The federal government’s commitment to extend employment insurance (EI) sickness benefits from 15 weeks to 26 weeks is a welcome and overdue expansion of the Canadian social safety net.
In our 2018 report On the Mend, we recommended doubling the available benefits from 15 to 30 weeks, but 26 weeks is still a dramatic improvement over the status quo.
Here's why:
Every year, more than 350,000 Canadians file claims for sickness benefits through the employment insurance program due to illness or injury. These are workers who have jobs, but are unable to work for an extended period of time.
The sickness benefit provides income support until the worker is healthy enough to return to work (valued at 55% of previous earnings up to a maximum of $562 per week). Although the program suffers from many of the same drawbacks as the broader employment insurance system, such as limited coverage for precarious workers, it generally functions as an important stopgap for ill or injured workers while they recover.
However, benefits are currently limited to 15 weeks, whether or not the worker is healthy enough to return to work. More than one hundred thousand sick Canadians reach that limit every year, at which point they must make the difficult decision between returning to work before they are healthy or losing their jobs.
Indeed, almost half of the workers who claim sickness benefits immediately go on to claim regular employment insurance benefits, which means they lost their job while still ill or injured.
We can cut those numbers dramatically through a simple extension of the maximum duration of benefits.
Our modelling shows that if benefits are extended from 15 weeks to 26 weeks, the number of people claiming the maximum number of weeks drops from 144,000 to only 61,000. The share of workers claiming sickness benefits and no other type of EI drops from 49% to only 20%.
Those numbers are still higher than we should be happy with—no worker should lose their job or be forced to return to work while still recovering from a major illness or injury—but it’s a big step in the right direction.
Extending sickness benefits will help Canadian workers in general, but it will especially help marginalized workers. Sickness benefits are used disproportionately by women, older workers and lower-income workers, so extending coverage means greater support for these groups.
What about the cost? Extending sickness benefits to 26 weeks comes with a price tag of $628 million per year, according to our model. That amounts to a 3% increase in total employment insurance program spending.
The first option to pay for it is to increase the EI premiums paid by employers and employees. We estimate that a modest increase of 8 cents per $100 of insurable earnings, which keeps premiums well within the historical range, would be sufficient. The alternatives are to absorb the cost into the employment insurance operating budget or to have the federal government step in with direct budget spending.
However we pay for it, the costs are modest and the benefits are substantial. The employment insurance sickness benefit plays an important role in the Canadian social safety net, and extending the duration of benefits is a practical, progressive policy worth pursuing.
Hadrian Mertins-Kirkwood is a senior researcher on international trade and climate policy for the Canadian Centre for Policy Alternatives. Follow Hadrian on Twitter: @hadrianmk.
