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Tightening the Screws on the Unemployed

May 15, 2012

4-minute read

The significant changes to the Employment Insurance (EI) program which are to be quickly implemented through Budget 2012 with very little consultation have not received enough critical attention.

First, a word on what is not in the Budget. It is disappointing, to say the least, that the government is failing to respond to the fact that less than 40% of unemployed Canadians are now qualifying for EI, well below the already low pre-recession rate.  And, for all of the talk about skills shortages in Canada, it is notable that there is NO  increased investment at all in EI supported training which would assist unemployed workers to find good jobs.

Instead, the focus is on tightening discipline over those workers who have managed to qualify for a claim.

The vast majority of regular EI claimants welcome positive efforts to assist them in a search for a new job and will not turn down reasonable employment opportunities. And there are rules now in place.

As things now stand, EI regular claimants are expected to undertake "reasonable and customary efforts to obtain suitable employment" and can be cut off benefits if they do not do so. "Suitable" employment is defined in S. 27 (2) and (3) of the Act. A job is not suitable if it is in the claimant's occupation but offers wages and conditions less than those offered in agreements between employers and employees, or by "good" employers.  Jobs not in the claimant's usual occupation are not suitable if they offer a lower rate of pay than the worker enjoyed previously, except that after a "reasonable interval" a claimant is expected to accept a job which offers wages and conditions matching those in agreements or offered by "good" employers.

The clear intent of these Sections is to allow for a period of job search to find a job matching previous employment wages and conditions, and to prevent the unemployed from driving down wages and conditions.

Sections 605 and 608 of the Budget Bill repeals these Sections, and give the Minister the power to set through regulation definitions of "suitable" employment for different categories of claimants, and "reasonable and customary efforts" to find a new job. These regulations will likely oblige claimants to take offers of jobs at lower wages and with worse conditions at an earlier point in their claim, and perhaps to take any available job at some point in a claim. Language in the Budget itself suggest there may be a focus on frequent claimants.  The intent may be to require claimants to move to take an available job.

Forcing workers to take the first available job is not good labour market policy since periods of job search allow for a better fit between unemployed workers and job vacancies across the country. For example, an unemployed welder in Moncton may need time to find a suitable job in Western Canada, and deserves income support from EI for the needed period of active job search.

These pending new rules are of particular concern given the proposed changes to the appeal system for claims. A new Social Security Tribunal will replace the current system of EI Boards of Referees and the Umpire.

Appeals, which mainly concern denial of claims, are currently made to local EI Boards of Referees for 83 regions, which have three members, one appointed from each of labour and business by the respective EI Commissioners, and a neutral chair appointed by the government. The part-time members of Boards are knowledgeable of local labour conditions as well as of EI legislation and regulations, and deliver timely decisions, usually within 28 days.

In 2010-11, there were 53,905 appeals, about half of which were resolved before a Board hearing, usually due to Departmental recognition of an error. 26,290 appeals were heard by Boards of Referees, and many claims that were initially denied are upheld, underlining the importance of the process of getting a fair hearing. The great majority of Board decisions are, apparently, unanimous.

The some 1,000 part-time members of Boards of Referees who currently handle something like 25,000 cases per year are to be replaced by just 39 full-time members of the EI section of the new Social Security Tribunal (plus a very few part-timers up to a maximum of about 4 full-time positions.) Hearings from April, 2013 will be before a single, supposedly expert, full-time member of the tribunal.

It is unclear if hearings will be held in the community and how the volume of complaints can be handled without leading to long delays. There are serious grounds for concern that determinations will be much less informed by knowledge of local conditions and the changing realities of the job market than is now the case, and will instead be decided on narrow legal and technical grounds.

A third concern with the Budget Bill is changes to pilot projects which will impact on high unemployment regions found mainly in the North, Quebec and rural Atlantic Canada. As of September, unemployed workers in these regions will lose access to an extra 5 weeks of benefits, and some will no longer have their benefits based on their best 14 weeks of prior earnings.  The first $75 of earnings from taking a very short-term job will now be subject to a 50% clawback (though the 100% clawback now in place above $75 or 40% of the claim amount will be replaced by the universal 50% clawback.)

In fairness, on the positive side, the Budget does promise to deliver more timely information on available jobs to unemployed workers, and tweaks the rules regarding working while on a claim and establishing the rate of benefit based on weeks worked in such a way as to lower penalties paid by most unemployed workers who accept part-time and temporary jobs. The Department also promises to review all disputed decisions  to reduce the volume of appeals.

Still, the major intent is to tighten the system to get the unemployed back to work, any work, much faster.  At a minimum, these changes demand much closer consideration than they will get before the Budget Bill is passed.

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