Introduction

The Employment Insurance (EI) program is a complex, multi-faceted program that constitutes a key part of Canada’s social safety net. In spring 2020, labour market disruptions related to the coronavirus disease 2019 (COVID-19) pandemic led to the loss of 2.9 million jobs from Canada’s economy.[1] This resulting increase in the number of Canadians requiring rapid financial support shone a spotlight on long-standing issues within the EI program, reinforcing the importance of having an accessible, adequate, and agile income replacement system that is built for the 21st century labour market.

On 28 October 2020, the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities (the committee) adopted the following motion:

That, pursuant to Standing Order 108(2), the committee undertake a study on the review of the Employment Insurance program; that the committee invite the Minister of Employment, Workforce Development and Disability Inclusion to address that subject; that the committee hold a minimum of five meetings on that matter; and that the committee reports its finding, including its recommendations to the House.[2]

The committee previously studied the EI program during the 1^st Session of the 42^nd Parliament. On 15 June 2016, the committee tabled its report, Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program in the House of Commons.[3] In addition, the 2015 mandate letter to the Minister of Employment, Workforce Development and Labour tasked the minister with “undertaking a broad review of the EI system with the goal of modernizing our system of income support for unemployed workers that leaves too many workers with no unemployment insurance safety net.”[4]

As a part of the present study, the committee held 7 meetings between 18 February and 22 April 2021, hearing from a total of 31 witnesses, including representatives from federal departments, labour organizations, advocacy groups, and business. The committee also received 34 briefs.

Committee members appreciate the insights shared by the various participants, and would like to thank sincerely all those who appeared before the committee or submitted briefs. In this report, the committee provides an overview of what it heard and reports on its findings.

Chapter 1: Overview of the Employment Insurance Program

The Employment Insurance (EI) program is an insurance-based program that operates under the jurisdiction of the federal government. Implemented in 1940, the EI program is designed to provide temporary income support in the event of a job loss (through regular benefits) or other life events such as the birth of a child, sickness or the need to care for a gravelly ill family member (through special benefits). The EI program also offers employment assistance through various programs and services, including those delivered by the provinces and territories under the Labour Market Development Agreements. In addition, the EI program provides supports for workplaces facing a temporary decrease in business activity beyond the control of the employer. EI benefits, support measures and program administration costs are financed by employee and employer contributions.[5] EI benefits are summarized in Appendix B to this report.

The EI program’s parameters are primarily set out in the Employment Insurance Act (EIA),[6] the Employment Insurance Regulations,[7] the Employment Insurance (Fishing) Regulations,[8] and the Insurable Earnings and Collection of Premiums Regulations.[9]

The Canada Employment Insurance Commission (CEIC) is responsible for overseeing the EI program. It is comprised of a chairperson (the Deputy Minister of Employment and Social Development Canada or ESDC) and a vice-chairperson (the Senior Associate Deputy Minister of ESDC) who represent the interests of government, as well as a Commissioner for Workers and a Commissioner for Employers, who are appointed by the Governor in Council and represent the views of labour and business. ESDC and Service Canada carry on the administration of the EI program on behalf of the Commission.[10]

Key Employment Insurance-Related Measures Introduced in Response to the COVID-19 Pandemic

In order to mitigate the economic effects of the COVID-19 pandemic, the federal government introduced a series of temporary measures in 2020 and 2021 to support eligible workers. Initial measures came in the form of the Canada Emergency Response Benefit (CERB), which was introduced to help workers who ceased working for reasons related to COVID-19 with $500 a week for up to 28 weeks, during the period from 15 March to 3 October 2020. The CERB was administered jointly under the Canada Emergency Response Benefit Act[11] (in relation to workers not eligible for EI) and under the EIA as the EI Emergency Response Benefit (EI ERB).[12] As a result, new claims for EI regular and sickness benefits made during this period were processed as claims for the EI ERB, while claims made prior to 15 March 2020 were processed under the traditional EI rules.[13] The government introduced these measures with the objective of temporarily simplifying the EI program and broadening the eligibility in the face of an extraordinary volume of claims.[14]

Following the phase-out of the CERB, the federal government authorized the payment of three temporary recovery benefits under the Canada Recovery Benefits Act[15] for workers affected by the pandemic who are not entitled to EI benefits: the Canada Recovery Benefit, the Canada Recovery Sickness Benefit and the Canada Recovery Caregiving Benefit. At the time of the committee study, these benefits were scheduled to be in place until September 2021.[16]

The federal government also introduced a series of measures with the objective of facilitating access to the EI program.[17] Amendments to the EIA introduced via interim order have, among other aspects, set the minimum unemployment rate used to calculate EI regular benefits at 13.1% for all regions across Canada, such that claimants are eligible for a minimum of 26 weeks of EI regular benefits, with their benefit rate calculated based on their 14 highest weeks of earnings over the qualifying period.[18] Amendments have also provided a one-time top-up of insurable hours, such that claimants only need 120 hours to qualify for EI regular and special benefits.[19] In addition, the need for a medical certificate to access EI sickness benefits has been waived, and the CEIC now has the flexibility to waive this requirement in relation to compassionate care and family caregiver benefits. A minimum benefit rate has also been set at $500 per week for most EI benefits (or $300 per week if claiming extended parental benefits).[20] At the time of the committee study, these measures were scheduled to be in place until September 2021.[21]

The EIA has also been amended to temporarily increase the maximum number of weeks for which EI regular benefits may be paid to 50 weeks. In addition, the 2020 insurable earnings threshold for self-employed persons to qualify for EI special benefits in 2021 has been temporarily lowered from $7,555 to $5,000. At the time of the committee study, these measures were scheduled to be in place until September 2021.[22]

During his appearance before the committee, ESDC representative Andrew Brown spoke about the department’s plans regarding reforms to the EI program. He indicated that once the pandemic subsides, there are plans to move forward with further measures to reform the EI program, particularly those highlighted in the mandate letter of the Honourable Carla Qualtrough (Minister of Employment, Workforce Development and Disability Inclusion).[23] Notably, the 2019 mandate letter tasked the Minister with strengthening the EI program, including by extending EI sickness benefits from 15 to 26 weeks, introducing a 15 week leave for adoptive parents, and improving access to EI benefits for workers in seasonal industries.[24] In addition, during the course of the committee’s study, the federal government tabled its budget containing proposals related to the EI program.[25] Relevant Budget 2021 proposals will be explained in greater detail in Chapter 2.

Labour Market Conditions and Recent Trends in Employment Insurance Accessibility

During her appearance before the committee, Statistics Canada representative Josée Bégin indicated that the COVID-19 pandemic has caused “unprecedented” job losses in Canada. She explained that while the unemployment rate stood at 5.7% in February 2020, by May of that year this figure had almost tripled, reaching 13.7%. She acknowledged that the labour market has improved since that time but stated that most labour market indicators have not yet returned to their pre-pandemic levels. The unemployment rate stood at 9.4% in January 2021.[26]

Figure 1 illustrates both the unemployment rate (dark blue line, right axis) and the number of regular EI beneficiaries (light blue line, left axis). The number of regular EI beneficiaries is a function of both the unemployment rate and the measures introduced to respond to the COVID-19 pandemic. The figure shows the number of regular EI beneficiaries decreasing sharply in mid-March 2020 when the EI ERB and CERB are introduced. Regular EI beneficiaries then increase dramatically in October 2020 when EI ERB and CERB are ended and new rules are introduced that lower the number of insurable hours of work needed to access regular EI benefits.[27] Starting at the beginning of 2021, the graph shows that the unemployment rate is falling at the same time as the number of EI regular beneficiaries is increasing.

Figure 1—Regular Employment Insurance Beneficiaries

Source:  Statistics Canada, “Employment Insurance, February 2021,” The Daily, 22 April 2021.

Statistics Canada provided the committee with a comparison of EI accessibility rates (broken down by province, sex and age) before and after measures temporarily lowering the number of insurable hours. This data, which is illustrated in Tables 1 to 3 below, show an increase in the proportion of people qualifying for EI regular benefits following the introduction of the measures.

Table 1—Number and Proportion of Regular EI Beneficiaries Qualifying Under the New Rules, by Geography

	Number October 2020	Proportion October 2020	Number January 2021	Proportion January 2021
Canada	135,440	11.3%	231,260	13.5%
Newfoundland and Labrador	3,890	9.4%	9,210	16.8%
Prince Edward Island	1,040	10.4%	2,030	13.7%
Nova Scotia	4,820	11.1%	8,330	15.0%
New Brunswick	5,680	12.4%	9,400	15.2%
Quebec	37,170	14.5%	67,260	15.5%
Ontario	45,860	10.9%	77,160	13.0%
Manitoba	4,200	12.0%	7,680	13.9%
Saskatchewan	3,560	11.5%	5,670	13.3%
Alberta	13,200	8.2%	21,450	9.9%
British Columbia	15,410	10.6%	22,120	12.6%

Source:  Statistics Canada, Employment Insurance Statistics (EIS), custom tabulation.

Table 2—Number and Proportion of Regular EI Beneficiaries Qualifying Under the New Rules, by Sex

	Number October 2020	Proportion October 2020	Number January 2021	Proportion January 2021
Both sexes	135,440	11.3%	231,260	13.5%
Males	66,180	10.8%	116,330	12.4%
Females	69,260	11.9%	114,930	14.9%

Source:  Statistics Canada, Employment Insurance Statistics (EIS), custom tabulation.

Table 3—Number and Proportion of Regular EI Beneficiaries Qualifying Under the New Rules, by Age

	Number October 2020	Proportion October 2020	Number January 2021	Proportion January 2021
15 years and over	135,440	11.3%	231,260	13.5%
15 to 24 years	33,550	19.3%	60,400	21.8%
25 to 54 years	71,200	9.9%	118,070	11.8%
55 years and over	30,690	10.1%	52,790	12.3%

Source:  Statistics Canada, Employment Insurance Statistics (EIS), custom tabulation.

