HUMA Committee Report

EMPLOYMENT INSURANCE GOVERNANCE AND
THE ROLE OF THE CANADA EMPLOYMENT
INSURANCE COMMISSION

            The Canada Employment Insurance Commission (CEIC) is a “departmental” corporation listed under Schedule II of the Financial Administration Act. It is made up of four commissioners. The Chair of the Commission is the Deputy Minister of Human Resources and Skills Development. The Vice-Chair is the Associate Deputy Minister of Human Resources and Skills Development. Obviously, both of these positions represent the interests of the government. A third commissioner represents the interests of employers and a fourth commissioner represents the interests of employees. The latter two commissioners are appointed by the Governor in Council for a period of five years, following consultations with organizations representing premium payers. The commissioners representing employers and employees are supposed to represent their respective constituencies by providing the Department with feedback pertaining to policy development, and program implementation and delivery. Some witnesses advised the Subcommittee that this consultation process is sometimes wanting, as some EI policy reforms have been introduced in the absence of effective consultation. The Committee believes that the commissioners representing employers and employees and their respective constituencies must be kept adequately informed of proposed changes in EI policy and that sufficient time must be given to conduct meaningful consultations in this regard.

… let’s not make political decisions. Let’s not say, okay, we’re going to give extended parental leave for a year, without knowing what the implications are on half the economy that have four or five employees and lose three or four people, they’re devastated. (Garth Whyte, Canadian Federation of Independent Business)¹

… you have to have consultation. If you’re going to change the purposes of the fund, add in a parental leave, you have to consult on that. (David Stewart-Patterson, Canadian Council of Chief Executives)²

            CEIC’s mandate is essentially to assist Human Resources and Skills Development Canada (HRSDC), the Department responsible for administering the benefit provisions under the Employment Insurance Act.³ With the help of HRSDC staff, the CEIC assists the Department by making regulations; monitoring and assessing the Employment Insurance Act each year; appointing members of the boards of referees, the first level of appeal regarding benefit eligibility; and, until 2001, setting the annual premium rate subject to the approval of the Governor in Council on the recommendation of the Minister of Finance and the Minister of Human Resources and Skills Development.

            Most of the witnesses who appeared before the Subcommittee expressed the desire to create a more independent CEIC or another entity that operated at arm’s length from the government. Committee members agree that CEIC’s independence needs to be bolstered, but most of us are hesitant to promote absolute independence in the context of an arm’s-length organization. In addition to the fact that, we along with many of our witnesses, would like to see the tripartite configuration of the current Commission continue, complete independence could entail a certain amount of operational inertia given the dichotomy of views that exists among the primary stakeholders of this program. If employer and employee interests are to be equally represented, some mechanism is necessary to break the inevitable deadlock that we suspect would prevail in a bipartite governance structure.

Right now essentially you have a worker and an employer commission that has very little power in regard to its responsibility. Most of the powers have been taken away. We believe the government has to be a central part of the EI fund … But as to how you’d set up that structure to ensure it meets our commitment, the devil will be in the details, but we’re clear that we want to see the government remain as a critical part of it, including both workers and employers. (Hassan Yussef, Canadian Labour Congress)⁴

            Committee members support a continuation of tripartite representation. However, we do not support a continuation of the government’s dominance in the Commission’s current organizational structure. Rather, we believe that as the sole contributors to the EI program, employees and employers must be given a much stronger voice in EI program management and policy decisions.

            In the view of most Committee members, the Commission must be transformed from its current status as a departmental corporation (akin to a branch of the Department of Human Resources and Skills Development) to a federal government enterprise that offers far more independence and authority to be a real partner in EI governance, especially in terms of overseeing a real EI fund and the restoration of its rate-setting responsibilities. The new EI Commission must also be given a more meaningful role in influencing EI policy decisions. While the Committee acknowledges the government’s primary policy-making role in this regard, those who finance EI must have a stronger voice in influencing the future direction of this very important program. The new Commission must be given the authority to establish its own budget and hire staff, including a chief actuary.

Recommendation 1

The Committee recommends that, in 2005, legislation be tabled in Parliament that would create a new entity called the Employment Insurance Commission. The proposed Employment Insurance Commission would be given the statutory authority to manage and invest employment insurance revenues in the proposed Employment Insurance Fund Account and to transfer these revenues, as required by law, to the Consolidated Revenue Fund in order to cover the cost of employment insurance. This new Crown corporate entity should be governed by commissioners who broadly and equally represent employees and employers. The government should also be represented in the proposed Employment Insurance Commission. The Chair and Vice-chair of the Commission should rotate between employer and employee representatives after serving a two-year term. Commissioners would be appointed by the Governor in Council following consultations with groups representing employment insurance contributors. The operations of the Commission and the funds under its management must be fully accounted for and reported in accordance with generally accepted public sector accounting standards. The Commission should have the authority to make recommendations to the government.