September 9th, 2011
|Posted by: * PACT Editor|
Should it be Easier to Qualify for Employment Insurance? (Bill C-280)
When Prime Minister Pierre Trudeau reformed the Employment Insurance (EI) system to make it easier for applicants to qualify for benefits in 1971, EI became known as the ‘10/42’, because after only ten weeks of work, you could receive benefits for the remaining 42 of the year. Since then, it has been progressively reduced by Liberal, Progressive Conservative, and Conservative governments. The number of hours worked that are required to qualify for EI is presently tied to the regional rate of unemployment, and is revisited annually: at present, if the unemployment rate is 6% or less, a person needs at least 700 hours; if it is 13.1% or more, only 420 hours are required.
An employee must pay premiums into his or her EI account - 1.73% of gross earnings (up to $43,200) everywhere except Quebec, where the rate is 1.36% - to a maximum of $747.36 per years. Those with EI accounts in good stead may then access 55% of their average weekly earnings up to the $43,200 cap, or a maximum of $468 per week for between 14 and 45 weeks (after a two-week waiting period), depending on circumstance, in times of unemployment. As with all types of insurance, premiums are kept low because most of the insured never has to make a claim.
The NDP has been pushing a Private Members’ Bill (Bill C-280) to reform the EI system again, making benefits easier to access. The party recommended the number of hours needed to qualify be reduced to 360, the benefit amount go up to 55% of the worker’s highest-paid 12 weeks, the waiting period be reduced, and the consideration of regional unemployment rate be removed. MPs for the Conservative Party strongly opposed the bill, saying it would give workers a year’s worth of EI for only 45 days of work and would cost $7 billion per year. The Bill was supported by the Bloc and the Liberals, but did not pass prior to the end of Parliament's most recent session. It will likely be put forward again in the next session.
Those in opposition of the proposed EI reform argue that making EI too easy to access will result in people choosing to accept EI benefits rather than working; premiums will need to be hiked to pay for it. On the other hand, EI has been running a massive surplus ($57 billion in 2008), which goes into the government’s coffers. Auditor General Sheila Fraser has long called for EI premiums to be separated from general revenues, and the surplus be reduced to about $15 billion, which she said would be enough to get through economic turmoil, with little success. Premiums now fluctuate from year to year, based upon the unemployment rate, as a means of ensuring the surplus doesn’t balloon, however the fact remains that EI is turning a profit.
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