I call this meeting to order.
Welcome to meeting number 18 of the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.
Today’s meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.
Pursuant to Standing Order 108(2) and the motion adopted by this committee on Wednesday, October 28, 2020, the committee will resume its study of the review of the employment insurance program.
I welcome our witnesses, who will begin our discussion with five minutes of opening remarks, followed by questions.
We have with us today, from the Canada Revenue Agency, Annette Butikofer, who is the assistant commissioner and chief information officer; and Frank Vermaeten, assistant commissioner. From Statistics Canada are Josée Bégin, director general, labour market, education and socio-economic well-being; and Vincent Dale, director of the centre for labour market information.
For the benefit of our witnesses, I have a few additional comments. Interpretation in this video conference will work very much like that of a regular committee meeting. You have the choice, at the bottom of your screen, of floor, English or French. When speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute.
We'll start with Mr. Vermaeten, for five minutes, please.
You have the floor, sir. Welcome to the committee.
Thank you very much and good afternoon, everyone.
Thank you for the invitation to appear before the committee today as you continue your review of the employment insurance program.
With me is my colleague, Annette Butikofer, who's assistant commissioner and chief information officer of the information technology branch at the Canada Revenue Agency. In my brief remarks, I'd like to provide the committee with a short description of the CRA's responsibility with regard to delivering benefits to Canadians.
First and foremost, the CRA seeks to ensure that Canadians obtain benefit payments in a timely manner and have avenues of redress when they disagree with a decision on their benefit eligibility. The CRA administers the Canada child benefit, the goods and services tax, the harmonized sales tax credit, the children's special allowances program, the disability tax credit, the Canada workers benefit and provincial and territorial programs.
Indeed, the CRA uses its federal tax delivery infrastructure to administer 181 services, ongoing benefits and one-time payment programs on behalf of the provinces and territories. These income-tested benefits and other services contribute directly to the economic and social well-being of Canadians by supporting families and children.
I should note that while the CRA is the administrator of many other benefits, the CRA has no direct involvement in the administration of the EI program or the EI system.
As the committee may know, the CRA's role in delivering benefits evolved as the COVID-19 pandemic hit, at the peak of the 2019 tax season. The CRA shifted gears to focus on the administration and issuance of emergency benefits to Canadians impacted by the pandemic. The Canada emergency response benefit was launched in April 2020 and was jointly administered by the CRA and Service Canada. Given the speed required to deliver the CERB payments to Canadians—within some three weeks—and the initial 16-week duration, the CRA leveraged pre-existing information technology services to ensure that payments would be issued on a timely basis.
As of February 14, 2021, the CRA had processed 22,652,229 CERB applications, representing $45.3 billion paid to Canadians. The CERB was followed by the Canada emergency student benefit, or CESB, in 2020, which leveraged the program and system design of CERB. Through the course of administering the CESB, the CRA has processed 2,140,226 applications, representing $2.94 billion paid to Canadians.
As part of the transition from CERB, since the fall of 2020, the CRA now administers three new COVID benefits: the Canada recovery benefit, the Canada recovery caregiver benefit and the Canada recovery sickness benefit.
As of February 13, 2021, the CRA had processed and paid out to Canadians, for the CRB or recovery benefit, 9,864,423 applications, representing $9.86 billion. For the CRCB—the caregiver benefit—we paid out 2,840,045 applications, representing $1.42 billion, and for the CRSB there have been 675,473 applications, representing $337.74 million.
In addition, the CRA also administers the Canada emergency wage subsidy and the Canada emergency rent subsidy programs, which were launched to assist businesses during the pandemic. As of February 14, 2021, 2,619,890 wage subsidy applications had been approved, with a $65.56-billion value of subsidies approved. As of February 7, 2021, 347,480 rent subsidy applications had been approved, with $1.29 billion in payments of subsidies approved.
In conclusion, while the CRA has no direct involvement in the administration of the EI program or systems, as those are the responsibility of ESDC, the CRA plays an important role in delivering many other benefits on which Canadians rely.
Thank you again for the invitation to appear, Mr. Chair. Ms. Butikofer and I would be happy to answer any questions the committee may have.
Thank you, members of the committee. Thank you for inviting Statistics Canada to speak today as part of the study on employment insurance.
