6.1. Education and Training[791]

Poverty reduction strategies need to include a wide range of social and economic policies, including community economic development and job creation strategies, education and training programs, tax policies, as well as improvements to social programs. The point is that it's not just social programs or welfare; a whole range of measures are necessary.[792]

Dennis Howlett, Make Poverty History

a. Role of human capital in reducing poverty

Knowledge and skills acquired through education and training are known to enhance employability and access to better paid jobs. In 2008, for instance, the unemployment rate among Canadians without a high school diploma was 12%, as compared to 6.4% for those whose highest level of education was a high school diploma and 4.1% for university graduates.[793] Recessions tend to be harder on workers with less education. According to the Association of Universities and Colleges of Canada, since September 2008, 135,000 new jobs have been created for university graduates, while 770,000 jobs have been lost for those without a university degree.[794]

Level of education also affects workers’ income: for employees between the ages of 25 and 64 working full-time all year, the average earnings for individuals without a degree were $32,029 in 2005, as compared to $66,535 for those with a university degree higher than a bachelor’s degree.[795]

Basic education also promotes the development of skills in adults since workers with higher education levels are more likely to have the opportunity to take training activities: in 2008, 14% of workers aged 25 to 64 who had not completed high school took part in job-related training, as compared to 44% of those with a postsecondary degree.[796]

Finally, upon retirement, seniors with higher education levels have a higher retirement income because they had a higher income during their career, were able to save more and more often have access to private pension plans. In 2005, the average after tax income of seniors with no degree was $17,149 as compared to $32,376 for those with a university degree.[797]

The likelihood of a person’s income being below the low-income threshold for at least one year in a four-year period is 7.5% for university graduates, 14.1% for those who have partially or fully completed their postsecondary education, 16.3% for high school graduates and 24.8% for someone who has not completed high school.[798]

Parental income and education levels affect the child’s rate of university attendance:[799] 50% of children from a family in the highest income quartile attend university at the age of 19 compared to 31% of children of families in the lowest income quartile.[800] A very large part of this gap (84%) can be explained by non-financial factors, such as parental expectations, school quality, high school marks; only 12% can be attributed to financial factors. It should be noted that factors considered non-financial can nevertheless be influenced by income. For instance, children from low-income families have more limited access to books and cultural outings that can contribute to greater academic success.

Education levels impact not only employability and prospective income, but a number of social dimensions as well, notably crime and health.[801] Certain studies show that, on the whole, a one-year increase in the average education level increases GDP in the long term by 4% to 7%.[802] We consider education or human capital as one of our greatest sources of wealth, both economically and socially.

b. Human Capital in Canada

Canada is among the countries with the highest education levels: in 2007, 48% of the population aged 25 to 64 had a postsecondary diploma, the highest total. Yet 25% of those aged 25 to 64 had a university degree, which is behind Iceland (26%), Israel (28%), the Netherlands (29%), the United States (31%) and Norway (32%).[803] The percentage of people obtaining a doctorate (1.0%) is also lower than in France (1.4%), the United States (1.5%), the United Kingdom (2.1%) and Germany (2.3%).[804] Moreover, according to the Adult Literacy and Life Skills Survey of 2003, 42% of Canadians aged 16 to 65 had an understanding of prose below what specialists regard as the minimum to meet the requirements of a knowledge-based society. This was higher than in Norway (34%), but lower than in the United States (53%).[805] Finally, in 2006, spending on educational institutions represented 6.5% of Canada’s GDP, which is slightly higher than the OECD average of 6.1%, but lower than countries such as, Korea (7.3%), Denmark (7.3%), the United States (7.4%) and Iceland (8%).[806]

The Committee members recognize therefore that, although Canada has a very high level of human capital, there is room for improvement. Additional efforts in this regard are essential in order to reduce poverty.

c. Federal Contribution to Education and Training

In Canada, education falls under provincial jurisdiction, although the federal government is indirectly involved in education in a number of ways.

Student Loans[807]

The Canada Student Loan Program offers loans to students in all provinces and territories except Quebec, Nunavut and the Northwest Territories, which have their own program and receive federal compensation. The government provides loans covering up to 60% of a student’s estimated financial needs, for a maximum loan of $210 (increased from $165 to $210 in 2005 and has not changed since). Private service providers are responsible for the administration of the loans process.

Table 6.1.1 presents some program statistics. The final operating results for the program were $554.5 million in 2006-2007, representing the total of Canada student grants and access to education grants, loan administration costs, the cost of government assistance and payments to non-participating provinces, less revenues.

Table 6.1.1– Statistics for Canada Student Loan Program

1          Includes collection costs, service provider costs, risk premium, put-back costs and administrative fees to provinces and territories.

2          Includes interest borrowing expenses, in-study repayment expenses, in-study interest subsidy, interest relief, debt reduction in repayment, claims paid and loans forgiven, and bad debt expenses.

Borrowers typically have 114 months (ten years less a six-month grace period) to repay their loan. In 2006-2007, the average debt level at the start of the repayment period was $12,232: $9,582 for a student at a private institution, $9,619 for a college student and $15,668 for a university student.[808]

There are a number of student debt management measures. Borrowers can change their borrowing terms to accelerate repayment or to suspend payments when they are unable to make them. They may also receive interest relief for six months at a time, up to a maximum of 30 months. If these avenues have been exhausted, they can also benefit from debt reduction depending on their revenue. Finally, in the event of permanent physical disability, the debt can be completely forgiven. In 2006-2007, 54,629 borrowers changed the terms of their loan, 105,180 received interest relief, 4,101 received debt reduction and 396 loans were forgiven.

