Skip to content

The Monitor Progressive news, views and ideas

What role will employment insurance play in a Canada's COVID-19 recovery?

July 31, 2020

6-minute read

The federal government announced on July 31, 2020 plans to transition CERB recipients who've reached the end of their eligibility period to a reformed employment insurance program. Prime Minister Trudeau assured CERB recipients that "no one will be left behind" during this transition.  The Alternative Federal Budget (AFB) Recovery Plan provides a proposal for how to redesign Canada's employment insurance program to ensure that it meets the needs of unemployed workers and their families.

Toward a just recovery The AFB Recovery Plan recognizes that the onset of COVID-19 revealed serious inadequacies with Canada’s employment insurance (EI) system. As a result, the conversation about income supports for workers has rapidly changed.

People suddenly understand that it matters—a lot—if they can quickly access income when they’re abruptly separated from their employment, in this case because of a global health emergency.

Historically, EI has been tasked with that job in our income security system, whether it’s a separation due to layoff, parental leave or quarantine. But EI could not deliver what was needed when COVID-19 hit Canada in March 2020.

It could not reach enough people. It could not pay them enough. It could not get money out quickly enough. It could not dismantle enough of the hurdles.

It’s been a long time since EI was recession-ready and pandemic- ready. The shortcomings have led to many ‘Fix EI’ campaigns, going back to the damage wreaked by EI restructuring in the 1990s and compounded by the neglect of successive governments.

Ottawa responded in March with a few EI modifications, including a waiver of the waiting period and medical certificate, but they weren’t enough.

The government quickly put another system in place, the Canadian Emergency Response Benefit (CERB). For all its shortcomings, CERB saved lives. It also saved the country from an economic catastrophe.

What CERB did well was quickly get benefits to millions of Canadians who were suddenly without work, on reduced schedules, sick, or caring for family. It did so with:

  • Federal funds (not just employer and worker contributions);
  • A broad brush that covered many who don’t normally qualify for EI;
  • A bare minimum of eligibility questions;
  • A benefit that paid more than the low EI benefit many could expect;
  • A maximized immediate benefit by deferring taxes; and
  • A modern computer program to quickly process payments.
The AFB Recovery Plan assumes the ending of CERB is not the end of the conversation. It can’t be. Not for millions of workers who need to know there’s a social insurance system that has their back.

This is an urgent task. EI is supposed to be our number one automatic economic stabilizer in times of crisis, getting money out quickly into the community to prevent further losses. As it stands, EI simply can’t do the job if we face a climate crisis, a depression, another COVID-19 wave, or a new pandemic.

The AFB Recovery Plan proposes to start that conversation with two simple questions: Can we learn some lessons from CERB? Can we move quickly to transcend the current EI system?

We learned some key lessons from CERB.

It’s possible for the federal government to contribute to EI. This is central to the way forward. Ottawa paid for CERB ($55 billion by July 5th). A new EI will also need federal contributions, as existed prior to 1990.

It’s possible to cover more workers. CERB covered millions of people who don’t currently qualify for EI, including premium-payers like temporary workers who don’t have enough qualifying hours and the self- employed who don’t pay premiums.

It’s possible to pay an adequate benefit to more people. CERB paid a flat $500 weekly before taxes. In sharp contrast, EI paid an average $453 weekly before taxes (2018), with many people receiving less than $400.

It’s possible to pay benefits a lot faster.

How do we transcend the current EI system?

A new unemployment insurance system can’t address all of Canada’s working adults’ income and social program needs, but it can be a more dependable, hard-working pillar of the income security system.

COVID-19 has laid bare EI’s failure to keep pace with a labour market that is now rife with temporary, part-time and other precarious forms of employment. As a result, many of the women, racialized, Indigenous, new immigrant and migrant workers employed in these jobs pay the steepest price, unable to meet EI’s qualifying rules or relegated to an impossibly low benefit rate. And so they stumble from one survival job to the next. At year’s end, 2019, only 33% of Canada’s unemployed women were receiving regular EI benefits, compared with 40% of unemployed men. The AFB’s new program would attempt to open up access for more of these workers and provide better benefits. These workers pay EI premiums; they should be able to collect EI benefits.

The AFB Recovery Plan is guided by these priorities in designing a new unemployment insurance system that can tackle the most egregious gaps in the current program:

  • Expanded access to more people active in Canada’s labour market;
  • Improved benefits that meet income adequacy standards;
  • A more agile delivery mechanism that gets benefits out with a minimum of fuss; and
  • A more effective automatic economic stabilizer.
COVID-19 short-term response phase Given the ongoing public health crisis and precarious economic recovery, immediate measures are needed to expand and expedite access to EI.

These AFB Recovery Plan measures will improve access to EI as CERB winds down (the current maximum 24 weeks ends on August 29, 2020). By December 2020, these measures will be reviewed for possible extension based on secondary waves of COVID-19 and the extent of the recession.