Statistics Canada has many data sources, such as the Labour Force Survey, or LFS, and employment insurance, or EI, statistics, that are used to paint a more complete portrait of labour market-related events. Many of the indicators I will cite today are drawn from these sources. Each data source has its benefits and drawbacks, for example, in terms of coverage, sample size and how quickly data are published.
The pandemic has caused unprecedented job losses in Canada. Total employment fell by more than three million during the worst of the crisis in March and April. Within three months, the unemployment rate almost tripled, reaching 13.7% in May. Although the labour market has improved since then, most labour market indicators have not yet returned to pre-pandemic levels. Their recovery has been slowed by the public health measures in place.
In January 2021, the unemployment rate stood at 9.4%, compared with 5.7% in February 2020. The number of long-term unemployed workers, in other words, people who have been looking for work or on temporary layoff for 27 weeks or more, remained at a record high of 512,000.
New experimental data show that COVID-19 has significantly impacted groups designated as visible minorities. In January, the unemployment rate of Black Canadians was 5.3 percentage points higher than a year earlier, versus an increase of 3.7 percentage points for Canadians who did not identify as indigenous or did not belong to a group designated as a visible minority. This more precarious labour market situation for population groups designated as visible minorities is partly due to the higher concentration of these workers in some of the sectors most affected by the COVID-19 economic crisis, such as accommodation and food services.
Looking at age groups, youth employment in January 2021 was the furthest, -14%, from the pre-pandemic levels of February 2020, when compared with other demographic groups, particularly employment among young women, -17%.
Last December, 1.3 million Canadians were receiving regular EI benefits, almost triple the number from February 2020, which was 446,000.
The results of the LFS show that 1.8 million people were unemployed in December, including 1.5 million who were looking for work and 300,000 who had a connection to a job, either because they had been laid off temporarily or because they had arrangements to start a new job in the near future.
There is always a proportion of unemployed who are not eligible for EI benefits. Some unemployed people have not contributed to the program because they have not worked in the past 12 months or because their job was not insured. Others contributed to the program, but they do not meet the eligibility criteria.
In December, 13% of all regular EI beneficiaries were eligible as a result of temporary changes made to the eligibility rules in September 2020. This proportion was higher in Quebec and in the Atlantic provinces than in the other provinces.
The December LFS results revealed that the industries where employment remained furthest from pre-pandemic levels included accommodation and food services, information, culture and recreation, and what is known as other services, including personal services and laundry services. The challenges facing these industries are reflected in the profile of regular EI beneficiaries. For example, in December, more than one in four regular EI beneficiaries had last worked in one of these three sectors.
The uneven impact of COVID-19 across industries, combined with relaxation of the rules for accessing the EI program, has also driven the proportion of women who receive regular benefits upward, which rose from 37% in February to 48% in December.
My colleague Vincent and I would be happy to answer any of your questions.
This concludes my presentation, Mr. Chair. I hope this overview of the Canadian labour market will be useful to the committee.
Thank you for the question.
It is clear that not all Canadians face the same challenges, which differ depending on whether they belong to a diversity group. The pandemic really shone a spotlight on those differences. Even though Statistics Canada has long been working to build an accurate picture of Canada's diversity through the census of population, the disaggregated data still present major gaps as far as certain fundamental economic indicators are concerned.
One of the challenges we run into is that the limited sample size of our surveys can hinder our ability to paint a clear picture, particularly when it comes to employment and labour market indicators for racialized groups.
At Statistics Canada, we are committed to working with private and not-for-profit groups and organizations, as well as different ethnocultural communities, to develop joint data collection and analysis initiatives. Those initiatives are the key to obtaining more representative statistics and enhancing our overall understanding. Equally important, however, is our intention to maintain our whole-of-government approach by continuing to work with our federal partners. That makes existing data available to us and allows for more effective integration of disaggregated data collection, while, of course, protecting Canadians' confidentiality and privacy.
Thank you to the witnesses for being here today and for taking part in our study on employment insurance reform.
My first question is for the Canada Revenue Agency officials.
I realize that you do not administer the EI program, as you pointed out, but I still have a question for you. The CRA was called upon to administer all of the temporary or emergency benefits that were introduced—you came up with their names, in fact. You will, in all likelihood—and you can confirm whether this is true—have to administer the three new measures that were recently extended by regulation. On top of that, tax season is almost here.