Those who benefited from these measures before August 1, 2009 will continue to do so until the end of the predetermined period. Since that date, however, the Repayment Assistance Plan has replaced the interest relief and debt reduction measures. Eligible students may receive assistance at two stages. At the first stage, borrowers make payments not exceeding 20% of their income to repay the principal. The government covers the interest owing. Borrowers who continue to experience difficulty after five years may receive assistance at the second stage, where the government helps repay part of the principal.[809]

Student Grants[810]

In the 2008 budget, the federal government announced the end of the Millennium Scholarship program and the consolidation of all student assistance as of 2009-2010 under the Canada Student Grants Program. Students from low- to middle-income families may receive grants of up to $1,200 (middle-income families) or $3,000 (low-income families) per year. This amount may be in excess of the needs identified in the evaluation. Persons with permanent disabilities may receive a grant of up to $2,000 per school year. Persons with permanent disabilities may receive a Canada student grant of up to $8,000 per year to purchase equipment and services. Low-income students with children may receive up to $200 per month of study for each dependent child, while part-time students with up to two dependents may receive $40 per week of study and $60 per week of study for those with three or more children. Low-income part-time students may receive up to $1,200 per year. Budget 2008 allocated $350 million for 2009-2010 for the consolidated student grant program.

The Graduate Scholarship Program is administered by federal funding bodies, namely, the Social Sciences and Humanities Research Council (SSHRC), the Natural Sciences and Engineering Research Council (NSERC) and the Canadian Institutes of Health Research (CIHR). It offers 5,000 scholarships per year valued at $17,500 for one year for master’s students and $35,000 annually for up to three years for doctoral students. Budget 2008 announced the creation of new scholarships awarded for excellence, providing $50,000 per year to the 500 best doctoral students, for a total of $25 million.[811] Budget 2009 added approximately $87.5 million over three years for additional scholarships to students at the master’s and doctoral level.[812]

The Apprenticeship Incentive Grant and the Apprenticeship Completion Grant offer grants of $1,000 per year up to a maximum of $2,000 per person during apprenticeship training and $2,000 when the apprentice successfully completes the program of study respectively.

Tax Incentives

The Registered Education Savings Plan (RESP) allows parents to save for their child’s education until the child registers for postsecondary studies.[813] These savings are not taxable although the interest will be when withdrawn. For each recipient, the maximum cumulative total contribution is $50,000. The Canada Learning Bond is a $525 subsidy per child whose parents open an RESP, for parents who receive the National Child Tax Benefit Supplement (provided to low-income families). The government will also deposit $100 per year in the child’s RESP for as long the family receives this supplement until the child reaches age 15. Finally, for the first $500 invested in an RESP, the government deposits the Canada Education Saving Grant in the child’s RESP, valued at $100, $150 or $200, depending on family income. For additional savings of $2,000, an additional $400 may be deposited. The maximum cumulative total benefit is $7,200 per child.

The Lifelong Learning Plan allows individuals to withdraw up to $10,000 per calendar year for a total withdrawal of $20,000 from their RRSP (retirement savings fund with tax deductible contributions), to finance their education or that of their spouse. They must be full-time students, except for persons with disabilities. The amounts withdrawn must be reimbursed within 10 years.[814]

There is also a series of tax credits and deductions to encourage postsecondary education: the education tax credit, deductions for tuition fees, textbooks, tools for apprentice mechanics and for interest on student loans.

Employment Insurance

Through labour market development agreements, the employment insurance program funds skills development activities offered by the provinces. Approximately $1.95 billion is invested each year in employment programs for clients eligible for employment insurance, along with $1 billion over two years for 2009-2010 and 2010-2011, as announced in Budget 2009. Among employment programs, the skills development programs provide a negotiated level of assistance that can cover tuition and other costs. For their part, labour market agreements are targeted to unemployed individuals who are not eligible for employment insurance or workers with a low level of education. The annual funding is $500 million, as well as $500 million over two years for the Strategic Training and Transition Fund.[815]

Other Programs

There is a series of other programs that encourage education and training. The Department of Indian and Northern Affairs Canada provides financial assistance to Aboriginal students to cover part of their tuition fees, books and transportation, as well as subsistence allowances. Children of deceased veterans are also entitled to financial assistance for their education. The Official Languages in Education Program helps the provinces and territories fund minority language education and second language instruction programs. The Department of National Defence offers a wide range of professional development and learning initiatives. The federal government also offers training to its own employees. Finally, it funds research related to education and training, including the “learn$ave” project, which looks at the impact of a savings subsidy for training for low-income individuals.[816]

d.Proposals to Increase Human Capital

The witnesses appearing before the Committee suggested various ways of encouraging low-income earners to increase their human capital and to improve access to education and training.

The Canada Social Transfer is an important source of funding for postsecondary education. Since the transfer is a facet of federal/provincial/territorial relations, the evidence heard and the recommendations will be addressed in a subsequent section.

With regard to student loans and grants, some witnesses called for grants to be increased or broader eligibility for interest exemptions and debt reduction assistance.