Statistics Canada informed the committee that employment rates are down significantly from pre-pandemic levels in certain service industries, such as accommodation and food services as well as culture and recreation. In terms of labour market demographics, visible minorities and youth have been disproportionately affected by pandemic-related labour market precariousness, in part because of the greater concentration of these groups in hard-hit service industries.[28]

Chapter 2: Employment Insurance Financing

EI benefits, support measures and program administration costs are financed by employee and employer contributions. An employee who holds insurable employment pays EI premiums through withholdings on the salary paid by their employer. The employee premium is equal to the annual EI premium rate multiplied by the employee’s insurable earnings, subject to a yearly maximum amount. Employers also pay premiums on their employees’ insurable earnings, at a rate 1.4 times the employee rate.[29] The CEIC is responsible for setting the annual EI premium rate in accordance with a seven-year break-even rule as forecasted by the EI Senior Actuary.[30]

2021 Budget Announcements Related to Employment Insurance

During the course of the committee study, the federal government tabled its budget. Tables 4 and 5 summarize recent announcements related to EI.

Table 4—Budget 2021 Announcements Related to Employment Insurance and Information Technology Improvements in millions of dollars

	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025	2025-2026	Total
Temporarily Waiving One-week Waiting Period	106	214	0	0	0	0	320
Less: Projected Revenues	0	0	0	0	0	-36	-36
Additional Weeks: Recovery Benefits and Regular Benefits	206	9,596	2,207	109	0	0	12,118
Less: Projected Revenues	0	0	0	0	0	-610	-610
Additional Weeks: Canada Recovery Benefit and Canada Recovery Caregiving Benefit	0	2,449	27	0	0	0	2,476
Maintaining Flexible Access to Employment Insurance Benefits	0	2,364	1,898	864	866	915	6,906
Less: Previously Provisioned in the Fiscal Framework*	0	-4	0	0	0	0	-4
Less: Projected Revenues	0	0	0	0	-204	-941	-1,145
Temporary Support for Seasonal Workers	0	4	63	33	0	0	100
Less: Projected Revenues	0	0	0	0	0	-11	-11
Temporary Alignment of Quebec Parental Insurance Plan	0	130	0	0	0	0	130
Total Employment Insurance Related Measures (Not Including EI ERB)	312	14,753	4,195	1,006	662	-683	20,244
Total IT Investments**	0	69	108	182	144	144	648

Source:  Table prepared using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021.

Notes:    Numbers may not add up due to rounding.

* The Fiscal Framework refers to Finance Canada’s policy making framework.

** The $648 million is to be provided to ESDC and the Treasury Board Secretariat for benefit delivery modernization and Service Canada’s IT systems. Improvements to IT systems include but are not limited to the EI program.

Table 5—Budget 2021 Announcements Related to Maintaining Flexible Access to Employment Insurance Benefits (Employment Insurance Sickness and Employment Insurance Access) in millions of dollars

	2021-2022	2022-2023	2023-2024	2024-2025	2025-2026	Total
Enhanced Sickness Benefits to 26 Weeks	164	428	634	866	915	3007
Uniform 420-hour entrance requirement for regular and special benefits, 14-week minimum entitlement for regular benefits, common earnings threshold for fishing benefits; All insurable hours/employment count with valid separation; Simplify rules around the treatment of severance and vacation pay; and Enhanced Work Sharing	2197.5	1467.5	230	0	0	3900
Consultation on changes: Gig Workers, Adoption and Seasonal Workers	2.5	2.5	0	0	0	0
Less: Funds Previously Provisioned in the Fiscal Framework*	-4	0	0	0	0	-4
Less: Projected Revenues	0	0	0	-204	-941	-1145
Total	2360	1898	864	662	-26	5758

Source:  Table prepared using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021.

Notes:    Numbers may not add up due to rounding.

* The Fiscal Framework refers to Finance Canada’s policy making framework.

Recently announced Budget 2021 measures include: temporarily reducing the required number of insurable hours of employment to 420 hours for both EI regular and special benefits; providing authority for additional weeks of recovery benefits and EI regular benefits until November 2021 should they be needed; and permanently increasing the maximum number of weeks for which EI sickness benefits may be paid from 15 to 26 weeks, starting in 2022. Budget 2021 also announced forthcoming consultations on future, long-term reforms to the EI program to examine systemic gaps exposed by COVID-19.[31] Finally, Budget 2021 announced significant investments in information technology infrastructure which could hopefully impact all aspects of the EI program.[32]

The Employment Insurance Operating Account

The Employment Insurance Operating Account is an important source of information about the financial operations of the EI program and operates within the Consolidated Revenue Fund (CRF).[33] Each year, all EI program and administration expenditures are charged to the CRF and all program-related revenues are credited to it. The Account’s annual deficit or surplus is included in the federal government’s financial statements. This financial information assists parliamentarians in their oversight of EI program revenues and expenditures.

Table 6 lays out spending estimates on EI benefits, including the EI ERB. Table 7 lays out the most recent Operating Account projections published in Budget 2021.

Table 6—Estimated Employment Insurance Benefits in billions of dollars

Fiscal Year	2019-2020	2020-2021	2021-2022	2022-2023	2023-2024	2024-2025	2025-2026
Employment Insurance benefits	21.8	59.8	41.2	28.1	24.5	24.9	25.6
Government credit to cover Emergency Response Benefit Costs	0	-26.3	0	0	0	0	0
Premium revenues	22.2	22.2	23.7	25.4	27.3	29.2	31.2
Benefits (not including EI ERB benefits)	21.8	33.5	41.2	28.1	24.5	24.9	25.6
Administration and other expenses	2	2.1	2.1	2.2	2	1.9	1.9
Fiscal Year Account Balance	-1.6	-13.4	-19.6	-4.9	0.8	2.4	3.7

Source:  Table prepared using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021.

Table 7—Employment Insurance Operating Account Projections in billions of dollars

	2019	2020	2021	2022	2023	2024	2025	(…)	2028
Operating Account annual balance	2.1	-6.3	-21.9	-6.1	-0.7	2.2	3.8	(…)	6.5
Operating Account cumulative balance	5.9	-0.3	-22.2	-28.3	-29.0	-26.8	-22.9	(…)	-4.44
Premium rate	1.62	1.58	1.58	1.58	1.63	1.68	1.73	1.78	1.83

Source:  Table prepared using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021.

With respect to the premium rate, as part of the economic response to COVID-19, the federal government is freezing the 2021 rates. In 2021, the employee rate will remain at 1.58% per $100 of insurable earnings (but lowered to 1.18% in Quebec), and the employer rate will remain at 2.21% (but lowered to 1.65% in Quebec). Employees and employers in Quebec pay a reduced rate as they are in a province that has established a provincial plan (i.e., Quebec Parental Insurance Plan or QPIP).[34] Budget 2021 projects the EI Operating Account to record annual deficits from 2020 to 2023 as a result of increased benefit spending and the previously-announced 1.58% premium rate for 2021 and 2022. Annual Operating Account surpluses and premium rate increases are forecast starting in 2024. Proposed premium increases are projected to reach $1.83 per $100 of insurable earnings in 2028.

Budget 2021 also estimates $26.3 billion in costs associated with the EI ERB. These costs will be credited to the EI Operating Account through a government contribution and will not impact the overall balance, in effect creating a tripartite (employer, employee and government) financing arrangement. This would not be the first time that the EI program has been financed in part through general tax revenue.[35] Moreover, returning to tripartite financing of the EI program aligns with several witness recommendations made over the course of the study.[36] Miles Corak, appearing as an individual, emphasized that a tripartite financing arrangement would allow the federal government to shoulder some of the collective risk to the system created by the COVID-19 pandemic.[37] The committee also heard witnesses’ concerns that EI premiums remain reasonable as to not undermine an economic recovery.[38] Moving back to tripartite financing would allow for greater flexibility in setting premiums. (See section entitled Employee and Employer Insurance Premiums below.)

Having considered the testimony placed before it, the committee recommends:

Recommendation 1

That the Government of Canada direct Employment and Social Development Canada to collaborate with the Department of Finance Canada to assess the costs and benefits of returning to a tripartite (employer, employee and government) financing arrangement for the Employment Insurance program.

Employee and Employer Insurance Premiums

Under the current proposed premiums and maximum insurable earnings (MIE) schedule, the maximum employee premium is estimated to be $905.40 in 2022, increasing to $1262.70 by 2028. The maximum employer premium will be raised from $1267.56 to $1767.78 (Table 8). When adjusted for inflation, 2022 premiums are not far above 2008 levels, which marked an historic low point ($711 for employees or $882 adjusted for inflation and $995 for employers or $1233.59 adjusted for inflation).[39]

Table 8—Employee and Employer Premiums Baseline Scenario

Year	Maximum annual insurable earnings	Premium Rate (% of Maximum annual insurable earnings)	Employee premium	Employer premium
2022	$ 57,304	1.58	$ 905.40	$ 1267.56
2023	$ 59,165	1.63	$ 964.39	$ 1350.15
2024	$ 61,048	1.68	$ 1025.61	$ 1435.85
2025	$ 63,076	1.73	$ 1091.21	$ 1527.70
2026	$ 64,900	1.78	$ 1155.22	$ 1617.31
2027	$ 67,000	1.78	$ 1192.60	$ 1669.64
2028	$ 69,000	1.83	$ 1262.70	$ 1767.78

Source:  Table prepared using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021; Office of the Superintendent of Financial Institutions, Office of the Chief Actuary, 2021 Actuarial Report on the Employment Insurance Premium Rate, 2020.

Premium Increases in Different Maximum Insurable Earnings Scenarios

Tables 9 and 10 estimate maximum employee and employer premiums under two different MIE scenarios proposed by witnesses during the course of the study.[40] Under the Canada Pension Plan (CPP) insurable earnings scenario, the MIE would increase to the levels of CPP maximum annual pensionable earnings levels ($61,800 in 2022 increasing to $73,700 by 2028).[41] Under this scenario, the maximum employee and employer premiums would be $976 and $1376, respectively, in 2022, increasing to $1348 and $1888, respectively, by 2028.

Table 9—Employee and Employer Premiums Canada Pension Plan Insurable Earnings Scenario

Year	Maximum annual insurable earnings	Premium rate (% of maximum annual insurable earnings)	Employee premium	Employer premium
2022	$ 61,800	1.58	$ 976.44	$ 1367.02
2023	$ 63,400	1.63	$ 1033.42	$ 1446.79
2024	$ 65,200	1.68	$ 1095.36	$ 1533.50
2025	$ 67,100	1.73	$ 1160.83	$ 1625.16
2026	$ 68,900	1.78	$ 1226.42	$ 1716.99
2027	$ 71,500	1.78	$ 1272.70	$ 1781.78
2028	$ 73,700	1.83	$ 1348.71	$ 1888.19

Source:  Table prepared using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021; Office of the Superintendent of Financial Institutions, Office of Chief Actuary, 2021 Actuarial Report on the Employment Insurance Premium Rate, 2020.

