits to most of the employees who pay them continues, what will happen to future surpluses?
The Federal Government could eliminate future skepticism by making EI a ‘forced savings account’ administered by the Federal Government. After allowing 20% for administration, every employee would be able to recover the other 80% during employment interruptions and at retirement. The possibility of diverting funds into government revenue would be eliminated.
Other revenue sources would have to be used to finance all other government activities. EI would revert to its original purpose of helping working Canadians.
If a person in his 50’s becomes unemployed after 40 continuous working years, he could collect 80% of his lifetime EI contributions. There is less of a possibility of this person being cut off before he finds a new job. Many retiring Canadians would receive a sizable return from their EI contributions.
No safety net program is perfect. However, these changes would help millions of Canadians and restore the original intent of EI. If the Federal Government is not interested in making major changes to EI, they should change the name from Employment Insurance to the Employment Tax.
Fred Morris is a grandfather who has worked for 50 years in the restaurant and delivery business. He is a political activist with a University Degree in Economics. Like many Canadians, he has paid thousands of dollars in EI premiums. In 2015, he handed Paul Martin Jr., at Jim Carr’s Academy Road campaign office in Winnipeg, a heavy envelope about EI. Mr. Martin’s promised reply has yet to come.