We heard that eligibility rules for getting interest relief and debt reduction assistance are too stringent and are providing only temporary relief. Often, existing high student loan debt is causing students to drop out of post-secondary education before they finish their program of study. In other cases, the thought of incurring high student debt is preventing many from furthering their education.[817]

Phyllis Mockler-Caissie, Poverty Reduction Initiative

The need-based Canada study grants for post-secondary education are appreciated. We wish to flag that $250 a month for living expenses is inadequate, and we recommend an expansion of that program so that low-income participants, especially in the higher-cost areas of the country, can participate more fully.>[818]

Terry-Anne Boyles, Association of Universities and Colleges Canada

The various parameters relating to the maximum loan per week and the amount of grants have changed in a discretionary way and currently are not indexed to the cost of living. Yet the low-income and moderate-income levels used in relation to grants are adjusted annually.

Recommendation 6.1.1

The Committee recommends that the federal government change the loans and grants system so that all financial parameters, including the maximum amount of assistance and grants, are indexed to the annual changes in the Consumer Price Index.

Recommendation 6.1.2

The Committee recommends that the federal government conduct an exhaustive review of the problems relating to access to postsecondary education and student debt and make the necessary changes to the loans and grants it provides and to student debt management measures.

The provinces are responsible for a large part of literacy efforts, through primary and secondary education. In 2006, Human Resources and Social Development Canada’s National Literacy Program, Office of Learning Technologies and Learning Initiatives program were subsumed under the Adult Learning, Literacy and Essential Skills Program (ALLESP). This program is designed to encourage ongoing learning and the creation of opportunities for learning, literacy and life skills acquisition. In September 2006, the federal government announced a $17.7 million cut over two years to adult literacy programs. At that time, the Committee recommended that the government continue funding these programs at the level prior to these cuts. The actual spending for the ALLESP was $23.3 million in 2007-2008,[819] while the combined spending for the three programs preceding the ALLESP was $39.6 million in 2005-2006.[820] For 2008-2009, the planned spending was $29.0 million while actual spending was $15.1 million.[821] Planned spending for 2009-2010, 2010-2011 and 2011-2012 was $26.3 million, $25.0 million and $21.5 million respectively.[822]

Recommendation 6.1.3

The Committee recommends that the federal government take steps to substantially increase adult literacy levels, in particular by increasing funding for the literacy and life skills program and through measures to encourage newcomers to learn English or French.

Witnesses also suggested that the federal government take action to improve literacy and, more generally, to increase the level of all kinds of training provided to unemployed persons and to employees through employment insurance, or financial incentives to the businesses providing training and to the employees taking it.

Yes, I think we could be using employment insurance in a much more creative way. One of the things we've been talking to the provincial government in Ontario about, and the federal government, is work-sharing programs. So if someone is laid off but is only, say, doing three days of work, as opposed to five, those other two days could be invaluable training days. That could be supported through EI in a much more creative and flexible way than we're seeing right now. The EI surplus could be used in a much more creative way, perhaps, to provide longer-term support.[823]

Margaret Eaton, ABC CANADA Literacy Foundation

We need to establish financial incentives that encourage businesses to offer training, and individuals to participate in adult learning. We need to do this carefully and selectively. [824]

Paul Cappon, Canadian Council on Learning

Recommendation 6.1.4

The Committee recommends that the federal government take steps to increase adult learning and training offered by businesses, through employment insurance, labour market and labour market development agreements, and grants or tax credits for training.

A number of witnesses spoke about the importance of financial knowledge, including knowledge of government programs, the ability to create a budget and how to avoid going into debt in order to help people escape poverty.

Along with that, we also need to look at financial literacy and numeracy skills among those with low skills. As we saw in the fallout from the mortgage issue in the U.S., which we're feeling a little bit in Canada, financial illiteracy was a huge contributing factor. These skills can also help raise people out of poverty.[825]

Margaret Eaton, ABC CANADA Literacy Foundation

What we soon learned was that it was difficult to encourage low-income families to save for their children's education when they didn't know how to manage their own budget. So we moved towards financial literacy.

[…] Financial literacy has been about helping families live within their means, which has led to making better choices for themselves and then to economic empowerment. But it's a basic building block of supporting families in living within their means. And the results have been extraordinary.[826]

Tanis Crosby, YWCA Halifax

In Budget 2009, the federal government announced the creation of a task force on financial literacy. Its mandate is to “provide advice and recommendations to the Minister of Finance on a national strategy to strengthen the financial literacy of Canadians.”[827] This task force will hold consultations in 2010 and release its report at the end of 2010.

Recommendation 6.1.5

The Committee recommends that the federal government follow the work of the Task Force on Financial Literacy and implement its recommendations, if they are effective and achievable, in order to enhance Canadian’s financial knowledge.