You said that the challenge you faced was delivering the benefits in a timely manner. As you know, there were problems. People had to wait seven or eight weeks for a decision on their Canada response benefit application. People had numerous problems involving the Quebec parental insurance plan and alignment with the new benefits.
Would you say those long wait times are behind us now?
If that could be sent to my office, I'd be interested in those percentages if that's possible.
During the pandemic, we see that the CERB acted as a de facto guaranteed income program. It is something that I, along with thousands of others—Basic Income Canada, Basic Income Manitoba and many others—have been fighting for, for long time, to ensure that all Canadians have a livable income.
With that in mind, are there any lessons that the CRA learned in terms of its potential future ability to deliver a guaranteed livable basic income program?
I ask that because it looks as though we're still going to be in the pandemic for a number of months, and we know that many people, in terms of EI, are running out of benefits. How are we going to keep Canadians supported?
I have one last question. I've heard of many from the disability community who do not think the disability tax credit is a good policy instrument, because it privileges those who are able to work. Even for those folks, it provides a very marginal value.
If somebody has the disability tax credit, they can, for example, open an RDSP, which can be really beneficial, but again, it also privileges those who can afford to contribute to an RDSP.
Would you agree with that assessment, and in your opinion, what are some of the alternative policy options that would benefit the most marginalized individuals in the disability community?
I'm pleased to hear it's not actually through CRA, because my next question was about the CRA call wait times, which I'm sure you heard about until you were blue in the face, but I did want to address them with you.
We're hearing from across the country that many people are having issues. In normal years in tax season, people wait a couple of hours sometimes on the phone and that's not necessarily abnormal, but it seems to be incredibly high even compared with a normal tax season. I'm hearing from folks and I know there are MPs across the country.... I'm sure everyone on this committee has probably had constituents complain about this issue, where someone is waiting three or four hours and then they get an operator saying, “Too busy, call back later,” and hang up. Then they have to start again.
My concern is that these are folks who were promised support from the federal government. The Liberal government has announced these things, but the problem is that thousands of people can't even get through to access them through CRA, and there's a whole host of technical things, as we know, that can go wrong and be why people need to call CRA to get those benefits. It's easy to announce these things, yet they're getting roadblocked, some for weeks, trying to get through.
I know you're aware of this issue, so can you explain to the committee the measures you're taking to reduce these call wait times to more of a humane level?
Colleagues, we're going to leave it there so that we get a full hour with the next panel as well.
I'd like to thank the witnesses for being with us here today. Thank you for your service, especially at such a difficult time when the public service is very much put in the limelight.
We also appreciate the various undertakings that you've given to provide further information in writing to the committee. At the risk of being bold, the written information that you provide will help inform us in the examination of further witnesses. We're happy to receive it piecemeal if you can provide some of it promptly and the rest takes a little more time. As soon as you can get it to us, that increases the value that it will have and its impact on the work of the committee.
Thanks again so much for being with us, and we'll bid you adieu now.
We're going to suspend for three minutes while we bring in the next panel and test their mikes.
Thanks again, everyone.
I recall the meeting to order.
We are meeting on our study of the review of the employment insurance program.
I would like to make just a few comments for the benefit of the witnesses.
Before speaking, you need to click on your microphone icon to activate your mike. Interpretation in this video conference will be like a regular committee meeting. You have the choice on the bottom of your screen of floor, English or French. When you are speaking, please speak slowly and clearly, and when you're not speaking, please put your mike on mute.
I'd now like to welcome our witnesses to continue our discussion. You will each have five minutes for your opening remarks, and that will be followed by rounds of questions.
We have with us today Miles Corak, professor of economics, graduate center, City University of New York; and from the C.D. Howe Institute, Parisa Mahboubi, senior policy analyst. We're going to start with Mr. Corak, please, for five minutes.
Welcome to the committee. You have the floor.
I'm especially glad to have this opportunity to discuss an issue of growing importance.
Employment Insurance has been found wanting. Many Canadians have experienced that for decades, and now is well beyond the time to do something about it.
The government can proceed immediately with a series of important changes that are well within its administrative capacity, but it also must proceed with an eye to more fundamental changes in the near term that may require more consultation.