Under the QPIP insurable earnings scenario, the MIE would increase to QPIP MIE levels ($85,000 in 2022 rising to $96,000 by 2028).[42] Under this scenario, maximum employee and employer premiums would be $1,343 and $1880, respectively, in 2022, increasing to $1,756 and $2,459, respectively, by 2028.

Table 10—Employee and Employer Premiums Quebec Parental Insurance Plan Insurable Earnings Scenario

Year	Maximum annual insurable earnings	Rate (%)	Employee premium	Employer premium
2022	$ 85,000	1.58	$ 1343.00	$ 1880.20
2023	$ 86,000	1.63	$ 1401.80	$ 1962.52
2024	$ 88,500	1.68	$ 1486.80	$ 2081.52
2025	$ 92,500	1.73	$ 1600.25	$ 2240.35
2026	$ 94,000	1.78	$ 1673.20	$ 2342.48
2027	$ 95,000	1.78	$ 1691.00	$ 2367.40
2028	$ 96,000	1.83	$ 1756.80	$ 2459.52

Source:  Table prepared using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021; Office of the Superintendent of Financial Institutions, Office of the Chief Actuary, 2021 Actuarial Report on the Employment Insurance Premium Rate, 2020.

Benefits and Income Replacement Rates

EI weekly benefits are equal to 55% of the claimants’ insurable earnings (or 33% if claiming extended parental benefits) during their variable best weeks over the qualifying period (generally 52 weeks), up to a maximum amount. The number of best weeks used in the calculation is determined by the regional unemployment rate and varies between 14 and 22 insurable earning weeks. The maximum amount payable is, on the other hand, determined by the maximum yearly insurable earnings.[43]

Several witnesses stressed the importance of using a gender lens when reviewing the income replacement rates that ultimately determine benefit levels.[44] Table 11 lays out the maximum weekly benefit and the average weekly benefits for men and women. Average weekly benefits levels for men (e.g. $506 in 2019-2020) are significantly lower than the maximum benefits (e.g. $573 in 2019-2020). Average weekly benefits for women (e.g. $448 in 2019-2020) are lower still, reflecting a significant gender wage gap.

Table 11—Weekly Maximum and Averages—Regular, Parental and Sickness Benefits in dollars

	2018-2019	2018-2019	2019-2020
Maximum Insurable Earnings	51,700	53,100	54,200
Maximum Weekly Benefit	547	562	573
Average Weekly Regular Benefit - Men	480	492	506
Average Weekly Regular Benefit - Women	423	433	448
Average Weekly Parental Benefit - Men	507	517	536
Average Weekly Parental Benefit - Women	455	466	483
Average Weekly Sickness Benefit - Men	464	475	492
Average Weekly Sickness Benefit - Women	397	409	426

Source:  Government of Canada, Employment Insurance Monitoring and Assessment Report for the fiscal year beginning April 1, 2019 and ending March 31, 2020, Annex 2: Employment Insurance benefits data tables, 30 April 2021.

Numerous witnesses recommend increasing benefit levels by increasing income replacement rates. Recommendations ranged from 60% of insurable earnings up to 100% of insurable earnings for certain types of claimants.[45] Several witnesses also suggested establishing a minimum weekly benefit to ensure low-wage earners a basic level income security.[46] These witnesses argued that a minimum benefit would also enhance gender equity since women workers are more likely to have lower weekly wages. Women workers also account for a smaller portion of the unemployed population than their weight in the labour force.[47] (See Appendix D.)

Selected Cost Estimates Related to Witness Recommendations

Over the course of the study, the committee heard numerous recommendations related to improving EI to better support vulnerable workers. The committee was also reminded of the need to consider the financial implications of program changes.[48]

Increasing the Replacement Rate Under Different Maximum Insurable Earnings – Program Cost Estimates

Table 12 lays out estimates of increasing EI benefits to an income replacement rate of 60% as well as increasing the MIE to CPP and QPIP insurable earnings levels.[49]

Table 12—Added Cost to Increasing Replacement Rates to 60% and Maximum Insurable Earnings in millions of dollars

Calendar Year	Baseline MIE Projections	60% Replacement Rate - MIE Unchanged (added cost)	60% Replacement Rate and CPP MIE Scenario (added cost)	60 % Replacement Rate and QPIP MIE Scenario (added cost)
2022	19,620	1,691	631	2,955
2023	20,368	1,764	593	2,903
2024	21,170	1,834	574	3,023
2025	22,145	1,908	559	3,324

Source:  Calculations made using Statistics Canada, The Social Policy Simulation Database and Model (SPSD/M), using data from Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021. Office of the Superintendent of Financial Institutions, Office of the Chief Actuary, 2021 Actuarial Report on the Employment Insurance Premium Rate, 2020. The SPSD is a non-confidential, statistically representative database of Canadian individuals in their family context, with enough information on each individual to compute cash transfers received from government. The SPSM is a static accounting model which processes each individual and family on the SPSD/M, and calculates federal and provincial transfers using legislated or proposed programs and algorithms. SPSD/M cannot model changes in behaviour that may result from changes to EI program parameters. Moreover, the number of EI beneficiaries who will benefit from increasing the replacement rate is highly uncertain and depends on labour market conditions.

Increasing the level of MIE would increase premiums and in turn generate additional revenue, as well as increase benefit costs. Increasing the income replacement rate would likely need to be financed by either a premium rate increase or additional government contributions. While benefit levels and premium rates have a critical role in determining EI program revenues and expenditures so too do underlying economic and demographic conditions. Ultimately premium rates are set based upon advice from the EI Senior Actuary, taking into in account all the above considerations.[50]

Selected EI Sickness Benefit Recommendations – Cost Estimates

Table 13 lays out estimates of additional costs to EI sickness under several different scenarios: lower qualifying hours eligibility (360 hours), 26 weeks (proposed in Budget 2021) and 50 weeks (suggested by witnesses).

Table 13—Estimates of Additional Costs to EI Sickness in millions of dollars: Lowering Hours Qualifying Hours, Extending Benefits to 26 Weeks and Extending Benefits to 50 Weeks

	Baseline Projection	360 hours	26 weeks	50 weeks
2021	2,095	278	164	630
2022	1,998	288	428	1,241
2023	2,023	298	634	1,636
2024	2,122	309	866	1,868
2025	2,191	321	915	2,011
2026	2,267	333	967	2,214
2027	2,347	342	1,017	2,419

Source:  Calculations using data from the Office of the Superintendent of Financial Institutions, Office of the Chief Actuary, 2021 Actuarial Report on the Employment Insurance Premium Rate, 2020; Parliamentary Budget Officer, Costing of a 360-hour Eligibility Threshold for Sickness Benefits, 4 April 2019; Parliamentary Budget Officer, Cost Estimate of an Increase in the Duration of Employment Insurance (EI) Sickness Benefits, 4 April 2019; Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021. Projections based on program implementation assumptions contained in Government of Canada, A Recovery Plan for Jobs, Growth, and Resilience, Budget 2021. Parliamentary Budget Officer, Employment Insurance Sickness Benefits Extension, 27 May 2021; Parliamentary Budget Officer, Bill C-265: Employment Insurance Sickness Benefits Extension Government of Canada, 26 May 2021: “A source of uncertainty is the additional weeks that would be taken by claimants that used the maximum 15 weeks of benefits. Given that ESDC does not keep administrative data on claimants’ working lapse, our assumptions are underpinned by a 2007 survey. As such, it may not be representative of Canada’s current labour market and could potentially underestimate the working lapse.”

Chapter 3: Employment Insurance Regular Benefits

An individual in insurable employment may be eligible to receive EI regular benefits if, among other criteria, they have experienced an interruption of earnings from employment through no fault of their own (for example, due to a shortage of work, seasonal or mass layoffs), for a minimum of seven consecutive days.[51] This chapter summarizes the key issues and recommendations that stakeholders brought to the committee’s attention in relation to EI regular benefits.

Eligibility for Benefits

Over the course of the study, various witnesses noted that under current rules, less than half of unemployed workers in Canada are eligible to receive EI benefits.[52] The section below summarizes the issues and recommendations raised by witnesses pertaining to eligibility for EI benefits, including reasons for separation, hours of insurable employment needed to qualify across Canada, and eligibility for special categories of workers (e.g., self-employed persons and gig economy workers, workers in seasonal industries, and migrant workers).

Reasons for Separation

Among unemployed workers who have paid into the EI program, the most common reason for ineligibility for EI regular benefits is invalid job separation (meaning the worker has left their employment for a reason that is not considered acceptable by the EI program).[53] In 2019, this accounted for 63% of contributors who were ineligible for EI regular benefits.[54] Over the course of this study, some organizations spoke out against the disqualification of certain workers who quit employment or were dismissed for misconduct from accessing EI regular benefits.[55] Pam Frache, representative from the Workers’ Action Centre, argued that this rule “is punitive, unnecessary and fails to recognize the reality of the labour market today.” She noted that firings can be “arbitrary” and workers may choose to leave a job for a range of legitimate reasons.[56] A brief submitted by the Community Legal Assistance Society suggested that rules relating to disqualification may have a disproportionate impact on certain groups, noting that precarious workers are more likely than workers in secure long-term employment to be fired for minor incidents.[57] A brief submitted by Neighbourhood Legal Services London and Middlesex also pointed out that overly complex rules about valid job separation “can work to punish and deter claimants from actively engaging and pursuing employment.”[58]

Stakeholders argued in favour of a limited penalty for workers with an invalid job separation, rather than outright disqualification. Witnesses made recommendations for penalties ranging from three to ten weeks without EI benefits.[59] Action-Chômage Côte‑Nord called for “the legal recognition of the right for workers to have a two-week trial period without penalty for any new job.”[60]

The committee takes note of witnesses’ concerns about the ineligibility of workers with an invalid job separation to receive EI regular benefits, and heard that program requirements must not penalize workers who left or lost their employment for reasons beyond their control. In the committee’s 2016 report, Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program, it recommended that the government review requirements relating to valid job separation in order to allow claimants who find new employment to keep their benefits in the event the employment is unsuitable.[61] Having considered the testimony placed before it, the committee makes the following recommendation:

Recommendation 2

That Employment and Social Development Canada review the Employment Insurance program requirements related to valid job separation in order to:

• Assess the impact that the list of valid reasons for separation has on the most vulnerable workers, and the extent to which it reflects current labour market realities; and
• Ensure that Employment Insurance program requirements related to valid job separation do not deter claimants from accepting new employment.