Knowledge of the costs and benefits of postsecondary education could also be improved. For instance, over half (60%) of high school seniors able to estimate the cost of tuition say it would be more than double the actual cost.[828] In this regard, the latest results of a pilot project conducted by the Social Research and Development Corporation show that, by providing better information about the costs and benefits of postsecondary education and by promising better financial assistance to students from low-income families, one can improve these students’ perception of postsecondary education and their ability to participate.[829]

We need to facilitate decision-making by individuals, businesses, and stakeholder organizations by better integrating labour market information with post-secondary adult education and counselling and support services, along the lines of what I think we'll get as recommendations from the Labour Market Information committee.[830]

Paul Cappon, Canadian Council on Learning

The Advisory Panel on Labour Market Information was formed by the federal government in 2008 to study problems and weaknesses relating to information. Its final report was tabled in May 2009.[831] Its recommendations pertain in particular to the governance, collection, analysis and dissemination of data, raising awareness of labour market information, and funding for and implementation of these recommendations. The initial cost of these measures was estimated at $21 million, in addition to recurring costs of $49.4 million. At the federal level, these recommendations pertain primarily to the data and analyses by Statistics Canada and Human Resources and Skills Development Canada. Improving labour market information is important so that young people can make informed choices about postsecondary education and field of study. Immigration policies should also be targeted to foreign workers with skills that are in demand in Canada. Better information might help address the problems of young people and immigrants having skills that are not in demand, which can make it more difficult for them to find stable work and increase the likelihood of their living in poverty.

Recommendation 6.1.6

The Committee recommends that the federal government follow the recommendations of the Advisory Panel on Labour Market Information to improve the quality of labour market information in order to increase the employability of young people and immigrants.

Some witnesses also spoke about the need to invest in the infrastructure of educational institutions. The government agrees with these witnesses, which is why it created the Knowledge Infrastructure Program in Budget 2009. This two-year temporary program will fund college and university infrastructure projects.

There should be a continued increase in investments in human capital and knowledge infrastructure, specifically physical infrastructure. Colleges and institutes were, for the most part, built through the federal technical and vocational act of 1960. That infrastructure is failing, and there's a dramatic need if we're going to have capacity for the current students and expanded capacity for the future.[832]

Terry-Anne Boyles, Association of Canadian Community Colleges

Recommendation 6.1.7

The Committee recommends that the Knowledge Infrastructure Program be made permanent, with a sufficient budget to maintain high-quality college and university infrastructure.

Some witnesses also stressed the need for non-financial assistance to employers and individuals by improving the assessment and recognition of prior learning. The Committee’s report entitled Employability in Canada: Preparing for the Future[833] highlighted the importance of these factors and of workplace learning in order to improve the employability of Canadians. A number of witnesses noted that better recognition of learning is essential.

We need to create increased awareness and recognition of prior learning assessment and recognition. That is the learning that people have done formally or informally in the past, which often doesn't count, but should count. The Conference Board of Canada, as you'll notice in our notes, has suggested that this would give Canadians an additional $6 billion in income annually, and it would make a great deal of difference to some people who are now below the poverty line if their learning were better recognized.[834]

Paul Cappon, Canadian Council on Learning

In November 2009, the Forum of Labour Market Ministers published its Pan-Canadian Framework for the Assessment and Recognition of Foreign Credentials.[835] The various governments have agreed to work together to meet the framework objectives, such as improving support for immigrants prior to their arrival, enhancing the ability of organizations to recognize credentials, meet integration needs (language courses, mentorships etc.), to target professions that are in higher demand, and to follow up on the implementation of the framework.

Finally, the Committee also heard evidence regarding the difficulty that people with mental illness face in receiving programs tailored to their needs, especially training.

If you step back and look at the package of federal programs, particularly the HRSDC programs, whether it is EI sickness benefits or CPP disability, etc., they were all designed for people who had a physical illness. That is what people had in mind when they were designing the programs. Frankly, they don't work very well for mental illness.[836]

Hon. Michael Kirby, Mental Health Commission of Canada

The federal government has acknowledged its responsibility for a national mental health strategy through creating the Mental Health Commission of Canada and charging it with developing a national mental health strategy. This strategy should include a substantial fund to work with provinces and territories to expand supported education and training programs, employment programs, and training and resources for employers to implement workplace accommodations.[837]

Ruth-Anne Graig, Canadian Mental Health Association

Recommendation 6.1.8

The Committee recommends that the federal government encourage training for persons with mental health problems in particular by providing additional financial support to the Mental Health Commission of Canada to support pilot projects or other research projects relating to training.

6.2 Making Work Pay

I would like to add in particular one group, a very significant group: single mothers in this country, many of whom are unemployed and many of whom probably would like to be employed. The problem is not so much their willingness to be employed but the disincentives to employment in this country.[838]

Glenn Drover, Canadian Association of Social Workers

In April 2008, this Committee released a report that focused on policies to address labour market imbalances in the years to come.[839] At that time Canada’s unemployment rate was around 6% and many employers, especially those who operated small- and medium-sized businesses in Western Canada, were experiencing difficulty recruiting workers with the skills required to maintain and expand their operations. With the onset of the recession, Canada’s labour market performance has dramatically deteriorated; in the second half of 2009 the seasonally-adjusted unemployment rate almost reached 9%.

As the economy recovers, members of the Committee expect skills shortages to resurface once again. This could result in labour market opportunities for low-income and other disadvantaged workers with the right skills. In order to maximize these opportunities, governments across the country must continue to focus their labour market policies on investments in education and training and other measures that seek to enhance workers’ earnings and participation in the Canadian workplace.

During our poverty study, the Committee was told that some individuals do not participate in the Canadian workplace because they face significant disincentives to work. For example, high marginal tax rates imposed on individuals can have an adverse impact on working time. For example, when the income of social assistance recipients rises in response to increased hours of work, they face higher income taxes, lower social assistance payments, and a reduction in means-tested refundable tax credits and social services.

