FEWO Committee Report

EXPANDING THE EMPLOYMENT INSURANCE MATERNITY AND PARENTAL BENEFITS TO SELF-EMPLOYED WORKERS

The Committee did not have the opportunity to explore the full range of issues confronting self-employed workers and other contingent workers. It did hear compelling evidence, however, that by failing to provide Employment Insurance maternity and parental benefits to self-employed workers, the Employment Insurance program was depriving a considerable segment of the population of the potential to benefit from the program. The Committee believes that maternity and parental benefits are not only economic, but also social in nature. According to a departmental official of HRSDC:

Obviously the policy rationale for these benefits is both social and economic. It's part of the government's commitment to support parents during the first year of a child's life and a recognition that the support is very crucial in terms of the child's future development. It also increases choices, reduces work-life stress, and helps persons maintain a labour force attachment, making for an easier integration back into jobs after having children. ^[18]

The Committee feels it is unjust that many contingent and self-employed workers in Canada are deprived of this valuable support during the first year of a child's life. The Committee regrets that it did not have the opportunity to explore the mechanics of a program which could expand benefits to self-employed workers; however, the majority of witnesses who appeared before the Committee urged it to consider an expansion of the maternity and parental benefits model which Quebec will initiate in January 2006 (see Appendix A and Appendix B) to the rest of the country.

THE PROPOSED QUEBEC MODEL EMPLOYMENT INSURANCE RECEIVES MUCH SUPPORT

In 2001, the Quebec National Assembly passed an Act respecting parental insurance. The implementation of this program required that Quebec acquire control of its share of funds from the federal Employment Insurance program —

a requirement which was met in March 2005 when the governments of Canada and Quebec signed a final agreement on Quebec's parental insurance plan. Under this agreement, the Government of Canada reduces Employment Insurance premiums of workers and employers in Quebec so that the Government of Quebec can collect premiums for its own program. Quebec's Act respecting parental insurance outlined a number of significant changes to the provision of maternity and parental benefits in that province, including a change to the eligibility criteria so benefits would be more accessible to part-time or self-employed parents, an enhanced level of benefits and a new paternity benefit offered exclusively to new fathers. The new Quebec program will come into force for all children born on or after 1 January 2006.

The Committee would have liked to hear about both the economic benefits and the financial implications involved with moving toward a Quebec model of maternity and parental benefits. The Committee also recognizes that the extension of maternity and parental benefits to self-employed workers would benefit the self-employed, their families, and their businesses as well as the Canadian economy as a whole. It would provide their children with a good start. Dr. Hughes identified the benefits of such an expansion as follows:

First, it will bring policy in line with current labour market realities and ensure that workers are treated more fairly than is currently the case. Second, it will contribute to the health of the small business sector by supporting those who are building businesses while also raising young families. And third, it should contribute to the improved work-life balance, which is a key issue that's facing many industrialized nations, including Canada. ^[19]

Human Resources and Skills Development Canada told the Committee that it had the technical ability to “successfully manage” the question of determining a premium rate for the self-employed. ^[20] The Committee felt that a proper cost-benefit analysis would be helpful in considering the viability of expanding Employment Insurance maternity and parental benefits to self-employed workers. As a result, the Committee recommends:

RECOMMENDATION 1

That the government develop a framework for extending maternity and parental benefits to self-employed workers under the EI program and examine other program models which could provide maternity and parental benefits to self-employed workers. The Committee requests that these models include:

1. conducting a cost-benefit analysis of applying the features of Quebec maternity and parental benefits program throughout Canada; and
2. developing options for financing such a system;
3. exploring options to increase the benefit rate for maternity and parental benefits;

In regards to the Employment Insurance program specifically, the Committee further requests that the government provide it with information on

4. the costs and benefits of increasing the maximum insurable earnings level from the current level of $39,000 and
5. options to introduce greater flexibility in maternity and parental benefits under Employment Insurance.

As it considers these questions, the Committee urges HRSDC to take into consideration the diversity of self-employed workers, and to be mindful of the particular needs of low-income self-employed workers, as well as their limited ability to pay large premiums. It also reminds HRSDC that many contingent workers combine self-employment with employment, and thus urges the Department to take this modern-day labour force reality into consideration in its cost-benefit analysis.

QUALIFYING HOURS

Human Resources and Skills Development Canada told the Committee that

in terms of regular benefits, the unemployment rate is another important consideration in terms of EI's responsiveness. For regular benefits, access is very much enhanced and durations are longer where the unemployment rate is high and vice versa in areas where it takes less time to find employment, but with as little as eight hours of work per week, someone can qualify for regular benefits. ^[21]

Eligibility for the maternity and parental benefits under the Employment Insurance program requires 600 insurable hours in the previous 52 weeks or since the applicant's last claim, even in regions where fewer than 600 hours are required to qualify for regular benefits. In other words, although the Employment Insurance regular benefit system is responsive to local labour market realities, the special benefits under Employment Insurance are not. This unduly penalizes those who live in areas of high unemployment. The Committee wishes to make Employment Insurance special benefits, including maternity and parental benefits, available to more workers. As a result, the Committee strongly recommends:

RECOMMENDATION 2

That the number of hours required to be eligible for Employment Insurance special benefits be the shorter of:

• the 600 hours currently required to be eligible or
• the insurable hours required in the applicant's region to qualify for regular Employment Insurance benefits.

UNPAID WAITING PERIOD

Witnesses told the Committee that the two-week waiting period for maternity and parental benefits was a hardship for workers, particularly low-income workers.

The two-week wait period should be removed in light of the fact that low wage workers do not have savings to rely on and that no one, especially women on maternity leave, should be expected to go two weeks without any income. ^[22]

The Committee heard from the department of Human Resources and Skills Development Canada that the two-week waiting period was due to the

co-insurance nature of the Employment Insurance program. The Committee did not have the opportunity to hear the perspective of other funders of the Employment Insurance program, such as employers, on this question. Members of the Committee were of the opinion, however, that maternity benefits are not the same as regular Employment Insurance claims, where one would assume there would be elements of co-insurance and sharing of a risk. As a result, the Committee recommends:

RECOMMENDATION 3

That HRSDC remove the two-week waiting period at the beginning of the benefit period for the receipt of maternity and parental benefits, thus making applicants eligible for benefits during the entire 52 week period covered by Employment Insurance.

CONCLUSION

The new realities of the labour force create new challenges for programs such as the maternity and parental benefits provisions of the Employment Insurance program. The Committee has heard that the needs of self-employed are varied and need to be considered in the wider context of the needs of contingent workers.

The Committee feels that the new maternity and parental benefit program being introduced in Quebec creates an exciting model to be explored at the federal level. A witness told this committee that “we need to be really creative about encouraging people to participate in the workforce at the same time they're having children.” ^[23] The Committee encourages the government to show creative leadership in addressing some of the gaps which currently prevent people from fully benefiting from the EI maternity and parental benefits, in moving forward on a model to adapt the maternity and parental benefits to the changing workforce, and in recognizing the importance of offering a good start to all children.