These measures include but are not limited to:

  • Reducing qualifying work hours to 300 hours (or 12 weeks if less) over an extended reach-back period of 24 months.
  • Raising benefit rates to 75%. Further, improve supports for low-paid workers through a floor similar to the weekly $500 benefit that was set by CERB or to a comparable low-income supplement based on individual, not household, earnings.
  • Requiring a simple worker attestation to establish a new claim (not employer-issued Record of Employments).
  • Waiving EI disqualifications and disentitlements. In particular, ‘voluntary quit’ and ‘refuse work’ lose all meaning during a pandemic, given broad public advisories from government officials to stay safe and flatten the Safe return-to-work protocols are also extremely difficult to enforce. And many workers are caring for family who are ill or children at home while school and child care is curtailed.
  • Extending EI to all migrant workers who pay EI premiums.
  • Waiving the one-week waiting period when no benefits are payable.
  • Doubling EI sick benefits to 30 Waive requirements for a medical certificate.
  • Extending EI regular benefits to 50 weeks in all regions.
  • Boosting the number of self-employed enrolled for EI sickness and special benefits by waiving the employee contribution and one-year waiting period and lowering the qualifying earnings to $5,000 (as with CERB).
  • Stopping requiring workers to exhaust severance pay before they receive This delays benefits, complicates processing, and leads to appeals.
  • Remodelling EI Work Sharing to assist with economic recovery, phased returns to work, and modified work This would encourage workforce consultations on schedule adaptations while providing workers with EI benefits for time off schedule, an advantage over the wage subsidy model.
  • Assigning all 2020 CERB-EI benefit costs to general They are not reasonably attributable to the EI account that is funded by worker and employer premiums.
COVID-19 medium-term recovery phase The AFB Recovery Plan will transition the current EI program to a new Unemployment Insurance program (UI) during the course of the year 2021. Beyond the immediate measures, the AFB Recovery Plan will institute these additional improvements:
  • Revamped funding for the new UI contributory social insurance program:
    • A federal contribution will be restored to help fund UI and share in the costs when national unemployment exceeds 5%; this contribution will increase with each additional 1% rise in
    • A federal contribution will also apply to some combination of special benefits, training, a new floor for low-wage workers, and enhanced access for self-employed workers;
    • A new counter-cyclical formula for setting The current pro-cyclical formula increases premiums at the worst possible time, when the economy is struggling to recover;
    • Maximum insurable earnings will be increased with a commensurate increase in the maximum benefit
  • A new qualifying rule for all benefits, the lesser of 360 hours or 12 weeks, which would be uniformly applied across This still allows for regional variations in benefit duration.
  • A fixed three-week disentitlement for “quit-fire” situations and school attendance.
  • Maternity and parental benefits increased to match Quebec benefit rates while lowering qualifying hours and taking other measures to expand access.
  • Automatic UI special benefit coverage for self-employed, requiring a modest premium contribution.
  • Increased training funds to support economic recovery and a Green New UI training benefits must allow for extended re-training, upgrading, literacy, and internet skills development. Extend Worksharing-While-Learning and similar initiatives.
  • Investment in a modern computer program.
Conclusion COVID-19 pressed an already faulty EI program to the max. CERB was a short-term improvement that saved lives and proved there are better ways to ensure income security to workers when they lose their job or working hours, for whatever reason. This is a moment in Canada’s history where we can no longer look away from the inadequacies of EI. A new, comprehensive unemployment insurance program could make Canada more resilient to all kinds of shocks, including future climate emergencies, pandemics, and recessions. If the global pandemic has taught us anything, a radical transformation of how we address unemployment is not only possible, it’s imperative.

This guide to Employment Insurance reform is excerpted from the Alternative Federal Budget (AFB) Recovery Plan. The AFB Recovery Plan is an offshoot of the Alternative Federal Budget project, now in its 25th year.

Topics addressed in this article

Related Articles

Canada’s fight against inflation: Bank of Canada could induce a recession

History tells us that the Bank of Canada has a 0% success rate in fighting inflation by quickly raising interest rates. If a pilot told me that they’d only ever attempted a particular landing three times in the past 60 years with a 0% success rate, that’s not a plane I’d want to be on. Unfortunately, that looks likes the plane all Canadians are on now.

Non-viable businesses need an"off-ramp"

Throughout the pandemic, many small- and medium-sized businesses have weathered the storm, thanks to federal government help. In his deputation to Canada's federal Industry Committee, David Macdonald says it's time to give those businesses an "off-ramp".

Truth bomb: Corporate sector winning the economic recovery lottery; workers falling behind

This isn’t a workers’ wage-led recovery; in fact, inflation is eating into workers’ wages, diminishing their ability to recover from the pandemic recession. Corporate profits are capturing more economic growth than in any previous recession recovery period over the past 50 years.