Employment Insurance Recipients on the Decline?

CTV News reported Monday that the number of Canadian Employment Insurance recipients has dropped for the first time in a year.

The rate of unemployment has been on the decline since July, according to Statistics Canada, which reported that the number of workers on EI benefits decreased by 3.8 percent from June.

The news, however, is not all positive:

Despite the decline in July, there were still 287,400 more Canadians, or 57.4 per cent, receiving EI benefits that month than last October

Erin Weir, Labour Economist for the United Steelworkers Union further cautions that the decline in Canadians receiving benefits is “…likely an indication that workers have exhausted their entitlements rather than that they have found new jobs.”

- Rachel Spence, Legal Assistant, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net

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Employment Insurance in Canada

On March 13, 2009, we looked at Unemployment Insurance in America and noted obstacles built-in to the U.S. system that often limited the ability of unemployed workers to obtain benefits. 

Today,  Doorey's Workplace Blog addresses systematic impediments to benefit entitlement in our own,  Canadian employment insurance model:

Statistics just released showed that applications for unemployment insurance increased by almost 23% this January compared to last year.  To deal with flood of applications, the government is providing an additional $60 million to hire more claim processors.

But critics argue that the real problem is the model itself, which has such strict eligibility requirements that more than one-half of Canada’s unemployed remain ineligible.  Here is a summary of the various eligibility restrictions prepared by the government.   In essence, you must have worked a certain number of hours during the 52 week period since your last claim to be eligible, and how many hours needed depends on where you live.  Here is the chart that tells you how many hours you need to work and how long you can receive benefits for.  In Toronto, for example, you need to have worked 595 hours, and you are eligible for a maximum of 47 weeks’ of benefits.  You also have to wait  a 2 week period at the beginning of your claim before your payments begin.

Critics want the number of hours needed to qualify to be lowered, the waiting period to be eliminated, the length of payments to be extended, and the amount of payments to be increased (currently, the maximum payment is $477 per week, based on 55% of average earnings to a maximum annual salary of $42, 300).

- Garry J. Wise, Toronto

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On Unemployment Insurance in America

Did you know that unemployment insurance premiums paid by individual employers in the U.S. are "based on the amount of the benefits their workers collect?"

The net result?

Washington Post writer Peter Whoriskey discusses a disturbing phenomenon:

More than a quarter of people applying for such claims have their rights to the benefit challenged as employers increasingly act to block payouts to former workers.

....Under state and federal laws, employees who are fired for misbehavior or quit voluntarily are ineligible for unemployment compensation. When jobless claims are blocked, employers save money because their unemployment insurance rates are based on the amount of the benefits their workers collect.

As unemployment rolls swell in the recession, many workers seem surprised to find their benefits challenged, their former bosses providing testimony against them. On one recent morning in what amounts to one of Maryland's unemployment courts, employees and employers squared off at conference tables to rehash reports of bad customer service, anger management and absenteeism.

The American unemployment insurance system thereby financially incentivizes bogus allegations by employers of employee misconduct and incompetence.

Now that's some safety net.

By contrast, Canada's employment insurance premiums, paid by both employers and employees, are solely based on each individual's insurable income earned. The rate formula is explained in the excerpt below from the Canada Employment Insurance Commission (CEIC):

GATINEAU, QUEBEC, November 14, 2008 - Acting under legislative authority introduced in 2005 that gives the Canada Employment Insurance (EI) Commission the authority to set the EI premium rate, the EI Commission today announced the 2009 premium rate.

As of January 1, 2009, the employee rate per $100 of insurable earnings will be $1.73, maintaining its current level. The corresponding employer rate is 1.4 times the employee rate.

The EI Commission sets the premium rate taking into account the principle that it should generate just enough revenue to cover payments expected to be made during the coming year. As prescribed in legislation, the rate is set based on economic forecasts provided by the Minister of Finance on or before September 30 of each year, the Chief Actuary's report and public input. As such, the proposed 2009 rate does not reflect recent changes arising from the deteriorating and rapidly evolving global economic situation and events after September 30, 2008. While the Government has the authority to substitute a new rate for that set by the Commission and is in a position to take into account more recent forecasts, the Commission notes that public input received from organizations representing employers and employees was unanimously of the view that the current rate should not be increased under current economic conditions.

Canadian employees who resign or are terminated for legitimate cause may be denied employment insurance benefits. Their employers' premiums, however, are in no way affected by E.I.'s eligibility determinations.

- Garry J. Wise, Toronto

Visit our Toronto Law Firm website: www.wiselaw.net

EMPLOYMENT LAW • CIVIL LITIGATION • WILLS AND ESTATES • FAMILY LAW & DIVORCE

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