I'll be making the initial presentation and then Sylvain and I will be sharing the questions.
First of all, I do want to thank the committee for being accommodating of our schedules. Sylvain has a son who is anxious that he be picked up by his father after school, so we did say to the committee that we could be here but that at least Sylvain has to be gone by 4:30. Thank you very much. I think it's really important that the committee showed this consideration.
On behalf of the Canadian Labour Congress and our over three million members across the country, we thank you for this opportunity to come and talk to you another time about unemployment insurance--or employment insurance, as some call it--because we do bring together people from all across the country, from coast to coast, in federations of labour, our affiliates, and our labour councils.
For a long time, the CLC has had three pillars in our UI campaign. We know that a lot needs to be done with employment insurance, but we've said that there are three things that need to be fixed. The first is access. The second is benefit level. The third is duration of benefits.
I'm actually not going to spend a lot of time on the question of access and level of benefits in terms of our presentation, because I want to spend more time on the duration issue. But let it be said that access is absolutely important: there's no point in having a great program that nobody can get into. We have contended for a long time that what we need to have is access of 360 hours. This bill provides for that.
We did not choose the number of 360 hours out of a hat; it's based on 30 hours a week for 12 weeks. In fact, that's actually higher than what the access rate was prior to going from “weeks accumulation” to “hours accumulation”. In fact, it was a lower threshold when you were in hours accumulation; I believe it was 15 hours over 12 weeks. So obviously we support the expansion to 360 hours for all claimants.
Similarly, in terms of level of benefits, the bill would modestly increase EI benefits to 60% of earnings calculated on the 12 best weeks over the previous year. We have to remember that the most recent 12 weeks aren't always the best 12 weeks, so that best 12 weeks is very important. We welcome this move to 60% on the basis of the best 12 weeks.
The average benefit today is very low. Nobody is having a good time on UI--if they ever did. The average is about $350 a week, which is barely enough to support even a single person above the poverty line and, quite clearly, if you are a woman who actually is able to access unemployment insurance, the average is even lower in all areas for women. By the way, again, the rates were much higher before: 70% and 66%. So we haven't even come back to where we used to be.
We want to spend most of our time this afternoon on the question of duration and exhaustees, because this is becoming a much bigger problem. It's estimated that a new claimant today will qualify, on average, for about 38 weeks or nine months of benefits. That's an average of 31 weeks before the recession, plus the extra five weeks added in the budget, plus the extra two weeks guaranteed, on average, by a rise of two percentage points in the national unemployment rate.
We know that jobs are still very hard to find. Between the start of the recession and September 2009, the average duration of a spell of unemployment has risen from 13.6 weeks to 17 weeks.
More than one in five unemployed workers in February 2010 had been out of work for more than six months, clearly placing those on EI at risk of running out of benefits in the very near future if in fact they hadn't already exhausted EI. So although there is a decrease in terms of access and an increase in terms of the level of benefits, the duration of benefits remains a concern that we think needs to be addressed.
The recession has been a stress test for the current EI system, the first test of fast-rising unemployment since the new hours-based system was introduced in the mid-1990s.
Since the crisis began in October 2008, there has been a modest rise in the proportion of all unemployed workers collecting regular EI benefits, driven by two key factors.
First, the initial stages of the downturn were marked by major layoffs of workers who had typically been in stable employment before becoming unemployed. Before the recession, proportionately more of the unemployed were new entrants and re-entrants to the workforce, who needed 910 hours of work. That really disqualified a lot of young workers, as well as parents, mostly women, who were returning to work after a leave, as well as recent immigrants.
Second, the EI system automatically responds to downturns, though with a lag. It doesn't deal with it right away, because the entrance requirements and the duration of benefits depend on the local unemployment rate. By mid-2009, the entrance requirement to qualify for EI had fallen compared to October 2008 in about 40 of the 58 EI regions, accounting for over 80% of workers.
Many workers, though, are still falling through the cracks. Again, it's primarily young workers and women. Since October 2008, the number of unemployed workers who were unemployed but not collecting regular EI benefits rose rapidly. The proportion of unemployed workers collecting benefits has jumped for men, but has barely increased for women. The BU rate between July 2008 and July 2009 went from 37% to 45% for men, but for women it went from 44.7% to 45.2%--barely even a twitch.