I'll outline six proposals, three are immediate and another three are near-term possibilities for you to consider.
Let me tell you something that I don't think Canadians need more of. They don't need more platitudes about getting a better education, or about getting more training. The EI program already transfers about $3 billion to the provinces for programs of this sort. Some are effective and some less so, but the government doesn't need to spend more money on training through EI and putting more responsibility on individuals to adjust to the storms of the turbulent labour market.
My point is that Canadians need better and more complete income insurance. My suggestions are directed to this need.
I have three policies for the short term that I believe the government can immediately implement in the next budget.
The first considers qualifying for benefits with the last ROE. I suggest this committee and the government consider the reason for separation from only the last record of employment in a series used to support a claim. The administration of the program should ignore the reasons in previous ROEs and allow qualification if shortage of work was the reason for separation in the most recent ROE.
Currently many workers in a precarious situation trying to piece together jobs and incomes find themselves falling into an administrative rabbit hole because past ROEs have been incorrectly completed by employers or separations are worker initiated. Focusing on the reason for separation in the last ROE will simplify a needlessly complicated process.
The second suggestion to you is to offer a close-to-uniform entrance requirement. There are 62 EI regions with a number of hours of work required to qualify for benefits determined by region-specific unemployment rates, unemployment rates that fall into nine bands ranging from less than 6% to over 13%. This is why the black hole exists in some regions.
We tie narrowly defined regional unemployment rates so finely to EI eligibility because we treat the program as a regionally based program of income support, with some work conditions attached. This amounts to a type of basic income for many people living in regions east of the Ottawa River. Laudable as this goal is, it has distorted the insurance function of employment insurance, it has excluded many Canadians from coverage and it has slowed the response to big labour market shocks.
It means a 0.1% change in the unemployment rate can change eligibility for the program. This level of precision amounts to letting statistical fog influence eligibility. It also means that to reduce the statistical fog, Statistics Canada relies on an average of regional unemployment rates in the past three months. This further corrupts the ability of the program to respond quickly to sudden changes in the job market. Eligibility rules are hard-wired to be backward looking.
There have been long-standing calls for a uniform entrance requirement, and currently that's the situation we're in. A reasonable alternative is to reduce the current nine bands to just three, say less than 6%, 6% to 10%, and greater than 10%.
The third immediate policy change that the government can introduce is to increase the benefit rate and the maximum insurable earnings. The benefit rate is currently 55%, meaning that an EI claimant receives 55¢ for every dollar of insurable earnings. Historically, this was 66 2/3%, and was as high as 80% for certain categories of claimants. Successive reforms cut the benefit rate, and these cuts were often done in the name of deficit fighting and work incentives. These past priorities don't serve our present and future well. It is both feasible and timely to raise the benefit rate and offer workers better insurance by covering more of their past earnings.
Let me jump to three other policies that refer to things the government can do in the near term that will probably require more consultation.
The first is to enhance coverage and step toward a basic income by integrating the Canada workers benefit with the EI program.
The fact that only 40% of the unemployed qualify for employment insurance in the best of times and the perception that the future of work will involve more contingency and more precarity in work arrangements has led many to question the eligibility rules of EI and its limited capacity to cover the self-employed. It has also led them to call for a basic income of some sort.
Not all of the self-employed should be covered by EI and dividend income surely should not. Further, the gig economy is not, nor will it be, a terrible reality for many, but both self-employment and employment as an independent worker will increasingly become a last ditch or supplemental means of support for many workers in precarious situations.
There is certainly a role for changes in regulatory policies and clarifications of the class of workers, but income support and income insurance policies can respond by focusing more on insuring incomes, rather than jobs or particular classes of jobs.
The Canada workers benefit remains a relatively modest program. Individuals living on their own must have at least $3,000 in earned income to qualify for maximum benefit of about $1,400. The jobs used to earn this income, including self-employment, do not necessarily lead to qualifying hours under EI. I suggest that any income used to support the receipt of the Canada workers benefit be converted to EI-eligible hours without regard to the nature of the job used to obtain that income. This will bring the self-employed who we might legitimately worry about into EI coverage, as well as others in contingent work.