I would like to add in particular one group, a very significant group: single mothers in this country, many of whom are unemployed and many of whom probably would like to be employed. The problem is not so much their willingness to be employed but the disincentives to employment in this country.[840]

Glenn Drover, Canadian Association of Social Workers

[O]ne of the biggest impediments that individuals and families face when attempting to move out of poverty is the welfare wall. While on social assistance programs, certain benefits--such as housing, child care, and prescription drugs--are subsidized. As a person attempts to move out of poverty, these benefits are eliminated, thus increasing the financial needs of the individual or the family, and often resulting in a return to the poverty cycle and/or as a disincentive to work. In recent years, the federal government has recognized this problem. It has moved towards addressing it through the working income tax benefit--the “WITB”, as it's commonly known--which is intended to lower the welfare wall by compensating people for personal high marginal tax rates. Without this, marginal tax rates for some of these individuals may actually be as high as 50% to 70%.[841]

Dave Quist, Institute of Marriage and Family Canada

... [R]eports by Toronto Dominion, or TD Economics, other economists and social policy experts have explored the work disincentives and high marginal effective tax rates faced by working-age adults on social assistance and other issues inhibiting poverty reduction in Canada. Both the federal and Ontario governments have acted on these reports in a number of positive ways, including through the working income tax benefit, which was expanded in the recent federal budget, and through the Ontario child benefit and a dental plan for the working poor. At this critical juncture, however, there is still much to do to ensure that all individuals have adequate opportunities to work and become more self-reliant.[842]

John Stapleton, Toronto City Summit Alliance

On several occasions, we were told that the best social program is a job. We agree that employment is a critical piece in solving poverty among working-age adults who are able to work. But it is important to note that there are many low-income working-age individuals who have a job and work full time.

Let's never forget that jobs matter when it comes to poverty. If you look at any statistics on who's poor, it's people without jobs who are poor. So creating jobs is very much part of poverty reduction.[843]

Hon. Deb Matthews, Government of Ontario

We have said now for over 15 years in this country, maybe 20 years, that the best social policy in this country is a job. What happens when the jobs dry up? […] The job losses in the opening months of this recession outstrip anything we saw in the 1981-1982 recession or the 1990-1991 recession.[844]

Armine Yalnizyan, Canadian Centre for Policy Alternatives

According to a study on the working poor, there were an estimated 653,300 low-income Canadians (i.e., salaried and self-employed) in 2001, of which 56.5% were men and 43.5% were women. When the dependants of these workers are counted there were approximately 1.5 million individuals living in low-income families that year, roughly 40% of all low-income individuals.[845] It is surprising to note that the study found that 76% of the working poor (compared to 88% of non-poor workers) worked at least 1,500 hours or more in 2001. Salaried low-income workers earned, on average, $12 per hour (65% of the average wage rate of non-poor workers), or 50% above the highest minimum wage in 2001 (i.e., British Columbia’s minimum wage rate was $8 per hour, the highest minimum wage that year). In 2001, less than 50% of salaried low-income workers were low paid (i.e., earning $10 per hour or less) and only 7% of salaried low-income workers earned the minimum wage.[846] That same year, roughly two-fifths of the working poor were self-employed.

a. Assisting the Working Poor—Minimum Wage and the Working Income Tax Benefit

Although witnesses suggested several ways to raise the incomes of the working poor, two measures—the minimum wage and the Working Income Tax Benefit (WITB)—were cited most often. Legislative authority to establish a minimum wage in Canada is shared between the federal, provincial and territorial governments. Prior to 1996, the federal government set its own minimum wage rate which is applicable to workers covered under the Canada Labour Code. Since then, the federal government has essentially delegated its authority to set the federal minimum wage to provincial and territorial governments; currently the federal minimum wage is equal to the minimum wage rate set by each provincial and territory government. Hence, there are 13 federal minimum wage rates applied to workers covered under the Canada Labour Code.

Many, but not all, of the witnesses who addressed the issue of raising the minimum wage as a means of providing greater support for the working poor called on the federal government to reinstate a uniform and higher federal minimum wage.

We are calling for minimum wage in Québec and the rest of Canada to be increased to the poverty line. We are asking that a minimum wage be reinstated in the Canada Labour Code. The Arthurs report, reviewing federal labour standards, agreed with this point.[847]

Mélanie Gauvin, Au bas de l'échelle

I would argue that, overall, raising the federal minimum wage is basically not a particularly effective policy because there are very few workers in the federal jurisdiction who receive minimum wage. You also want to have some regional sensitivity there. Overall, minimum wage is a very crude instrument to reduce poverty. It has its role, but it's not always effective because a lot of people who receive the minimum wage may not be poor.[848]

Andrew Sharpe, Centre for the Study of Living Standards

Some members of the Committee question the effectiveness of a uniform and higher federal minimum wage as a means of raising the incomes of the working poor. In addition to the potential adverse employment effects associated with increases in the minimum wage rate, a uniform rate is unable to capture regional differences in labour market conditions across the country. Furthermore, we were told that the minimum wage is a blunt instrument for helping low-income workers. Aside from the fact that the federal minimum wage applies to a very small number of workers across the country,[849] many minimum wage workers are not necessarily poor. In 2005, almost 60% of minimum wage workers lived with their parents or other family members while only 10% of minimum wage workers lived alone or with a non-relative.[850]