The proportion of unemployed workers collecting benefits remains low in many parts of our country. Part of the reason is that it's difficult to gain access when jobs suddenly disappear in what used to be a low unemployment area.
Entrance requirements in terms of hours worked continue to exclude many unemployed workers. We estimate in some of the studies that means about 160,000 unemployed workers in any given month and a much higher number over the course of a year. There was a study by HRSDC of a proposal to temporarily drop the entrance requirement to 360 hours. That would have brought about 184,000 more workers into the system over a year, at a cost of $1.14 billion.
As proposed in this bill, the CLC believes that the 360-hour threshold should also replace the 910-hour requirement imposed on new labour force entrants and re-entrants, because that really excludes recent immigrants and may account for why so many unemployed workers in Toronto and Vancouver are ineligible for benefits.
On top of unemployed workers who never qualify for benefits, many unemployed workers collect benefits for a while but exhaust a claim before finding a new job. Workers who entered the EI system in the early stages of the crisis, in 2008, were starting to run out of benefits in significant numbers by the fall of 2009. The number of exhaustees, we predict, will soar in the months ahead. You have figures there about what the percentages were in terms of people who exhausted their benefits before the recession and after.
It's estimated that a new EI claimant today will, on average, qualify for about 38 weeks or nine months of benefits. That was an average of 31 weeks before the recession--again, plus the extra five weeks added in the budget, plus the extra two, and so on. We think the total number of new regular EI claims in 2009 will hit about two million. If the exhaustion rate remains the same, we could eventually see 500,000-plus people and their families with exhausted claims in late 2009 and into 2010.
At this point in the recession, as I've said, jobs are still very hard to find. Between the start of the recession and September 2009, the average duration of a spell of unemployment had risen from 13.6 to 17 weeks, and more than one in five unemployed workers in September had been out of work for more than six months. I know that some of this was referred to earlier, but I think it bears repeating.
The CLC has called for improved access to 50 weeks of EI regular benefits. We want to make it clear that if the majority of MPs come to an agreement on this bill, we wouldn't want our position on the question of duration of benefits to stop the increase to more access and improved benefits, which are the two improvements I referred to earlier.
We still believe, though, that the benefits need to be paid longer to better protect Canadians and the Canadian economy from the consequences of an economic downturn like the one we are in now.
We urge you to support this important and progressive piece of legislation. Once it has passed, I think we need to come back to the duration issue and deal with it for all those people who are being excluded now.
I went very fast; my apologies to the interpreters. They have the English copy of the document. We will get you the French translation within the next couple of days.
Welcome to both of you. I guarantee that I won't hold you up from picking up your son; that's priority number one. I wish I were home to pick my son up too.
I want to just chat a little bit about some of the initiatives in this bill, which has been brought forward by one of our more distinguished parliamentarians, who shall remain nameless throughout the committee today. As we often say about employment insurance, there are a lot of things that can be done to make the system stronger and better for more employees. I suppose you can make changes that would benefit employers as well; I think we have to bear in mind both sides. This bill refers to a number of them.
I want to reference something the Library of Parliament did for us—I think for us, or perhaps for me—back in March, in which they compared our employment insurance system to those of some other countries, particularly countries in Europe.
For example, on a waiting period, in Canada, as you know, we have a two-week waiting period. They call it a “waiting period”; it's really a “you're out of luck period” for people who are out of work. Denmark has no waiting period; Finland has seven days; France has eight days; Germany has no waiting period; and Sweden has five days. We make people wait a lot longer to get benefits than other countries do.
On benefit duration, outside of what has happened on stimulus in countries, in Canada, as you know, the benefit duration is between 14 and 45 weeks. In Denmark, it's up to four years; in Finland, it's 500 days; in France, benefits are paid for a minimum of six months; in Germany, it's from six months to a maximum of 18 months; and in Sweden, it's 300 days, but it can be extended for 150 days.
There is a whole range of areas. For example, if you look at the benefit level, we have 55% of average weekly earnings. And you're right: it used to be as high as 70% back in the seventies and probably the early eighties. Denmark has 90%; Germany has 67% if you have a child and 60% if you don't; and Sweden has 80% for the first 200 days and 70% for the period after that.