If this committee were to consider recommending a considerable enhancement in the generosity of the Canada workers benefit with, say, an unconditional payment of $12,000 to $15,000—equivalent to the deep income poverty line—and a maximum benefit that lifts workers to the official poverty line, then it would have taken two considerable steps forward.
It will offer a way of significantly increasing the coverage of employment insurance for workers who need the insurance. It will also take a significant step toward establishing a basic income for single workers and those without children who need the support, much in the way that the Canada child benefit and the OAS-GIS offer a basic income to families with children and older Canadians.
Thank you, Mr. Chairman, and honourable committee members. I'm very pleased to have the opportunity to speak to you today.
The pandemic has exposed existing gaps in our employment insurance program and the need for potential EI reform to build a sustainable income support system. Today, I'd like to highlight gaps related to eligibility requirements and provide recommendations to enhance access to benefits.
Evidence shows that the pre-pandemic access conditions do not provide a broad coverage to support all Canadians who need financial assistance. For example, part-time workers, new entrants to the labour market and workers in low unemployment regions are less likely to meet minimum required insurable hours to qualify for EI.
Labour market statistics show that the crisis has affected hourly paid, low-wage workers the most. These statistics highlight the importance of recent temporary changes to EI requirements to expand eligibility and to fill coverage gaps in employment insurance by reducing the insured hours required and making enhanced requirements more similar across regions.
Several studies have previously suggested a reform to harmonize EI eligibility. One reason is that this change would provide better support for part-time workers since workers in regions with a low unemployment rate need to accumulate more hours, making it harder for part-timers to qualify.
The recent data on regular employment insurance and unemployment shows that the beneficiary to unemployment ratio, which can be seen as a measure of EI coverage, has increased by about 36 percentage points over a 12-month period to 75% in December 2020. This is a significant increase and represents high EI coverage given that a large number of unemployed Canadians, such as gig workers, do not contribute to EI.
Since the previous recession in 2008-09, the so-called gig economy and platform work have been growing, mainly due to rapid economic changes related to technological progress, globalization and demographic changes. The growth of gig and non-standard work can have an important role in a post-COVID-19 economic recovery, but there are concerns about the lack of financial security and predictability, paid sick leave and other benefits.
Previous C.D. Howe Institute research highlights the idea that Canada should focus on policies that provide proper supports for workers in non-traditional jobs—for example, through an expanded employment insurance system—while maintaining a dynamic labour market. Currently, the Canada recovery benefit attempts to address the income support challenges of these workers, but the program is temporary, while the concerns about income-related stability and uncertainty are not.
While an EI system that covers gig workers and the self-employed may be desirable, it is not clear how to build that system. For example, there are workers who have experienced substantial earnings losses without job loss, and self-employed workers whose earnings can be negative. Besides, a challenge is to define the time period in which earning losses and benefits are evaluated for eligibility of self-employed workers.
EI programs that insure various forms of unemployment need to insure earnings in a more flexible way, but this will reshape the labour market, distorting decisions of businesses, employees and the self-employed in a way that may or may not be desirable.
In conclusion, for a broader and further-reaching eligibility increase, the government needs to consider a program that offers a lower yet geographically more uniform hours-based requirement. However, more research and better data are needed to build an EI system for the 21st century that includes all forms of employment.
Thank you for your attention. I look forward to your questions.
Thank you to the witnesses for being with us today. I found your opening remarks very interesting.
I have a few questions for you, Mr. Corak. I reviewed you letter to from October 19, 2020, and I found your idea about the EI special benefits account very interesting. You touched on it a little bit in your opening remarks. I have a few questions and I am hoping you can expand on it.
My understanding from your note is that it would be similar to how individual EI premiums would be allocated to their own account, much in the same way as the Canadian pension plan, really financed on their work history. You mentioned that everyone would be free to use their account to support a period of time away from work—whenever, for whatever reason and for whatever length—subject to the balance in their account. I'm wondering how you feel this would work in another pandemic, if you feel that this would be helpful.
My point is that one of the problems with the EI account now is the people who didn't work enough to pay into it. Would we see a similar problem with your proposal, or am I missing something?
Good afternoon, colleagues.
Ms. Mahboubi and Mr. Corak, thank you for your presentations. They were very interesting.
Ms. Mahboubi, I want to talk to you first, with respect to CERB. We all know that CERB was created to give income in the quickest way possible to those who lost employment during the pandemic. I think we can all look back really remarkably with a sense of pride at how quickly it did get out to so many people.