The WITB, introduced in Budget 2007, is a refundable tax credit intended to help low-income people over the so-called “welfare wall” and to strengthen the incentive to work among low-income workers already in the labour market by providing a supplement to help make work pay.[851] This initiative provides income support to low-income workers by providing a refundable tax credit to those (who are at least 19 years of age, not a full-time student and resident in Canada) whose annual earnings exceed $3,000 ($1,750 in the case of workers eligible for the Disability Tax Credit).[852]

An important feature of the WITB is that it can be modified to operate more effectively vis-à-vis provincial and territorial programs as long as program changes:

• build on actions taken by the province or territory to improve work incentives for low-income individuals and their families;
• are cost neutral to the federal government;
• provide for a minimum benefit level for all WITB recipients; and
• preserve harmonization of WITB with existing federal programs.[853]

Budget 2009 substantially increased the level of support provided under the WITB, beginning in the 2009 tax year. The maximum benefit for single workers has been increased to $925 (when earnings reach $6,700). The amount for people eligible for the Disability Tax Credit will increase in proportion to the increase in the maximum entitlement for single individuals. For single parents and couples, the maximum benefit has increased to $1,680 (when earnings reach $9,720). The WITB is reduced at a rate of 15% when earnings reach $10,500 (in the case of single individuals) and $14,500 (in the case of couples and single parents). According to the Department of Finance, the additional cost of the enhanced WITB is expected to total about $580 million in 2009-2010 and benefit more than 1.5 million individuals and families in the 2009 tax year.[854]

Many witnesses expressed a great deal of support for further increases in the WITB, an initiative that many members of the Committee consider to be an effective instrument for raising the incomes of the working poor. This view is based on the fact that the WITB is targeted at low-income workers (i.e., it is means tested) and it is available to all workers across the country, not just those covered under federal labour law.

We are very explicit about our request to the federal government, and very pleased, as I said, with the increase in WITB. On the target indicators, there are two things we're asking the federal government to do. One is to increase WITB to $2,000 a year. It's now up to over $1,600—thank you for that very much.[855]

Hon. Deb Matthews, Government of Ontario

Some positive steps have been taken by the government in the past. I've mentioned the WITB is a step forward in addressing the welfare wall, but it has not yet eliminated it. Continuing to expand this program would make it easier for people to return to the workforce.[856]

Dave Quist, Institute of Marriage and Family Canada

[T]he finance minister saw fit in the most recent budget to substantially improve the working income tax benefit by increasing the maximum benefit and also pushing the income level eligibility higher up for this program. This is an extremely new program, but it's potentially very important in terms of reducing poverty among the working poor, who make up about half of low-income Canadians.[857]

Ken Battle, Caledon Institute of Social Policy

Recommendation 6.2.1

The Committee recommends that the federal government continue to monitor the Working Income Tax Benefit to ensure that it achieves its intended results and be prepared to continue to expand this measure.

b. Employment and Pay Equity

Several witnesses told the Committee that the federal government should reform its employment and pay equity programs and policies to increase the earnings and employment opportunities of workers facing discrimination in the Canadian workplace. Some witnesses affirmed that employment equity and pay equity are important policy measures for improving the income and employment opportunities of low-income workers, especially female workers. According to a recent report prepared by the Standing Committee on the Status of Women, the male-female earnings differential, albeit smaller today than in the past, still persists; slightly more than one-half of this earnings differential seems to be explained by differences in labour market qualifications and job characteristics.[858]

The federal government delivers a number of initiatives to promote a fair and inclusive working environment for workers in the federal jurisdiction. For example, the Racism-Free Workplace Strategy seeks to eliminate systemic discrimination facing visible minorities and Aboriginal people in federally regulated workplaces covered under the Employment Equity Act and the Federal Contractors Program.

The Employment Equity Act is intended to eliminate barriers to employment faced by Aboriginal people, persons with disabilities, visible minorities and women. The Canadian Human Rights Commission is responsible for conducting audits to ensure that federally regulated employers, Crown corporations, federal departments and agencies, and separate employers comply with the Act. The Federal Contractors Program requires employers (with 100 or more employees) who wish to do business with the federal government (contracts worth at least $200,000) to undertake employment equity as a condition of the contract. Human Resources and Skills Development Canada can conduct compliance reviews to ensure that federal contractors are meeting their employment equity obligations. While the Employment Equity Act states that a parliamentary review must be conducted every five years, it has been eight years since the last parliamentary review.

Equal pay for work of equal value in federal workplaces is addressed through a complaints-based system under the Canadian Human Rights Act in the case of federally regulated employers. All other employers in the federal jurisdiction (e.g., federal departments and agencies, separate employers, the Royal Canadian Mounted Police and the Canadian Forces) are subject to the recently introduced Public Sector Equitable Compensation Act. This Act makes employers and bargaining agents jointly accountable (through the bargaining process) for ensuring that employees are equitably compensated.