The message here is that our EI benefits... We often compare ourselves only to the United States, particularly to some states where the benefits aren't as strong; in other states they're stronger. There are a lot of ways in which you can make the case that we need to invest, particularly in times of stimulus, but even without, when you're talking about stimulus, you need to invest.
On the stimulus side, there is a lot of evidence indicating that EI is the best form of stimulus, that in fact you're giving money to people who (a) need it and (b) will spend it. The famous study that gets quoted a lot indicates that there is a benefit of $1.61 for every dollar that's spent, so I think there is a lot more that could have been done on EI.
I guess my first question is on whether your organization has any updated estimates of the cost of any of these components.
:
The maximum is $440 or something like that, so we're not talking about an awful lot of money here.
I've been watching what's been happening in the United States. They've extended benefit periods in some areas. You're starting to hear some lawmakers making the kinds of comments we've heard on occasion here in Canada: that EI's becoming too lucrative and that you're paying people to stay at home and all that sort of stuff. I think the way that's often said is very offensive to people who are almost never on EI because they want to be, by and large, but because they have to be. They don't go there by choice.
It was suggested last year that if we went to a national standard of hours you would then have people who would want to go on EI, who would go out of their way to do it, which is a ridiculous thing when you take into account the first thing, which is that you have to be fired. You can't quit your job and collect benefits; that's just not the case. So to go on EI, to take advantage of what they would call a liberalization of EI, you would have to wait until you were fired to get a measly amount of benefits for a short period of time.
I want to ask you a tough question. I know that you don't like this question and I may have asked it of you before. If you're looking at employment insurance, there are a number of things you can do.
You can eliminate the two-week waiting period, which is not in this bill, but was in 's bill, I think. Extending benefits is here. Increasing the rate is here. You can base it on the best 12 weeks, which isn't here.
Standardizing nationally, getting rid of the regional rates, eliminating distinctions between new entrants and re-entrants, increasing maximum yearly insurable earnings, and further increasing the amount of money somebody can make from EI without it being clawed back from their EI: there are a number of things we can do.
And there is a balance here between cost and benefit. Without me holding you to this, I'd like to know what the order would be in which you would make these changes if only so much money were available. Notwithstanding the $57 billion, I understand we're not going to go there--
:
No, I'm not dying to get in, and I hope I'll survive it.
The first thing, of course, is that in order to find a job you need resources. You need...[Technical Difficulty--Editor]...to pay for your phone bill. You need to be able to go to the public library to get access to the Internet to find out what's available. You need to be able to buy the local newspaper.
If you're out of EI benefits, and if you're in a situation where you're not quite eligible for social assistance in your province, what kinds of resources can you put into looking for a job today?
We're really worried about a lot of Canadians right now who are exhausting their benefits. We've been to communities and we've talked to workers through our research projects and our ongoing activities. When we say to them, okay, you're unemployed, and we ask them what happened, they say every time that they were forced to collect EI. That's the first thing. The second thing they do is ask what they are going to do after that, because there are no jobs in their communities.
I was in Miramichi last summer, where the manufacturing base has been destroyed. There were four or five major plants. One of the largest pulp and paper mills is being completely demolished right now. Three thousand jobs have disappeared in that community. People know they're going to run out of benefits. They know there are no jobs in town or in the province. Going to Alberta is no longer the option it used to be.
What are we going to do for them? The extended benefits they're entitled to because of the reforms that have been put in place are going to run out as well. They're not going to have the resources to look for jobs.
One of the things we've been saying about how to rebuild is that we need an industrial policy. How do we create the next jobs? Where do we create them? Can we achieve that? We have ideas. We know what to do.
There are ideas being proposed in that community right now. One is how to use the resources there to restart something, to transform the local resources into energy, for instance. There are proposals on the table, but they're not being examined because there's no industrial strategy.
There are other things that we've proposed, such as procurement policies that would initiate jobs in Canada, and green policies that would create jobs today and provide a better, greener economy in the future.
So there are ideas out there. We just need to move forward and implement them.