As CERB ended, obviously there was a transition to the simplified EI program for those who were eligible, and then obviously, the CRB.
In your opinion, what would have been the consequence of continuing the CERB and not relaunching a simplified and more generous EI program?
Thank you for the opportunity to speak about that topic.
The C.D. Howe Institute published, through commentaries and intelligence memos, and talked about why it was really important to have that transition, or if we wanted to extend CERB, we needed to reform that program, because when CERB was created and introduced, the purpose was to keep people inside their houses. The purpose was for people to stop working, stop doing other things and stay at home to keep people safe.
However, as the economy and businesses started to reopen, there was a problem with CERB. It didn't create an incentive to look for employment, because as I mentioned, the majority of those individuals who lost their jobs and had seen a reduction in hours were mostly low-income individuals. Therefore, CERB was a program that was quite desirable for these individuals.
In receiving CERB without being required to look for employment, of course, it's going to create some challenges for businesses to find the right individuals to work for them. There was no requirement to look for employment.
If you wanted to stick to CERB, it had to be reformed. It needed to take into consideration several elements of the EI program. Of course, moving to the EI program was the better option when the government was ready to shift that big portion of individuals into the program.
That's absolutely correct. As I tried to outline in my opening remarks, because we have so many regions we are stretching the capacities of Statistics Canada's survey instrument to its very limit. Statistics Canada wants to give you the best signal possible, so it uses a three-month average of past unemployment rates. What we saw in this pandemic, what we saw in Alberta when the oil prices bottomed out, and also in Saskatchewan when potash prices collapsed, and what we saw in the great recession was an employment insurance system that was looking backwards. When the pandemic hit, it was still January's unemployment rate that was helping to determine eligibility for the program.
My suggestion is to make the bands that determine the eligibility rules much wider, or to cut back on the number of regions for a type of special benefit. Just use provincial employment rates or urban versus rural in a province. Statistics Canada can give us provincial employment rates on a monthly basis, and I think that would be hard-wiring a quicker, real-time facility into EI, rather than fossilizing it by being backwards-looking when important things happen quickly.
If you don't mind, I'm going to answer in English.
The government has currently—and this seems like a temporary measure—suggested that everyone should have the same eligibility rule, and my colleague from the C.D. Howe has suggested the importance of that. I'm suggesting perhaps go partway, perhaps just three ranges of unemployment rates. In that sense, Madam Chabot, that would render the regional map less significant for getting into the program, but not necessarily for the duration of benefits.
I'm not so much arguing that we should rewrite the regional map. I think that would be a political challenge. In some measure, you could render it less relevant for some aspects of the program. The regions and the regional employment rates could still determine the duration of benefits, but maybe they should play less of a role in determining entry into the program.
What I'd like to add, though, is that we should think of the Canada workers benefit as an important complement to EI for people with part-time work for partial hours, who don't otherwise qualify. We would catch them through the Canada workers benefit and then convert that income—whatever they earned—into eligible hours. Right now there is no discussion or integration between these two programs. You can easily solve the problem of the 60% of the unemployed who are not eligible for EI by offering this complementary program.
At the same time, right now what you have is a situation in which the eligibility rules vary according to each percentage change in the unemployment rate. If a region moves from 8.9% to 9%, that changes eligibility rules. A one-tenth of a percentage point change is just statistical fog. It has really no meaning, so why should it play a role in determining eligibility?
I suggest using just three bands: if the unemployment rate is less than 6%, if it varies between 6% and 10%, and if it's greater than 10%. Leave it at that.
To cover off the many people who don't qualify, that's where you would use the Canada workers benefit—which now makes automatic quarterly payments to a whole host of people—and just convert their income into hours so that they can then graduate, if you will, to the EI system.
That's a good question.
Historically it was 66 2/3%. I'm not sure where to put the number on the increase, but it should increase.
The other thing you should note is that, if they're making above the maximum insurable earnings, it's even less than that.
What does the future of work involve? It probably involves people in the service sector—relatively highly paid people—facing the kinds of risks that manufacturing workers faced in the 1990s as globalization rolled through the heartland of Ontario and Quebec and decimated work.