Some witnesses expressed opposition to the federal government’s recent decision to introduce the Public Sector Equitable Compensation Act, and called on the government to implement the recommendations of the Pay Equity Task Force which released its report in 2004.[859]

[W]e urge the federal government to remove one of the major systemic barriers to poverty reduction: wage discrimination…Federal pay equity legislation would help to remove that systemic barrier. We totally support the task force that presented a report in 2004 on pay equity.…We need to adopt a new pay equity law to extend the coverage to aboriginal people, people with disabilities, and visible minorities.[860]

Johanne Perron, New Brunswick Coalition for Pay Equity

CFUW believes that there is already a clear framework in existence to address pay inequity through proactive legislation by the federal government. The 2004 pay equity task force report recommends adopting a new stand-alone pay equity law that will cover women as well as workers of colour, aboriginal workers, and workers with disabilities. The recommendations outlined in the report are comprehensive, provide a clear way forward, and are useful models for proactive pay equity in Ontario and Québec to build upon. This report has yet to be implemented by any government, and the recent inclusion of the Public Sector Equitable Compensation Act in the budget implementation bill risks weakening what little recourse women currently have to pay equity.[861]

Susan Russell, Canadian Federation of University Women

The Employment Equity Act, on the other hand, benefited from widespread support among witnesses.

I'll just quickly wrap it up by saying that we also believe the Employment Equity Act should be strengthened in order to create jobs and to make sure that African Canadians and other visible minority groups get their fair share of jobs.[862]

Mr. Trevor David. AfriCana Village and Museum

It is essential that the government consider strategies such as paid internships, subsidies, and/or tax incentives for employers who are committed to practising employment equity and other measures that ensure equal access to the labour market for racialized groups. We see the equal participation of these groups in the labour market as being essential to addressing the issues of poverty.[863]

Grace-Edward Galabuzi, Colour of Poverty Campaign

… [T]he federal employment equity program has been very helpful. It's interesting, because if you look around, even the premier of the province and our mayor talk about how Toronto has such a diverse population, and they look at some of the workplaces to show the diversity. They often refer to the banks and to telecommunication companies. All of them are regulated federally, and, therefore, they are subject to the employment equity program. To me, that is an illustration of how useful the federal employment equity program has been. At least at the front-line level, the workforce has become more diverse.[864]

Avvy Yao-Yao Go, Metro Toronto Chinese and Southeast Asian Legal Clinic

Recommendation 6.2.2

The Committee recommends that the House of Commons instruct the appropriate Parliamentary Committee to undertake the required quinquennial review of the Employment Equity Act. In preparation for this review, the government should provide that Committee with a current assessment of the Employment Equity Act and options for improving its effectiveness.

Recommendation 6.2.3

The Committee recommends that the federal government continue to monitor and strengthen its pay equity regime with the view to ensuring that all workers in the federal jurisdiction are equitably remunerated and that all pay equity complaints are resolved in a timely fashion.

c. Precarious Employment and Federal Labour Standards

Canada, like other industrialized countries, continues to adjust to economic structural change. In this context, technological change, competitive trade pressures and a host of other factors have fostered an environment where firms pursue measures to protect and enhance their competitive position at home and abroad. One of these pursuits has involved adopting a more flexible and less costly workforce, capable of adjusting quickly to changes in the market place. Today, employers are undeniably hiring more workers on a temporary or part-time basis compared to the past; between 1976 and 2008, part-time employment’s share of total employment increased from 12.5% to 18.4%.[865]

Several witnesses indicated that the growing incidence of temporary and part-time employment in Canada is worrisome, as this type of employment is generally believed to offer workers less job security, lower earnings and/or reduced benefits. In this context, temporary and other non-standard employment can contribute to low income, especially among women, an issue that was recently highlighted in a report entitled Improving the Economic Security of Women: Time to Act.[866]

Many people seem to believe that the solution to poverty is a job--if we could only get those lone-parent mothers working, they wouldn't be poor anymore. Finding a job is not necessarily the solution to women's poverty, because you have to look at the kinds of jobs women do: 40% of women who have jobs are employed in what we call non-standard work arrangements. That includes part-time work, temporary jobs, casual work, contract work, and own-account self-employment, which is self-employment without any employees, and 40% of women's jobs are those kinds of jobs. Just 29% of men's jobs are those kinds of jobs.[867]

Monica Townson, As an Individual

So that we can ensure that everyone is treated equally, the Québec Labour Standards Act and the Canada Labour Code need to establish that an employer cannot provide working conditions to an employee that are inferior to those provided to workers doing a comparable job for the same company, for the following reasons: if this person usually works fewer hours per week; if this person was hired through an employability program or measure covered by legislation; if this person is a temporary, casual or on-call employee; if this person was hired through a temporary help agency; or if this person works outside the work building. We are also calling for companies to pay wage compensation that is proportional to the loss in benefits to which other employees of the company are entitled.

Recently in Québec—and it is similar in the other Canadian provinces—we have seen some employers that try to reduce costs and increase flexibility, and end up creating inequalities based on the type or status of the job, which can make it difficult for people to access decent jobs, and explains part of the problem with poverty among workers.[868]

Mélanie Gauvin, Au bas de l'échelle

Concern regarding temporary employment also stems from the fact that workers in this type of employment do not obtain the full benefit of labour standards legislation (e.g., rules governing hours of work, leave, termination of employment, etc.). The reason for this is that workers are typically required to accumulate a period of continuous employment in order to benefit from the employment protections offered under these laws. In terms of workers in the federal jurisdiction, this issue was thoroughly studied in the recent review of Part III of the Canada Labour Code, conducted by the Federal Labour Standards Review Commission. In June 2009, Human Resources and Skills Development Canada completed a consultation process that provided an opportunity for interested parties to comment on the recommendations presented in the Commission’s report.[869] Members of the Committee generally agree that it is time to update federal labour standards and that the proposed legislative changes should provide an adequate balance between the needs of employers and employees, particularly workers whose employment arrangements are currently underserved by Part III of the Code.