:
Good afternoon. I have provided the clerk with a copy of my remarks and I had one given to the person who is doing the translation.
I apologize for being late. I had several family issues I had to deal with today.
In any event, I am John Farrell, executive director of Federally Regulated Employers--Transportation and Communications. I thank you for allowing me to appear before the committee.
FETCO is an organization consisting of a number of major employers and employers associations in the federal jurisdiction in the transportation and communications sectors.
A list of FETCO members appears in appendix A of our document, which you don't have, so for the record, the companies that are represented by FETCO include: Air Canada; the BC Maritime Employers Association; Bell Canada; Canada Post Corporation; Canadian Airports Council; Canadian Association of Broadcasters; Canadian Broadcasting Corporation; Canadian National Railway; Canadian Pacific Railway; Canadian Trucking Alliance; FedEx; Maritime Employers Association; Nav Canada; Purolator; Telus; Western Grain Elevator Association; WestJet; and VIA Rail Canada.
FETCO has approximately 586,000 employees, of which 212,000 are union members.
Bill proposes to extend the qualifying period for employment insurance benefits by the period of time that a labour dispute, either a strike or lockout, is in progress. Currently, the Employment Insurance Act does not permit employees to count this time, which is indefinite, as part of the qualifying period.
Strikes and lockouts are permitted by the labour laws in all jurisdictions in Canada as a means for parties in collective bargaining to exercise economic leverage to achieve their collective bargaining objectives and determine the terms and conditions of employment. When a strike or lockout occurs, one party or the other is not willing to accept the proposed terms and conditions of employment. The strike is considered a fundamental right by unions.
Strikes are far more prevalent than walkouts. According to data I have secured from HRSDC, 83% of work stoppages over the last 15 years have been strikes and 17% were lockouts. Lockouts are seldom used by employers because, fundamentally, employers are interested in continuing to operate their businesses, not shutting them down.
Employees engaged in a strike do so of their own free will. They withdraw their services in order to inflict economic leverage over their employer to accomplish their collective bargaining objectives. Union members have choices. They vote to provide their union with a strike mandate. They vote to reject or accept a company proposal for a settlement. They vote on whether or not to engage in strike activity.
In a strike situation, union members exercise discretion to remove their services and not to engage in gainful employment with a particular employer. While on strike or lockout, employees are usually entitled to receive strike pay, and this strike pay is not taxable. Contributions as employee union dues are tax deductible, and when employees receive strike pay they're not required to pay tax on that strike pay, so in a sense they are receiving tax-free income while they're receiving strike pay.
In some cases, employees are entitled to receive as much as $400 or $500 a week in strike pay, which, on a tax-free basis, is quite extensive. This doesn't happen in all cases, but with certain unions that have a habit of subsidizing strike activity from one bargaining unit to another, such as the Communications, Energy and Paperworkers Union, sometimes the strike pay can be as high as $400 or $500 per week.
Employees are also free to seek gainful employment with other employers while they're on strike or lockout.
In the case of a lockout, it is clear that the company initiates the action. Usually a lockout occurs because the employer has economic or operating imperatives that must be met for the good of the business, and unions and employees are unwilling to accept the terms and conditions of employment.
In some cases, lockouts are required to counteract disruptive union tactics, such as costly rotating strikes, or threats to the business if a strike is likely to occur at an inopportune time and could cause severe economic harm to the business. In other words, lockouts are generally used by employers in response to potential strike activity as a tactical defence to manage the business in a way that is most appropriate for the company.
Lockouts, like strikes, are also discretionary. There's no doubt about that. Lockouts are part of the process permitted by the labour laws, just as strikes are.
Permitting employees on strike or lockout to extend their entitlement to employment insurance benefits will substantially reduce the incentive for employees to seek a compromise in the case of lengthy strikes.
There are situations covered by the Employment Insurance Act where the current qualifying period may be extended. They include, as you probably know: illness; injury; quarantine; pregnancy; confinement to a prison or jail; and when someone is receiving certain assistance under employment benefits programs or is receiving benefits under provincial law on the basis of having to cease working because continuing to work would result in danger to a person, unborn child, or a child that is breastfeeding.