Hours of Insurable Employment and Economic Regions

In 2019, among workers who had paid into the EI program and who had a valid job separation, approximately 17.6% were ineligible for benefits because they lacked the necessary hours of insurable employment.[62] Notwithstanding the temporary pandemic‑related measures discussed in Chapter 1, claimants of regular benefits normally must have accumulated 420 to 700 hours of insurable employment during their qualifying period (which is generally 52 weeks long), based on the rate of unemployment in their economic region of residence.[63] This is based on the idea that it is more challenging to find a job (and therefore to accumulate hours of insurable employment) in a region with a higher unemployment rate.[64]

Pam Frache of the Workers’ Action Centre identified current hours requirements as a challenge for part-time workers, highlighting the prevalence of part-time work in long‑term care.[65] The Conseil d’intervention pour l’accès des femmes au travail explained that including an option for workers to qualify based on weeks of work, rather than hours, would provide part-time workers more equitable access to benefits.[66] Witnesses explained that women, youth, racialized people, newcomers, and persons with disabilities are all overrepresented in part-time or non-standard work and therefore face barriers to accessing EI benefits.[67] In addition, a brief from the Migrant Rights Network asserted that

From eligibility requirements that disadvantage part-time, seasonal and contract workers, to below-subsistence benefit levels for low-income workers, the program’s failings are felt most starkly by the racialized and women workers who are forced into the most insecure parts of the labour market.[68]

Further, several witnesses raised concerns about the practice of determining qualifying hours based on unemployment rates in economic regions. One such witness was Parisa Mahboubi, from the C.D. Howe Institute, who explained that the current approach puts part-time workers in regions with low unemployment rates at a disadvantage.[69] Ms. Mahboubi also highlighted a need for the EI system to take into account barriers to employment faced by specific groups, such as persons with disabilities, that are present regardless of the unemployment rate in a given region.[70]

During his appearance before the committee, Carl Pursey, representing the Prince Edward Island (PEI) Federation of Labour, raised concerns about existing boundaries for EI economic regions. In 2014, the federal government divided PEI, Yukon, the Northwest Territories and Nunavut into two economic regions each (one covering the capital area and the other covering the rest of the province or territory).[71] Mr. Pursey indicated that this division has been particularly detrimental for seasonal employers in PEI:

With the zones, some employers are having problems employing people, because they'll ask which zone someone lives in. If someone lives in one zone and the employer needs them for seasonal work, they know that person is going to require more weeks of work than they can offer. It's a whole mess, and they can't get the same workers back each year…[72]

Mr. Pursey also noted that the division creates inequities for workers who commute to the same work location from different economic regions.[73] In a brief submitted to the committee, Philip Brown, the Mayor of Charlottetown, recommended the restoration of a single economic region for PEI.[74]

Some organizations put forward specific recommendations for uniform, national hours requirements in relation to both regular and special benefits (e.g., a hybrid requirement comprising the lesser of 420 hours or 12 weeks,[75] the lesser of 360 hours or 12 weeks,[76] or the lesser of 300 hours or 12 weeks).[77] One brief recommended that the insurable hours requirement be lowered to 120 hours for maternity benefits.[78]

However, not all witnesses advocated for a uniform national eligibility requirement for EI benefits. Miles Corak, for example, recommended an approach that maintains differentiation of hours requirements based on regional unemployment rates, but reduces the current nine bands of unemployment rates (which range from less than 6% to over 13%) to just three (e.g., less than 6%, 6% to 10%, and greater than 10%).[79] Mr. Corak and David Gray, also appearing as an individual, both recommended that the government base eligibility on provincial employment rates rather than the regional unemployment rates, since this data is available on a monthly basis and would therefore more accurately reflect sudden labour market changes.[80] In a brief submitted to the committee, the Conseil national des chômeurs et chômeuses proposed a uniform requirement of 15 weeks of at least 15 hours of work each, with a lower requirement for certain workers, such as those in Indigenous communities or areas with significant unemployment.[81]

The committee takes note of the value of EI program requirements that account for regional labour market disparities. However, it also heard from witnesses that the current requirements around insurable hours of employment are not responsive to challenges faced by some groups of workers. It also heard that the current boundaries for EI economic regions do not reflect the realities of some communities, including the province of Prince Edward Island, which was divided into two economic regions in 2014. During his appearance before the committee, the Commissioner for Workers, Pierre Laliberté, indicated that a 2018 departmental review of the EI economic regions was completed without any formal public consultation. Referring to Prince Edward Island, Mr. Laliberté indicated that personal conversations with stakeholders did not reveal a support of the status quo (i.e. keeping the two economic regions).[82]

In the committee’s 2016 report Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program, it recommended that the pre‑2014 boundaries of the EI economic regions be restored. The committee is aware that the federal government, through Budget 2021, has committed funding to temporarily maintaining a uniform 420-hour entrance requirement over the coming year while Canada’s economy recovers from the pandemic.[83] Having considered the testimony placed before it during the current study, the committee makes the following recommendations:

Recommendation 3

That Employment and Social Development Canada decrease the number of hours of insurable employment needed to qualify for all types of Employment Insurance benefits in order to ensure equitable access for diverse workers across Canada, including those in part-time or non-standard work.

Recommendation 4

That Employment and Social Development Canada reconsider, and ensure robust consultation with stakeholders on, current practices with regard to Employment Insurance Economic Regions, including:

• The number and boundaries of regions; and
• The existence of varying Employment Insurance eligibility requirements based on claimants’ region of residence.

Further, that it reinstate a single Employment Insurance Economic Region for Prince Edward Island within 12 months.

Special Categories of Workers

Self-Employed Persons and Gig Economy Workers

Currently, self-employed persons are not eligible to receive EI regular benefits. However, several witnesses argued that at least some of these workers (including self-employed persons in the emerging gig economy) should have access to these benefits. Kenneth MacKenzie, President of the Associated Designers of Canada, argued that

Not allowing self-employed workers to participate fully in the EI program puts gig workers at a disadvantage. As gig and self-employed workers become a larger part of the workforce, the EI program must evolve to accommodate them so that they can contribute to and receive the full benefits available to traditional employees through EI regular benefits.[84]

David Gray pointed to both benefits and risks associated with expanding coverage to gig economy workers. While it would result in “welfare gains […] for certain gig workers in the face of unpredictable shocks beyond their control,” there could be impacts on employment and unemployment outcomes, such as a higher number of quits.[85]

Leah Nord, the representative from the Canadian Chamber of Commerce, provided the caveat that “the gig economy does not wholly equate to precarious work,” and warned against “jumping to program solutions” before further investigating the issues.[86] Similarly, Miles Corak differentiated between those who “are using self‑employment as a last-ditch attempt to piece together income” and the “risk-taking entrepreneur,” highlighting a need to focus on the former.[87]

Determining Eligibility

Witnesses also raised questions about how to determine eligibility for self-employed and gig workers. During her appearance before the committee, Parisa Mahboubi explained that

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.[88]

David Gray indicated that eligibility would likely need to be based on prior earnings, and suggested the establishment of pilot projects to determine the best options for “the level of earnings that are covered, the percentage of prior earnings that would be covered, the length of the prior contribution period and the length of the benefit entitlement period.”[89]

Kenneth MacKenzie, the representative from the Associated Designers of Canada, suggested that the existing EI fishing benefits model could be adapted to suit certain gig workers.[90]

Mandatory vs. Voluntary Participation

There was no consensus among witnesses on whether the expansion of EI regular benefits to self-employed persons should be mandatory, or should be offered on an opt‑in basis (as is currently the case for EI special benefits). Speaking about the inclusion of gig workers, David Gray recommended making coverage mandatory for the sake of solvency.[91] However, testimony from the Canadian Federation of Independent Business (CFIB) and the Canadian Chamber of Commerce supported voluntary participation.[92]

Misclassification

Several witnesses expressed concern about the misclassification of workers (i.e., a situation in which an employer attributes the wrong employment status to a worker), particularly when workers are erroneously classified as self-employed or independent contractors.[93] Don Valley Legal Services recommended increasing regulatory penalties for employers who misclassify employees and therefore do not remit the EI premiums that they owe, and recommended that Service Canada and the Canada Revenue Agency (CRA) “develop a comprehensive strategy to combat misclassification of employment status.”[94] In addition, the Community Legal Assistance Society recommended better coordination between the EI appeals system and the system of appeal for misclassified workers.[95] The EI Inter-Provincial Working Group recommended “[a]n EI blitz on the misclassification of workers deemed ‘independent’ self-employed contractors by an employer or temp help agency,” making them ineligible for EI. The Working Group stated that “[m]any are actually employees and should be covered.”[96]

Having considered the testimony placed before it, the committee takes note of the need to investigate options to improve EI coverage for self-employed persons and gig economy workers, particularly those in precarious situations. However, it also heard that many questions remain about the optimal terms of such coverage. The committee is aware of upcoming consultations announced in Budget 2021 that will look at systemic gaps exposed by the COVID-19 pandemic with respect to the EI program, including “the need for income support for self-employed and gig workers.”[97] Therefore, the committee recommends:

Recommendation 5

That Employment and Social Development Canada conduct consultations with relevant stakeholders on ways to provide self-employed persons, including those in the gig economy, with access to regular Employment Insurance benefits; and that, based on the results of these consultations, Employment and Social Development Canada make permanent changes to the Employment Insurance program to address the unique needs of self-employed persons.