If you can work wherever you want, how long is it going to take for your boss to wonder whether maybe anyone can do the work you do? There will be a whole series of contracting out that could happen, putting people higher up on the wage scale at risk. When they fall into unemployment, they will find that this system—which they paid into all their lives—is going to give them 25% or less of their earnings.
You're not preparing people for the future of work if you don't offer better insurance. Increasing the benefit rate and the maximum insurable earnings is a way to do it, though I have to admit I'm not in a position to put a number on that yet. You would want to balance that with the financial constraints the government faces.
I think there is naturally a good deal of confusion about this topic. I'm confused by it as well. The way I make sense of it is that there's “basic income: the why” and “basic income: the how”.
I think everyone's agreed on the “why.” There are different rationales. We want basic income to make the administration of benefits simpler. We want basic income to fight poverty. We want basic income to foster solidarity, community and family. Those are all laudable goals. I think most people agree on them. I think where the differences come from is confusion over “basic income: the how”. When this debate began in Canada, basic income was seen as a universal payment to everybody, regardless of their station in life.
I think the basic income community has evolved tremendously and I don't think many hold that view. I am looking for something like a Canada child benefit. We have a basic income for families with children. It's called the Canada child benefit. They are looking for something like OAS or GIS. We have a basic income for the elderly. What we're missing is that important segment of our population who are in mid-life, mid-career, on their own, have had family challenges and have had work challenges. I encourage you to use the instruments available to you.
The Canada workers benefit is a nascent basic income. I would add to it an unconditional payment, just like the Canada child benefit, that would keep people above the deep poverty line, say $12,000 to $14,000 a year, depending upon region.
I would enhance the supplement for work to bring people up to the poverty line, and then I would taper off benefits as income grows further.
If the committee and the government used the instruments they have at hand, you would cover, through these different tiers, what we think of as a basic income, what economists put as a negative income tax.
It's obvious that the current EI system needs to be revised. We had people testify before committee last week.
However, we also need to recognize that the current definitions of work are outdated. It's certainly something that impacts my riding significantly. Therefore, many people fall through the cracks of the existing system. I often refer to people who are dealing, for example, with severe mental health and trauma who often end up on the streets living in destitute poverty.
We know that many populations living poor or living rough are overrepresented by women, racialized people, disabled people, indigenous people, millennials, zoomers, as well as older folks. Do you believe that another form of income insurance, as a partner to EI, would be helpful—for example, an income-tested guaranteed livable income?
You spoke a little bit about that. Can you expand on that and how a guaranteed livable basic income could work in partnership with EI?
That's exactly what I'm suggesting. Thanks for the opportunity to expand on it.
That's what I see the Canada workers benefit being. This said, people face all kinds of challenges in their lives. Money is not everything. There is an important interface with the provinces that has to happen here. I see converting the Canada workers benefit, as I suggested, into an unconditional component that is independent of your work status, and then that is tiered to the amount of income you have.
Earlier, there were issues raised about whether people file their taxes. This would only capture people who are in the system. We still need advocates for many people. We still need the provinces and the municipalities to be engaged in an important way.
This is an important area on which I think the federal and provincial governments should interface. You don't have to worry about classifying someone as a gig worker or self employed. The point is that their income is just too low. We have a poverty reduction strategy. They fall through the cracks.
In terms of creating employment income that provides support to Canadians, I would say the first parameter that we need to consider is coverage—the proportion of Canadians who could have access to EI programs when they lose their jobs, or if we're going to have some sort of modernized EI program in the future, talking not only about employment loss but maybe income loss. As I said, this is a topic that is very complicated. We need lots of investigation data to be able to think about how we can reform the EI program and about how we consider income loss.
In general, in terms of benefits, I guess a focus on coverage is more important than the amount of the benefit, because we want those individuals who don't have any other option, who don't have any income, to have access to some sort of support, rather than nothing. After we make sure that individuals receive some sort of support, we can have a better discussion about whether there is enough or not.
I believe the main parameters for reforming the EI program would be about the eligibility criteria, in terms of how it can support more Canadians, more individuals, who contributed to the program. This is something I believe is important.