These situations are not discretionary, unlike the situation with respect to strikes, and it makes sense for the legislature to extend the qualifying period in these non-discretionary circumstances.
Furthermore, employment insurance is a program supported by employers and employees, both union and non-union. Employers pay 58% of the premiums. EI provides benefits to employees who are temporarily unemployed through no fault of their own, not because they are engaged in a labour dispute over the terms and conditions of employment. This is unfair to employers and non-union employees, both of whom are contributing premiums to the employment insurance fund.
It is appropriate for the qualifying period to be 52 weeks and it is appropriate to have reasonable proximity in timing between gainful employment and the receipt of benefits. Striking or locked-out employees are out of the labour market because of a labour dispute, not because they are unemployed and actively seeking employment. Furthermore, employees on strike or lockout are free to seek alternate employment and are also entitled to receive tax-free strike pay while on strike or lockout.
Extending the qualifying period indefinitely for the period of a strike or lockout is unfair to employers. It is contrary to the long-standing principle that employment insurance should remain neutral when it comes to labour disputes.
Madam Chair, that is the extent of my remarks to the committee.
:
Thank you, Madam Chair.
Welcome to our meeting this afternoon.
I just want to check a couple of things. This bill applies only to those people who would lose their jobs after a strike is over; it would not apply to everyone en masse. If for any reason people are laid off after going back to work following a strike, that's when it would apply. I suspect the number laid off probably wouldn't be very large unless the company was shutting down one way or another.
I understand that you say these strikers have a vote, but you and I know what the difficulties of negotiations are. Sometimes it's not a matter of choice; you get to impasses. It's not as if the workers always have a choice. I've seen it on both sides. But can you tell me why you object to their receiving assistance? That's one question. This bill only covers them after they become unemployed.
The other question deals with your point that they can get employment elsewhere. However, that employment would be considered in any case in the EI process, so that if they were to earn a full-time salary, that period wouldn't be counted. It would be considered in the equation and would cancel itself out. It's not an issue for this bill in that sense, I don't think.
I have another question for you, but could you just touch base with me on what your major issue is with people who have actually been on strike and then go back to work but lose their jobs? Then, of course, depending on how long they've been off work, they also lose that period.
:
Thank you, Madam Chair.
When you started, you talked initially about bills needing to be neutral because there are two sides to a labour dispute, and normally when you're dealing with unemployment or employment insurance, there are causes that are essentially external to the parties. But in this case, you have an employer and employee who each have a vested interest.
Certainly, each--the employer and employee--pays into EI, and the employer more so, at 1.4% or whatever, so when you have a bill such as this one...and what's peculiar about is that it wants to make this effective as of January 1, 2008, to sort of go to it retroactively. The reasonable assumption would be that if you go retroactively it's going to expend benefits that didn't exist and therefore will be a charge on the EI account, for which employers and employees would be responsible.
The way I would see it is that, before this legislation, there were certain employees who would not be entitled to the benefit, and therefore there wouldn't be a charge on the EI account for which the employer and the employee would have to pay. After this bill, there would be an additional charge to the EI account, for which both would have to pay their relative proportions. To that extent, it would force both sides to the dispute to pay in, when only one side benefits, and therefore would impinge on the neutrality that should be taken in labour disputes. Would you agree with me on that? Is that what you find objectionable?
Outside of the issue that this particular bill wants to make it retroactive to 2008 to cover a specific situation, which I think is always a questionable thing to do when you're dealing with laws that will be of general application, the central point to all of this is that in a labour dispute you have two sides, and one should be neutral in that. Because each party has some decision-making powers as to whether a strike happens or doesn't, and whether it continues or doesn't, it's within their power.
In fact, as I recall it, Mr. Sims, in the Sims report, heard all of the stakeholders, all of the employers, employees, and third parties who might have been affected, and came up with some suggestions for what ultimately became the Canada Labour Code, which tries to balance the rights in a fairly delicate fashion. It takes all kinds of things into account. And we've come up with what we now know as the Canada Labour Code. Beyond that, one tries not to involve oneself in a dispute.
Now, would you say, from what you see in the Canada Labour Code, that there was this balancing situation between employee and employee and that one should not cherry-pick, adding or subtracting one thing from it, without looking at the big picture?