Canada’s Shrunken Safety Net: Employment Insurance in the Great Recession

Belt-tightening changes made to Employment Insurance in the 1990s have decimated the program’s coverage over the years and substantially reduced the value of payments.  Today only three in ten unemployed Canadians receive regular EI benefits in contrast to eight in ten in the last recession, in 1990.  There is a gender gap in coverage, and it has widened.  Both eligibility for benefits and the maximum duration of benefits vary widely from community to community and province to province, leading to unfair treatment of the unemployed.

Caledon proposes several immediate changes to strengthen EI, including: a uniform set of rules governing entrance requirements and length of benefits, increasing the earnings-replacement rate from the current 55 to 70 percent of insurable earnings, and setting premium rates higher in good economic times and lower in bad times.

But bolder reforms are also needed, especially to deal with the coverage problem.  Ottawashould create a new program to complement a strengthened Employment Insurance.  The new scheme would pay temporary and time-limited income-tested benefits to unemployed workers with low or modest incomes who cannot qualify for Employment Insurance.

ISBN – 1-55382-366-4