In terms of, for example, regional variations, the reason that I believe we should eliminate that feature from the EI program is that, for example with remote working, we are facing changes in the nature of work. We are seeing a borderless labour market. If we are moving in that direction and we want to modernize our EI program, it means that we need to look at the way the labour market is changing and the nature of work is changing. As I said, remote working is an example. You can physically be in one location and work for an organization in a different region, a different province or even a different country. These are the questions we also need to take into consideration when we are going to reform the EI program.
Thank you for the question, Madam Falk.
The question of work incentives very much influenced the current shape of the EI system we have now. I have, perhaps, two concerns about that.
I think incentives matter when it comes to the impact on geographic mobility. As my colleague just mentioned, maybe in the future that's going to be less important.
The second is the intergenerational disincentives as, perhaps, knowledge of the program or use of the program is passed across generations in families. This is very much wrapped up with the incentives embodied in EI on the demand side of the labour market. We need to pay more attention to how firms interact with EI in order to understand the efficiency and disincentive consequences.
EI has long been a form of regional income distribution and cross-industry distribution, with the extractive and construction industries benefiting a lot more than other industries. I don't think we often recognize that, even within industries, there's always a set of firms that receives subsidies through the program. This may have an impact on the capacity of firms to grow and the efficiency of the economy in the long run. It's unfortunate that we don't pay more attention to the demand side of the labour market.
When we look at the disability issues, definitely individuals with a disability face significant barriers to labour market participation and employment. Often, even if they are employed—although it really depends on the level or severity of their disability—in general, we see that they earn less and their labour force participation is less than others in terms of employment. They face higher unemployment rates.
When we talk about regional variation in terms of unemployment rates, the unemployment rate for different populations is also different. It would be similar in all regions, because all disabled people face barriers to employment. If we have one disabled person in Ontario—for example, in Toronto—and we have another one in a different region with high employment, they both face similar barriers to employment. It will be equally difficult for them to find employment. That's why, again, it's really good to mention that we need to also think about the barriers that different population groups are facing to find employment and how the EI program can support them if they lose their employment.
I have written about the role of social assistance and how it can help attach a disabled person to the labour market. For example, currently some of the social assistance programs we have don't provide great incentives for disabled people to look for employment and to tackle their barriers. Yes, of course, it's going to be difficult for some because the challenges they are facing are significant. It's not something like zero and one—if people can work or cannot. There is some sort of spectrum here. Some people are able to participate.
When we design an EI program, we need to think about those individuals—disabled people, women and women with young children. Different types of individuals may face different barriers to the labour market.
The bottom line is that we should be worried about inequalities in our society, all sorts of inequalities, because ultimately they shape opportunities. Different types of inequalities shape opportunity in a different way.
The Great Gatsby curve is a relationship across countries in which the most unequal countries are the most class-bound countries, where it's hardest to get ahead in life and privilege is protected.
Canada, for example, is much more socially mobile than the United States, in part because of our health care system, in part because of the high quality of our education system and in part because of an open and efficient labour market that rewards talents, but it doesn't mean we don't have challenges. The Great Gatsby curve stresses the importance of fighting poverty and inequality to allow the next generation to prosper.
No, that wouldn't be my view.
Let me perhaps rephrase this. When the 1971 legislation was written, for every dollar that an employee contributed to unemployment insurance, as it was then called, the employer contributed $1.40. The reason was that, for every person who quit, there were 1.4 people who were laid off, so we were trying to tie contribution rates to who caused the separation, the employer or the worker.
Since that time, we've removed quitters from the program, but people are still paying their dollar. What has happened is that special benefits have risen in importance. All I want to do is take that dollar and give people ownership over it and let them use it in the way that's best for them. The program would still function as it is. We would just simplify and reorganize the special benefits side.
It's very good what we've done with special benefits. We never know when a child will fall ill. We never know when an elderly mother or father will fall ill. However, we never know when a teenage child will be diagnosed with schizophrenia. Are you going to start another program for that? We never know all sorts of other contingencies. Because we don't know, just give people agency over the use of their funds.
Obviously I'm also calling for a bit of a return to tripartite financing. In 1971, the federal government was a contributor to the EI fund because there was a collective risk and it should be faced collectively, just like in the pandemic it was a collective risk and the federal government had to step up to pay. Therefore, some of these special benefits need to be funded collectively as well, some fraction of them.
The program stays intact. It's just simplifying and redesigning special benefits.