Workers in Seasonal Industries

In a brief submitted to the committee, Action-Chômage Côte-Nord explained that many workers in seasonal industries face an EI “black hole,” or “a period of up to 18 weeks where workers are left without income between the end of their EI benefits and their return to work.”[98] To better support workers in these industries, a pilot project (Pilot Project No. 21) running from 5 August 2018 to 30 October 2021 offers up to five additional weeks of EI regular benefits to eligible seasonal claimants in 13 economic regions.[99] Pierre Laliberté, Commissioner for Workers, noted that pilot results “have been largely positive for those affected” by the so-called EI black hole.[100]

During her appearance before the committee, Minister Qualtrough noted that the federal government is “looking to see how we can make [the pilot program] better, make it permanent and make it more available to more seasonal workers.”[101] Action-Chômage Côte-Nord recommended adjustments to the pilot program, such as the expansion of the definition of “seasonal worker” and modification of the pilot to provide up to 15 additional weeks rather than five.[102]

Corinne Pohlmann, representing the CFIB, stated the following:

We've spoken to seasonal employers in the past. Many have told us that in order for them to be able to retain those employees throughout the year, they would be willing to pay a bit more for EI, for example. Make it more of an experience-rated type of program, like most other insurance programs are, so that the more you use it, the more you'd be able to pay.[103]

The committee takes note of the testimony received on seasonal workers’ ongoing need for support, and is aware of upcoming consultations announced in Budget 2021 that will look at systemic gaps exposed by the COVID-19 pandemic with respect to the EI program, including “how to provide more consistent and reliable benefits to workers in seasonal industries.”[104] The committee is also aware of the government’s proposal in Budget 2021 to extend the seasonal worker pilot project until October 2022.[105] Therefore, the committee makes the following recommendation:

Recommendation 6

That Employment and Social Development Canada take further steps to solve the problem of the Employment Insurance “black hole” (a situation in which a seasonal worker has insufficient weeks of Employment Insurance benefits to bridge the period of unemployment between seasons), including by expanding the coverage of Pilot Project No. 21 (which provides up to five additional weeks of Employment Insurance regular benefits to eligible seasonal workers in select regions), as well as making it permanent.

Migrant Workers

The committee also received testimony about the eligibility of migrant workers for EI benefits, with witnesses calling for improved access to both regular and special benefits.[106] ESDC representative Andrew Brown explained that workers employed through the Temporary Foreign Worker Program are eligible to receive EI regular benefits while they are in Canada.[107] However, the Migrant Rights Network raised concerns about the application of eligibility requirements – specifically, the requirement to have a valid social insurance number (SIN) to access regular benefits – with regards to migrant workers, whose SIN may expire while they are still in Canada and eligible to work.[108] The organization also argued against the need for a valid SIN to collect special benefits while outside of Canada, highlighting the disproportionate impact of this rule on migrant workers.[109]

The committee heard that migrant workers face distinct barriers to accessing regular and special benefits, even when they have been legally working in Canada and paying into the program. Therefore, the committee makes the following recommendation:

Recommendation 7

That Employment and Social Development Canada assess the impact of Employment Insurance eligibility rules on migrant workers who have been paying into the EI system.

Adequacy of Benefits

EI regular benefits, and most special benefits, are equal to 55% of a claimant’s average insurable earnings, up to a maximum weekly benefit rate. For 2021, the maximum weekly benefit rate is $595.[110] During the COVID-19 pandemic, the minimum benefit rate has been set at $500 per week for most EI benefits.[111] The section below summarizes the issues and recommendations raised by witnesses pertaining to the adequacy of EI benefits, including the income replacement rate and maximum insurable earnings, benefit clawbacks, and the duration of benefits.

Income Replacement Rate and Maximum Insurable Earnings

Over the course of the study, several organizations recommended that income replacement rates be raised above the current 55% threshold, with proposals ranging from 60% to 75%.[112] ACORN Canada recommended that the income replacement rate be raised to 100% for low-income workers.[113] Pierre Laliberté, CEIC Commissioner for Workers, stated that an income replacement rate of 75% would be necessary to keep minimum-wage workers above the poverty threshold as defined by the Market Basket Measure (also known as Canada’s Official Poverty Line).[114] In addition, some witnesses proposed basing benefits on income earned during the 12 best weeks of work.[115]

A number of witnesses also recommended raising maximum insurable earnings when discussing EI regular benefits, as well as EI benefits as a whole, with some recommending that the maximum insurable earnings be increased to the same level as the QPIP[116] or the CPP.[117] Mr. Laliberté pointed out that, had the maximum insurable earnings amount been continuously indexed to inflation, it currently would be above $80,000 per year.[118] Miles Corak acknowledged the importance of offering better insurance, but noted that any changes to the benefit rate and maximum insurable earnings would need to be balanced with fiscal constraints.[119] Table 12 in Chapter 2 lays out estimates of increasing EI benefits to an income replacement rate of 60% as well as increasing the maximum insurable earnings to CPP and QPIP insurable earnings levels.[120]

Witnesses also called for the establishment of a benefit floor that is liveable for low‑income EI claimants,[121] with several organizations recommending a weekly minimum payment of $500, similar to the temporary pandemic measure.[122] In contrast, Corinne Pohlmann of the CFIB highlighted the challenges a weekly benefit floor as high as $500 might pose for employers trying to attract people (including part-time workers) back to work.[123] As discussed in the section below, some witnesses proposed reducing benefit clawbacks as a way to support claimants who choose to work while collecting benefits.

Benefit Clawbacks

Some witnesses recommended eliminating or reducing various forms of clawbacks to EI benefits, such as clawbacks for social assistance payments,[124] money earned by working while on claim,[125] and separation monies (e.g., severance payments).[126] Note that the clawback of separation monies has already been suspended temporarily during the pandemic, and the 2021 federal budget proposes to amend the EIA “to simplify eligibility rules around […] the allocation of monies on separation for a period of one year, from September 2021 to September 2022.”[127]

In addition, the Fédération des travailleurs et travailleuses du Québec recommended that the government stop requiring individuals who have earned above a certain threshold to repay a portion of their EI benefits at tax time.[128]

During the study, witnesses emphasized the importance of EI benefits that are sufficient to meet living expenses while claimants are unemployed or unable to work. The committee takes note of the need to update benefits to reflect the cost of living, while also keeping in mind the costing implications explored in Chapter 2 of this report. The committee therefore recommends:

Recommendation 8

That Employment and Social Development Canada consider increasing the income replacement rate, maximum insurable earnings, and minimum weekly benefit, as well as decreasing benefit clawbacks, to ensure that Employment Insurance regular and special benefits are sufficient and liveable.

Duration of Benefits

Under the traditional EI rules, an eligible claimant can receive between 14 and 45 weeks of EI regular benefits in a benefit period, based on the regional unemployment rate and the number of hours of insurable employment accumulated during the qualifying period.[129] During the pandemic, eligible claimants can receive between 26 and 50 weeks.[130] Several witnesses recommended increasing the number of weeks that EI regular benefits are available, with some recommending a minimum of 35 weeks,[131] and some recommending maximums ranging from 50 to 52 weeks.[132] Some witnesses pointed to the potential economic advantage of extending the duration of regular benefits, suggesting this would allow unemployed workers more time to find jobs that match their skills.[133] Leah Nord of the Canadian Chamber of Commerce, on the other hand, reminded the committee that in order to determine which reforms will be truly effective, we must first have concrete information on the costs to employers, employees, and the EI system.[134]

Duration of Combined Regular and Special Benefits

Witnesses also made recommendations pertaining to the maximum duration when combining regular and special EI benefits. Currently, when EI regular and most special benefits are combined, claimants may receive up to 50 weeks of combined benefits at 55% of a claimant’s average weekly insurable earnings in a 52-week benefit period.[135] The Canadian Labour Congress and the PEI Federation of Labour both recommended the elimination of the 50-week limit on combined regular and special benefits, with the latter specifying that “[w]orkers should also be able to draw for up to 50 weeks with the combined benefits, to a maximum of 104 weeks.”[136] The Canadian Labour Congress noted that the current limit on duration for combined regular and special benefits has a disproportionate negative impact on women, who claim the majority of special benefits.[137] Representatives from the Conseil d’intervention pour l’accès des femmes au travail explained that if women become unemployed at the end of their combined maternity and parental leave, it is likely that they will not have access to EI regular benefits.[138]

The committee heard witnesses’ concerns about the gender-related impacts of rules related to combined regular and special EI benefits, and therefore recommends:

Recommendation 9

That Employment and Social Development Canada increase the duration of combined regular and special benefits in order to avoid penalizing claimants – largely women – who may claim both regular and special Employment Insurance benefits such as maternity or parental benefits during the same benefit period.

Waiting Period

In response to the COVID-19 pandemic, the federal government is waiving the one-week waiting period (during which EI claimants do not usually receive benefit payments) for claims established between 31 January and 25 September 2021.[139] Some organizations recommended eliminating the waiting period on a permanent basis, with Action‑Chômage Côte-Nord noting that many workers have no savings to live on in an emergency.[140] The committee heard that this is a threat to workers’ income security and takes note of the importance of ensuring vulnerable workers have access to support in the first weeks after becoming unemployed. Therefore, it recommends:

Recommendation 10

That Employment and Social Development Canada review the fiscal and social impact of the temporary measure waiving the one-week waiting period for Employment Insurance benefits during the COVID-19 pandemic, and consider permanently removing the one‑week waiting period for all claimants.

Complementary Reforms

Over the course of the study, several witnesses highlighted measures outside of the EI program that could complement reforms to EI regular benefits.[141] One of the reforms discussed was a basic income – which, generally speaking, refers to a cash transfer from government to individuals or families to provide an income floor below which no individual or family can fall. Evelyn Forget, appearing as an individual, advocated for “a guaranteed livable income that is targeted to working-age recipients based on […] their current income.” Ms. Forget noted that while such a reform would streamline cash transfers from government, it would not replace essential public services or supports for people with disabilities.[142]

Ms. Forget asserted that “basic income is an essential partner to a renewed Employment Insurance program,” explaining that it would top up the wages of low-income workers, as well as “[capture] those people who simply don't work enough hours, or don't work regularly enough to qualify for [EI].”[143]

Similarly, Miles Corak proposed that the government “step toward a basic income by integrating the Canada workers benefit with the EI program.”[144] The Canada workers benefit is a refundable tax credit targeted to low-income individuals and families.[145] Mr. Corak recommended that this benefit be enhanced to provide an unconditional payment equivalent to the deep income poverty line,[146] and a maximum benefit sufficient to lift workers to the official poverty line, tapering off as income grows.[147] He also recommended that the income used to qualify individuals for the Canada workers benefit be “converted to EI-eligible hours without regard to the nature of the job used to obtain that income,” suggesting that this would help extend EI coverage to those in self‑employment or other contingent work.[148]

At the same time, other witnesses provided caveats related to basic income. During her testimony, Pam Frache of the Workers’ Action Centre warned that a basic income might “inadvertently create an incentive for employers to adopt sub-poverty business models and create precarious employment because we have a publicly funded revenue stream that's going to top that up.”[149] Carl Pursey of the PEI Federation of Labour recommended that guaranteed liveable income be studied separately from EI, noting that the latter “needs to be prepared properly for long-lasting, successful implementation.”[150] The committee agrees that further study outside the context of the EI program would be necessary to determine whether and how a basic income could contribute to income security in Canada.

