The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies.
CANADA – Improvements, not an overhaul, are needed for Employment Insurance (EI) eligibility, states a new report from the C.D. Howe Institute. In “Unequal Access: Making Sense of EI Eligibility Rules and How to Improve Them,” authors David Gray and Colin Busby find that the degree of alleged deterioration of the EI program as a social safety net over time is greatly misunderstood and exaggerated.
“With growing ranks of unemployed Canadians in 2015 and 2016, particularly in resource-based regions, many analysts question whether the EI regime is functioning as it should,” states Gray. “Appropriate eligibility measures show that eligibility rates are quite high, generally above 90 percent, for most laid-off full-time workers, but significantly lower for part-time workers, new entrants to the labour force, and for workers in low-unemployment regions,” he adds.
However, the authors argue that claims of EI eligibility restrictions and benefit cutbacks eroding the safety net for workers who pay into the program are mostly untrue. According to Busby, “although we demonstrate that there are a significant number of unemployed Canadians that do not contribute to EI, eligibility is quite high for targeted recipients.”
Nevertheless, the federal government can make important improvements.
For example, the Employment Insurance Coverage Survey (EICS) looks at qualification rates for workers who pay EI premiums and are laid off from work. To increase EI eligibility, the authors support the Federal budget’s decision to drop the long-standing penalty applying to new entrants and re-entrants into the labour force This reform should result in a modest increase in the number of EI-eligible workers who are unexpectedly laid off.
Another recommendation, for a broader and further-reaching eligibility increase, is the consideration of a lower, yet geographically more uniform, hours-based requirement. Eligibility rates for workers in regions with low unemployment rates, which currently require at least 700 hours of work, are significantly lower than eligibility rates for workers in regions with high unemployment rates that require only 420 hours of work, on average.
“The broader design of the social safety net needs a thorough rethink, given the evolution of the labour market,” state Gray and Busby. However, current EI eligibility criteria do not need a major overhaul to expand eligibility, though addressing regional variations in eligibility should be a priority. The authors conclude that “policymakers should revisit the ‘social’ side of social insurance programs, and as a first step they must begin to better understand the circumstances of a large number of unemployed workers who are not recent contributors to EI.”