Chapter 4: Employment Insurance Special Benefits

In addition to regular benefits, the EI program also pays special benefits in the form of maternity, parental, sickness, compassionate care, and family caregiver benefits for children and adults (see Appendix B for a summary of EI benefits). As of 1 January 2010, self-employed persons are also able to access all types of EI special benefits if they voluntarily register into the EI program.[151] This chapter explores various issues and recommendations brought up during the course of the committee study with respect to EI special benefits. It also builds on some of the aspects discussed in Chapter 3 with respect to special benefits, including weeks of combined regular and special benefits as well as hours of insurable employment.

Maternity and Parental Benefits

EI maternity benefits are payable to a claimant who is pregnant or has given birth, for a maximum of 15 weeks at 55% of a claimant’s average weekly insurable earnings.[152]

EI parental benefits are payable to a claimant who must care for a biological newborn or for a newly adopted child.[153] As of 3 December 2017, there are two options available for receiving parental benefits under the EIA: 35 weeks at 55% of a claimant’s average weekly insurable earnings (standard option); or 61 weeks at 33% of their average weekly insurable earnings (extended option).[154] Further, as of 17 March 2019, eligible two‑parent families can also access the EI Parental Sharing Benefit and receive an additional five or eight weeks of EI parental benefits, depending on whether they choose the standard or extended parental benefits option. Any combination of sharing is allowed in order for parents to access the additional weeks of parental benefits, provided that no one parent takes more than 35 or 61 weeks of parental benefits.[155]

During his appearance before the committee, ESDC representative Andrew Brown indicated that approximately 15% of families have been choosing the extended benefit duration configuration. While he acknowledged that further evaluation is needed to fully understand this trend, he also noted that, in some provinces, families seem to be choosing this extended benefit duration configuration to help with childcare responsibilities. However, the lower benefit rate provided under the extended parental benefits option has been flagged by claimants as a negative aspect, because the same amount of money is spread out over a longer period of time, resulting in much lower monthly payments to individuals. Mr. Brown also mentioned that another trend the department is following closely is the greater uptake of parental benefits by fathers following the introduction of the EI Parental Sharing Benefit. Traditionally, he noted, it has been mothers taking most of the EI parental benefits.[156] The next section provides an overview of evidence received by the committee on the impact of the current maternity and parental benefits system on women and adoptive parents.

Impact of Current Rules on Women

Various witnesses before the committee spoke about gender inequalities built into the current maternity and parental benefits system. Representatives from the Conseil d’intervention pour l’accès des femmes au travail noted the discriminatory consequences of the 50-week limit when EI special and regular benefits are combined. The Conseil argued that this rule disproportionately disqualifies women from receiving EI regular benefits, given that women take maternity benefits along with the majority of the parental benefits. If women become unemployed at the end of their combined maternity and parental leave, it is likely that they will not have access to EI regular benefits.[157] The Conseil also argued that the insurable hours requirement to access EI benefits (600 hours in the case of EI special benefits under the traditional EI rules) has a discriminatory impact, since most part-time work is done by women. They indicated that, in the year 2019, 64% of those working part-time were women.[158] In their view, this trend is not due to choice but to necessity:

Far more women are looking after domestic duties, such as caring for children, balancing family, work and school, as well as informal caregiving, which must not be overlooked in the context of the pandemic.[159]

In light of the social inequalities that condition women’s labour-market participation, existing EI eligibility thresholds and limits result in a situation where women are eligible for benefits less often than men and receive lower amounts when they are eligible.[160] Recommendations witnesses made in this regard are discussed in greater detail in Chapter 3, including increasing the maximum number of weeks of combined regular and special benefits from 50 to 104 weeks, creating a hybrid requirement for insurable hours that would look at hours worked or weeks worked, and decreasing the number of required hours of insurable employment to as low as 120 hours for EI maternity benefits.[161]

Further, Engineers Canada expressed concern in its brief about “the lack of viable flexible work options while on parental leave,” which in their opinion could carry negative career ramifications particularly for women in project-based industries like engineering.[162] Noting that women shoulder most of the unpaid care work at home, they explained that lack of flexible work options could also impact women’s future return to work and affect their financial independence later in life. In their view, a flexible parental leave program would “promote flexibility for employees to remain connected to projects, career advancements, networks and professional development opportunities” as their families grow.[163] As such, Engineers Canada recommended in its brief that the federal government “create flexible parental leave options within the current Employment Insurance (EI) program,”[164] providing the example of Sweden as a model that allows parents to have greater agency over their benefits and remain connected to the workforce while on leave:

Swedish parental leave policies allow for flexibility in how couples decide to use postnatal benefits. While both parents are entitled to 240 days of leave, 90 of those days are earmarked as a minimum for each parent. Parents also have the right to take their leave in multiple separate blocks, as well as work part-time during their parental leave period. For instance, individuals can work shorter days and be compensated for the difference in pay, up until their child turns eight. This flexibility allows employees to remain connected to projects, professional development opportunities, and industry networks while on parental leave.[165]

The committee takes note of the disproportionate impact that certain aspects of the EI program may have on certain groups of workers, including women, having made recommendations regarding the insurable hours requirement and the maximum weeks of combined regular and special benefits in Chapter 3. The committee is aware of the investments proposed in Budget 2021 regarding early learning and childcare.[166] The committee also takes note that greater flexibility may be needed for new parents so that they can take care of their children while staying connected to the labour market. Having considered the testimony placed before it during the study, the committee makes the following recommendation:

Recommendation 11

That Employment and Social Development Canada explore ways to make Employment Insurance parental benefits and the Working While on Claim provisions of the program more flexible, with a view to increasing a claimant’s agency over their benefits and facilitating their continued participation in the labour market while caring for young children.

Attachment Benefits for Adoptive Parents

The Adoption Council of Canada and Adopt4Life informed the committee that, unlike biological parents, adoptive parents[167] do not have access to EI maternity benefits. EI maternity benefits are offered to biological mothers who cannot work because they are pregnant or have recently given birth. While adoptive parents do have access to EI parental benefits, the brief argues that adopted children need more time to attach to their new parents or caregivers than what the current system provides. The brief notes that “attachment is more complex and difficult for children who are adopted after six months of age – a fact which is significant given that the vast majority of children awaiting adoption in Canada are age 6 or older.”[168]

The Adoption Council of Canada and Adopt4Life recommend the introduction of “attachment benefits” comparable to the EI maternity benefits, to respond to the unique needs of families with adopted children. They recommend that attachment benefits be offered on the same basis as maternity benefits, that is to say, for 15 weeks at a rate of 55% of a claimant’s average weekly insurable earnings. Further, attachment benefits should be available as early as 12 weeks before the expected date of arrival of the child and as late as 17 weeks after that date. Where there are two parents or caregivers, the brief recommends either one should be eligible for the attachment benefits. Finally, they ask that attachment benefits be offered in addition to EI parental benefits.[169]

The committee is aware of upcoming consultations announced in Budget 2021 that will look at systemic gaps exposed by the COVID-19 pandemic with respect to the EI program, including “how best to support Canadians through different life events such as adoption.”[170] The committee takes note of the unique needs of families with adopted children and therefore recommends:

Recommendation 12

That Employment and Social Development Canada explore the option of creating “attachment benefits” modeled after Employment Insurance maternity benefits, to ensure equitable treatment of adoptive, kinship, customary and biological parents in the amount of time and benefits provided to bond with their children.

Sickness Benefits

EI sickness benefits are provided to a claimant who is unable to work because of sickness, injury or quarantine. Sickness benefits are paid for a maximum of 15 weeks at 55% of a claimant’s average weekly insurable earnings.[171]

Evidence received by the committee highlighted shortcomings with the current EI sickness benefits regime. The Multiple Sclerosis Society of Canada, for example, emphasized the disproportionate and discriminatory impact of program rules like the 600-hour threshold to qualify for sickness benefits and other special benefits on people living with a disability. They explained that rules like these make no accommodations for “people who are generally able to work but are affected by intermittent periods of acute symptoms nor for those who range from full ability to work to short periods of inability.”[172] They noted that women, in particular, are disproportionately impacted as they are three times more likely than men to be diagnosed with multiple sclerosis, an episodic disability.[173] Recommendations witnesses made regarding hours of insurable employment and other eligibility criteria are discussed in greater detail in Chapter 3.

As the committee has noted earlier in this report, Budget 2021 proposes increasing the length of EI sickness benefits from 15 to 26 weeks, starting in 2022.[174] During his appearance before the committee, ESDC representative Andrew Brown indicated that EI sickness benefits provide support to more than 400,000 people annually, with approximately 35% or 36% of them using all 15 weeks of benefits. Therefore, he calculated that an extension of the EI sickness benefits from 15 to 26 weeks would benefit approximately 120,000 people.[175]

Much of the evidence received by the committee was focused on the duration of EI sickness benefits. Witnesses explained that the current 15 weeks of benefits are often insufficient to deal with unforeseen circumstances (such as surgery, cancer, and mental health complications), which can prolong a claimant’s illness. As a result, witnesses indicated that claimants often exhaust their EI sickness benefits before they have completed their treatment or recovered enough to return to work. In their opinion, this problem is exacerbated by the fact that a large portion of the Canadian workforce has no access to private disability insurance coverage or employer paid sick leave.[176]

During her appearance before the committee, Marie-Hélène Dubé described how insufficient sickness benefits can lead to the intergenerational transmission of poverty, noting that “[f]amilies sometimes have to rely on social assistance programs of last resort because they weren’t given a few weeks or months of EI benefits.”[177]

While some witnesses agreed with the federal government’s approach to extending the EI sickness benefits from 15 to 26 weeks,[178] others recommended an increase to 35 weeks[179] or to 51 weeks.[180] However, the most common recommendation was that EI sickness benefits be raised from 15 to 50 weeks.[181]

The representative from the CFIB, however, cautioned that an increase in the weeks of benefits may have financial repercussions for some small businesses, thereby calling for a detailed cost analysis in this regard along with consultations with workers and employers.[182] She told the committee that small businesses had a mixed reaction to proposals to extend EI sickness benefits:

We asked our members in February whether sickness benefits should be extended to 26 weeks. We found that 45% of our members supported that; 45% were opposed and the remaining 10% were unsure. More recently, we asked about extending sickness benefits to 50 weeks, and we found that 46% remain opposed. However, the level of support went down to 35%, while those saying they were unsure doubled to 20%. Clearly, then, more information is needed for smaller employers to understand what the costs and benefits of extending sickness benefits would be for the EI system.[183]

Table 13 in Chapter 2 lays out estimates of additional costs to EI sickness under several different scenarios: lower qualifying hours eligibility (360 hours), 26 weeks (proposed in Budget 2021) and 50 weeks (suggested by witnesses).

The committee is aware of investments proposed in Budget 2021 to increase the maximum duration of EI sickness benefits from 15 to 26 weeks, as previously committed to in Minister Qualtrough’s 2019 mandate letter.[184] In its 2016 report, Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program, the committee also recommended “that the federal government explore increasing the maximum number of weeks of Employment Insurance sickness benefits.”[185] The committee takes note that EI sickness benefits are of the utmost importance to Canadians’ social safety net and recommends:

Recommendation 13

That Employment and Social Development Canada, in consultation with employee and employer groups, consider expanding the maximum duration of Employment Insurance sickness benefits to 50 weeks in order to ensure that workers have sufficient time to fully recover before returning to work.

Special Benefits for Self-Employed Persons

As indicated above, self-employed persons can access all types of EI special benefits if they opt into the EI program. They must nevertheless pay premiums for at least one year before they can claim any benefits. They can withdraw from the plan at the end of any calendar year provided they have never received benefits; otherwise, they must continue paying EI premiums for the duration of their self-employed career.[186] As indicated above, measures implemented in March 2021 temporarily lowered the 2020 insurable earnings threshold required for self-employed persons to access EI special benefits in 2021 from $7,555 to $5,000.[187]

Speaking about the access by self-employed persons to EI special benefits, ESDC representative Andrew Brown indicated that a very small proportion (approximately 25,000 people out of two to three million across Canada) have opted into the program. Given the choice, he indicated, self-employed persons prefer not to pay into the insurance scheme. Those that tend to opt in more often, he noted, are younger women given their interest in obtaining access to EI maternity and parental benefits.[188]

During his appearance before the committee, Kenneth MacKenzie, president of the Associated Designers of Canada, similarly noted that a very small number of people opt into the EI program, describing the premiums that need to be paid in this regard as “too much of a toll” for some gig economy workers, particularly those in precarious situations. Mr. MacKenzie acknowledged that making the EI program mandatory for self‑employed persons could be a solution in this regard, provided they are only required to pay the employee portion of EI premiums among other aspects.[189] The Inter-provincial EI Working Group provided a similar recommendation, noting the example of the QPIP as a good model for the government to follow with respect to special benefits for self-employed persons.[190]

The committee is aware of upcoming consultations announced in Budget 2021 that will look at systemic gaps exposed by the COVID-19 pandemic with respect to the EI program, including “the need for income support for self-employed and gig workers.”[191] The committee heard that reforms may be needed to increase the participation of self‑employed persons, particularly those in precarious situations, in the special benefits scheme of the EI program. Therefore, the committee recommends:

Recommendation 14

That, in addition to considering ways to provide self-employed persons with access to Employment Insurance regular benefits as outlined in recommendation 5, Employment and Social Development Canada review the access to Employment Insurance special benefits by self-employed persons with a view to removing barriers to increased participation.

Additional Suggestions Regarding Special Benefits

During his appearance before the committee, Miles Corak recommended the establishment of an EI special benefits account. Under this approach, EI special benefits would be delivered through individual accounts designed in a way inspired by the three tiers of Canada’s retirement income system,[192] thereby giving claimants greater agency over their benefits.[193] However, he argued that maternity and parental benefits should be included in a separate but complementary family insurance program, explaining:

Just to be clear, maternity and parental benefits [would] still [be] a part of special benefits. I'm not sure that is an insurable risk in the same sense, and I'm not sure that we can handle that with special individual accounts. It would take time to build up these accounts, particularly early in your work history, probably when you are in the middle of family formation. That's why I suggest that maternal and parental benefits be hived out of this altogether and treated as a special program in the EI Act.[194]

For their part, the Fédération des chambres de commerce du Québec recommended a clearer separation between the various components of the EI program: the removal of “measures targeting the non-employed and the social components of the insurance system [such as maternity, parental, sick, and compassionate care benefits] in order to refocus EI on its primary mission and review the means of funding these programs.”[195] On the other hand, in its brief to the committee, the Chartered Professionals in Human Resources Canada cautioned about removing all social benefits (including maternity and parental benefits) from the EI program and making them available through another program as this could lead to unintended consequences.[196] Currently, they explained, “claimants on maternity or parental leave are penalized should they lose their jobs once their leave is completed by being unable to claim unemployment benefits.”[197]

The committee heard the concerns raised by witnesses with respect to whether EI special benefits should be a component of the EI program. In its 2016 report, Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program, the committee recommended that ESDC conduct consultations in this regard.[198] Having considered the testimony placed before it, the committee similarly recommends:

Recommendation 15

That Employment and Social Development Canada conduct consultations with employee and employer groups to determine whether special benefits should be part of the Employment Insurance program or be administered separately, and that this be done with a view to increasing access to benefits while facilitating program administration.

Chapter 5: Training and Labour Market Programming

This chapter summarizes witnesses’ concerns and recommendations pertaining to Part II of the EIA, which covers labour market transfer agreements with provinces and territories and supports training. Key issues that arose in testimony included the availability of EI benefits to individuals pursuing training; the investments needed to ensure Canada’s workforce has the skills necessary for today’s labour market; and the role of training within the EI program.

Pursuing Training While Receiving Employment Insurance Benefits

Currently, EI claimants may pursue training while on EI as long as they can prove they are available for work and are seeking employment, and are ready to adjust or cancel their training if they receive a job offer.[199] In a brief to the committee, Canada’s Building Trades Unions recommended that newly unemployed workers be allowed to pursue training without having to look for or be available for work.[200] An existing federal government initiative called Skills Boost allows certain EI claimants to seek permission from Service Canada to continue receiving EI benefits while attending full-time training; however, this applies only to long-tenured workers.[201] Hassan Yussuff, the representative for the Canadian Labour Congress, recommended that the government expand this initiative to cover other groups of unemployed workers.[202]

Some witnesses also recommended making regular EI benefits available to certain workers who quit their jobs in order to pursue training.[203] However, the Quebec Employers' Council provided the caveat that while it is important to ensure unemployed workers can support themselves while pursuing training, it is also important that the benefits they receive do not reduce their incentive to work.[204]

Work-Sharing

The Quebec Employers' Council also recommended that a training policy be established for the Work-Sharing Program (see Appendix B for an explanation of the program).[205] Currently, the Work-Sharing Program allows employees to participate in training while they are receiving work-sharing benefits. Chartered Professionals in Human Resources Canada suggested that a modern EI program should build on this practice, and that the government should review the effectiveness of the temporary changes made to the Work-Sharing Program during the pandemic with the potential to implement them permanently.[206] These changes expand the coverage and generosity of the program – for instance, by extending eligibility to employers who have been in business for one year instead of two, and increasing maximum duration of a Work-Sharing Agreement from 38 to 76 weeks.[207]

Employment Insurance Training Support Benefit

Some witnesses made recommendations pertaining to the EI Training Support Benefit. Once in force, the EI Training Support Benefit would provide up to four weeks of income support within a four-year period, at 55% of a claimant’s average weekly insurable earnings. The objective of this new EI benefit would be to help workers cover their living expenses while they are on training and without a regular paycheque. At the time of writing, this measure was not yet in force.

In relation to the EI Training Support Benefit, Unifor and Canada’s Building Trades Unions both recommended replacing 85% of participants’ wages, eliminating the one-week waiting period before receiving benefits, and extending the benefit to 16 weeks.[208] The Canadian Union of Public Employees recommended that the duration be extended to at least 26 weeks.[209]

Investing in Labour Market Programming

Pierre Laliberté, CEIC Commissioner for Workers, called for more spending on labour market programming (e.g., “providing skills training, subsidizing people who want to start a business, [and] engaging in job partnership programs”) and indicated that this type of investment has positive returns for the government.[210]

Several briefs submitted to the committee highlighted the importance of aligning training with labour market needs. In its brief, the CFIB recommended that the government “[b]etter align and increase awareness of EI training programs and initiatives with small business needs,” and provide training incentives (such as an EI premium rebate for employers to help with training costs) to assist with post-pandemic recovery.[211]

To “provide better alignment between skills, jobs and training,” Chartered Professionals in Human Resources Canada made recommendations related to a “pan-Canadian mapping of training and employment opportunities.”[212] The organization suggested that EI benefits “could be accompanied by specific training measures aimed at developing skills that are needed by employers,” including subsidized training for unemployed workers from declining industries to gain the skills and knowledge needed to work in industries with a high demand for workers.[213] The Quebec Employers' Council specified that training covered by EI should be “short and transferable, boost skills and provide a qualification,” and that digital literacy should be prioritized.[214]

Role of Training Within the Employment Insurance System

Not all witnesses placed the same priority on training within the EI system. Miles Corak suggested that the EI program already allocates sufficient money to training programs and that reforms should focus instead on providing “better and more complete income insurance.”[215] During his appearance before the committee, Sean Strickland, Executive Director of Canada’s Building Trades Unions, acknowledged the importance of training but suggested that it be separated from the EI system, particularly in the context of post‑pandemic recovery. He stated that this would simplify the EI program, while providing more Canadians with access to training.[216]

Having considered the testimony placed before it, the committee takes note of the importance of investing in training to ensure that workers have the skills and knowledge needed to succeed in today’s labour market and that employers have access to the skilled workforce they require. It therefore makes the following recommendation:

Recommendation 16

That Employment and Social Development Canada consider expanding Employment Insurance coverage to more workers pursuing training, as well as enhancing the proposed Employment Insurance Training Support Benefit (for example, by increasing the income replacement rate and/or the duration of the benefit).

Chapter 6: Technological Infrastructure and Modernization

Over the course of the study, the committee received considerable testimony about the computer system used to administer EI and the challenges it posed to the provision of rapid income support to Canadians at the beginning of the COVID-19 pandemic. This chapter summarizes what the committee heard on this topic, including key issues that must be addressed, as well as the government’s plans to modernize the system. It also discusses the rollout of the Canada Emergency Recover Benefit (CERB) at the beginning of the pandemic and resulting considerations for EI reform.

Age and Complexity of the System

ESDC’s Chief Transformation Officer, Benoît Long, stated that the federal government’s legacy computer systems – those used to administer EI, the Canada Pension Plan (CPP) and Old Age Security (OAS) – are “among the oldest IT systems in Canada still in use today,” with their age and condition being a “continual concern” for the department. He explained that the system used to administer EI is 50 years old.[217]

One consequence of the legacy systems’ age is that accessing benefits can be a complicated and confusing process, leading to a high number of unclaimed benefits among Indigenous persons, low-income seniors, persons with disabilities, and other vulnerable groups. It is estimated that, between EI, CPP and OAS, $2.5 billion in benefits go unclaimed each year.[218]

Another consequence, Mr. Long explained, is the computer system’s increasing complexity. While new investments have been made approximately every decade, the EI computer system has not been overhauled significantly in the past 50 years.[219] Changes added to the EI program over time have “led to a complex web of rules and code.”[220]

Making changes to the legacy computer systems to reflect new policies can “present significant and unsolvable technological obstacles.”[221] Further, trying to extend the life of these systems can be costly and pose risks such as mispayments, fraud, and possible system failure.[222] Mr. Long stated that “[r]eplacing our legacy system is no longer an option to consider. It's critical to continue [replacing our legacy system] in order to allow the government to continue to function.”[223]

In a brief submitted to the committee, the Canadian Payroll Association agreed that the replacement of the legacy EI system is critical, noting that this “is a major undertaking that requires input from key stakeholders who are responsible for the management of EI-related data.”[224]

Rollout of the Canada Emergency Response Benefit and Implications for Employment Insurance

The CERB was introduced to provide temporary financial support to workers who lost income due to the COVID-19 pandemic. As mentioned in Chapter 1, the CERB was accompanied by the EI Emergency Response Benefit or the EI ERB. While these were two distinct benefits, they are generally collectively referred to as the CERB.[225]

During her appearance before the committee, Minister Qualtrough explained that the government made a strategic decision to provide benefits through the CERB in part because EI benefits would not have covered all workers who had lost their employment due to the pandemic.[226] Further, the Minister noted that Service Canada would not have been able to process the incoming volume of applications in a timely manner.[227] Mr. Long expanded on this, stating that the EI system would not have been able to accommodate the necessary changes quickly.[228]

To respond to the Canadians’ urgent need for support, the CERB was designed in just a few weeks, in time to be rolled out on 6 April 2020.[229] Claimants who were eligible for EI could apply through Service Canada (for the EI ERB) and claimants who were not eligible for EI could apply through the CRA (for the CERB). Frank Vermaeten, a representative from the CRA, explained that on its end, the Agency accommodated the need to get payments out quickly by leveraging pre-existing information technology services.[230] As of 4 October 2020, when the program ended, the CRA and Service Canada had processed a combined 27.56 million applications, and distributed $74.08 billion in CERB and EI ERB payments to Canadians.[231]

A 2021 report from the Office of the Auditor General of Canada (OAG) examining the CERB noted the trade-off between quick delivery and the validation of eligibility. Although pre-payment controls (i.e., controls to prevent the payment of benefits to ineligible applicants) were introduced after the benefit was launched, the CRA “could have introduced a control related to suspicious applications at the launch of the benefit.”[232] According to the report, CRA officials stated that introducing such a control earlier would have resulted in a later launch.[233] Speaking about lessons learned from the CERB, Minister Qualtrough stated that “we can learn that you have to really balance the desire to deliver quickly with the need for robust integrity measures.”[234]

In response to the OAG report’s recommendations, ESDC and the CRA committed to conducting formal assessments of the CERB delivery and noted their plans to conduct post-payment verifications, the mechanisms of which will be subject to future OAG audit.[235]

As indicated in Chapter 1, following the CERB’s phase-out, the government introduced temporary measures to make the EI program more generous and accessible.[236] Minister Qualtrough noted that, at the time of her appearance before the committee on 15 April 2021, over 3.9 million EI claims had been received since September 2020.[237] She stated that the government’s efforts to modernize EI must take into account the temporary benefits’ expiry in September 2021.[238]

Benefits Delivery Modernization

Mr. Long noted that the government would soon be implementing Benefits Delivery Modernization (BDM), which is “the Government of Canada’s solution to meeting the Speech from the Throne commitment to update outdated IT systems and to modernize the way that government services Canadians.” BDM will include various components, including “a common technology platform that will streamline benefits processing, making it easier for government to introduce or change benefits, and for Canadians to access them.”[239]

Mr. Long explained that BDM will be rolled out on a benefit-by-benefit basis over seven years, and that the old and new computer systems will both be used during that period.[240] Due to their complexity, on-boarding for EI benefits is not expected to begin until 2023-24.[241] The Honourable Carla Qualtrough noted that reforms to the EI program can still be made before the new computer system is in place; however, these must be made strategically, with consideration for the old system’s limitations.[242]

The committee heard that the replacement of the EI legacy system is critical. With regards to the modernization of EI’s technological infrastructure, the committee makes the following recommendation:

Recommendation 17

That Employment and Social Development Canada keep the committee apprised of the Benefits Delivery Modernization initiative’s progress.

Chapter 7: Administration of the Employment Insurance Program

Over the course of the study, witnesses made a range of recommendations pertaining to the process of reforming EI, with many calling for a comprehensive review of the program,[243] and several asserting the need for further consultation, costing and analysis.[244] Witnesses also proposed reforms pertaining to the current administration of EI. This chapter explores issues related to administration, including program governance, the appeals process and service delivery to claimants and other stakeholders.

Canada Employment Insurance Commission

Stakeholders emphasized to the committee that the appointment of a new Commissioner for Employers to the CEIC (the organization responsible for overseeing the EI program) should be viewed as a matter of priority. The position has been vacant since January 2021.[245] The Fisheries Council of Canada explained that

the role of EI Commissioner for Employers is vital in ensuring our voice representing employers is heard during consultations on the EI program. The vacancy in this position has and will severely hinder our ability to have an equal voice moving forward, especially at this point in time when there are so many issues at play caused in part …[by]… the pandemic.[246]

The Council recommended that the next Commissioner for Employers be appointed and on-boarded “before any consultations [on ongoing and future changes to the EI program] commence in earnest.”[247] During her appearance before the committee, Minister Qualtrough stated that the government was in the process of appointing a Commissioner for Employers, but did not provide a specific timeline.[248]

The committee heard that the representation of both employee and employer interests in the oversight of the EI program is crucial, and that this will be especially important as the federal government begins consultations on EI reform. It also heard that the appointment of a Commissioner for Employers should be a priority. Therefore, the committee puts forward the following recommendation:

Recommendation 18

That Employment and Social Development Canada appoint, without delay, a Commissioner for Employers to the Canadian Employment Insurance Commission.

Client Service

The committee heard that client-facing services need to be more helpful and accessible. Carl Pursey, the representative from the PEI Federation of Labour, asserted that “[w]e should […] ensure the protection of francophone rights for those living outside Quebec to receive services from the government in French.”[249] Witnesses also recommended ways to make services more accessible to claimants who are not fluent in English or French.[250] In addition, witnesses indicated that Service Canada needs to ensure services are accessible to those who face barriers to Internet access, such as seniors, individuals living in poverty, and individuals with a high school education or less.[251]

Witnesses also raised concerns about the quality of service received at in-person Service Canada locations and on the phone. For example, the brief from Don Valley Community Legal Services stated that staff can often help with only the most basic functions related to EI, and recommended that the government ensure Service Canada agents receive the training needed to respond to questions and provide advice to claimants.[252] It indicated that “[f]rontline agents need vastly increased training on basic issues in employment, labour, and human rights law.”[253]

In 2019, the OAG published a report examining the accessibility and timeliness of call centre services at several federal departments, including ESDC’s call centre for EI. The Auditor General recommended that ESDC review its management of incoming calls in order to improve callers’ access to agents.[254] In a brief to the committee, the CFIB identified “[i]mproving customer service at the Service Canada Call centres” as a measure to reduce red tape for employers.[255] During his appearance before the committee, Benoît Long, Chief Transformation Officer at ESDC, stated that the government had made investments to improve access to agents, including in response to increased call volumes during the COVID-19 pandemic.[256]

In addition, a number of organizations recommended that the system of EI liaison officers be reinstated.[257] Liaison officers’ role included providing information to clients on EI and other services, organizing group information sessions at workplaces, and helping workers complete their EI claims in the event of mass layoffs.[258] The Fédération des travailleurs et travailleuses du Québec explained that, prior to the elimination of the role in 2013, “aid agencies, lawyers and union representatives of unemployed workers could contact a liaison officer specifically responsible for dealing with them.” These liaison officers provided a direct link between stakeholders and the bureaucracy, helping to resolve issues informally and requiring fewer claimants to turn to the appeals process.[259] The reinstatement of liaison officers was also recommended in the committee’s 2016 report Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program.[260]

The committee believes that in order for EI benefits to be truly accessible, current and prospective EI claimants – as well as the organizations that represent them – must be able to obtain the information and assistance they need in a timely manner. Further, this information or assistance must be provided in a format that does not create additional barriers. Accordingly, the committee makes the following recommendations:

Recommendation 19

That Employment and Social Development Canada improve the quality and accessibility of client-facing services provided by Service Canada to Employment Insurance claimants and recipients, including through:

• A review of current communications materials and client service practices to ensure that low-income individuals, seniors, individuals with language barriers, and other vulnerable groups do not face undue barriers to accessing Employment Insurance benefits; and
• Improved training to ensure that Service Canada officers are prepared to respond to detailed queries from claimants about rules and requirements related to Employment Insurance.

Recommendation 20

That Employment and Social Development Canada reinstate the system of Employment Insurance liaison officers in order to better support Employment Insurance claimants and the frontline organizations that assist them.

Conclusion

During its review of the EI program, the committee received a wealth of oral and written testimony from senior federal officials, advocacy groups, and representatives from labour and business about the key challenges facing the program, as well as considerations for reform. While the COVID-19 pandemic brought new urgency to discussions around the accessibility, adequacy, and responsiveness of the EI program, much of the testimony received reiterated existing concerns that were discussed during the committee’s 2016 study of the program.[261]

In the present report, the committee makes recommendations on regular benefits, special benefits, and a range of other topics relating to the EI program. The committee is aware that the government has proposed, through Budget 2021, a $5-million investment over two years towards targeted stakeholder consultations on long-term reforms to program.[262] It hopes that the present study – while not comprehensive – can support the development of evidence-based, permanent reforms.