Recommendation 6.2.4

The Committee recommends that the federal government move quickly to modernize Part III of the Canada Labour Code. The proposed legislative reforms must provide the requisite balance between the needs of employers and employees as well as adequately capture the changes that have occurred in the Canadian workplace over the last several decades, particularly relating to changes in work time and work arrangements.

d. Social Economy

The Committee was told that organizations (e.g., co-operatives, enterprising non-profits, community economic development organizations, etc.) operating within what is broadly referred to as the social economy can make a significant contribution to addressing the needs of low-income individuals, especially in terms of providing job opportunities for those who face serious challenges finding and maintaining employment. Generally speaking, these organizations produce goods and services for the market economy, but manage their operations, through a democratic governance structure, and reinvest their profits to pursue social goals.

[W]e need to explore innovative solutions to creating employment and eliminating poverty. One of the most promising, yet underdeveloped, approaches in this country is social enterprise.[870]

Don Palmer, Causeway Work Centre

The best vehicle for meeting this spectrum of needs [basic job skills] is a social enterprise or training business, which has a double bottom line of making a profit while teaching its employees how to work. The so-called social economy in Québec is the best model of this approach, but the concept of social enterprise and community-based enterprises is gaining momentum everywhere and should be strengthened, encouraged, and supported.[871]

Sue Rickards, As an individual

As is done in the U.K., we believe that Canada should consider using unclaimed funds from dormant bank accounts to fund social enterprises and macroeconomic projects. As far as I understand, tens of millions of dollars are left every year in banks as unclaimed funds, and I believe they go back into the treasury. Well, in the U.K., what they have done is to use these funds to fund social enterprises and help lift up marginalized groups and get them working and paying taxes. That may be something the standing committee would want to take a look at, in terms of being innovative and creative.[872]

Trevor David, AfriCana Village and Museum

In Budget 2004 the federal government committed funding ($132 million over several years), to be delivered through regional development agencies and the Social Sciences and Humanities Research Council, to support capacity building, financing and research in the social economy.[873] On September 25, 2006, the federal government announced that approximately $39.3 million of non-committed funding for the social economy program would be eliminated, part of an initiative in Budget 2006 to identify $1 billion in savings from programs and activities.[874] The Committee examined this cost-saving proposal on November 21, 2006 and according to the testimony presented to the Committee witnesses generally felt that the social economy program should continue and that more funding was needed.[875] In addition, according to the results of a recent evaluation of the Fiducie, the entity that was established to implement the funding component of the Social Economy Initiative in Québec, satisfactory progress was achieved in the first year of operation and the enterprises that used its services found them to be satisfactory.[876]

Members of the Committee support using the social economy as a policy tool for reducing low income and promoting social inclusion among the most disadvantaged groups in Canadian society. In this regard, many of us believe that the federal government should take steps to help expand this important sector to help alleviate poverty across the country. Consideration could be given to using unclaimed bank balances and unclaimed cheques issued by the federal government as possible sources of financing to achieve this policy objective. For the year ended December 31, 2008, unclaimed balances held by the Bank of Canada were $351.4 million.[877] As the Bank of Canada is required to hold unclaimed balances for certain periods of time, only $170,000 was transferred to the Consolidated Revenue Fund in 2008-2009, the latest year for which data are available.[878]

In terms of unclaimed cheques issued by the federal government (e.g., tax refunds, GST credit, Child Tax Benefit, etc.), information published by Finance Canada indicates that in 2008-2009 some $30.1 million was transferred to the Consolidated Revenue Fund from cheques in the Outstanding Interest Account that were unclaimed or outstanding for 10 or more years.[879]

Recommendation 6.2.5

The Committee recommends that the federal government increase the budget for social economy initiatives and that this increased funding be used to promote job creation among low-income individuals, especially those who face serious barriers finding and securing a job.

6.3 Employment Insurance Benefits and Other Employment-Related Income Support

There has been a growing body of evidence accumulated, beginning in the 1930s but certainly over the last 30 years, that talks about the impact of unemployment. There was a recent report done by the Ontario Institute for Health & Work[880] that, again, reaffirms some of the work that's been done in the past. It's easy to dismiss unemployment as being a temporary condition from which people will recover, but many people don't. The impact of unemployment has a devastating impact on one's mental and physical well-being.

[…]

... We see this every day in the faces of our clients, particularly those who live in poverty, who fail to qualify or who see their benefits run out. We would call for easing of entrance requirements and also for restructuring the program in a way that is responsive to workers who have unstable or irregular labour force attachment patterns.[881]

Neil Cohen, Community Unemployed Help Centre

a. Employment Insurance

The EI program received a considerable amount of attention during the Committee’s hearings. This is not surprising, given EI’s important role as an automatic stabilizer during an economic downturn and, more importantly, as a key source of income support for many unemployed workers. To help address the needs of low-income claimants with children, the EI program also provides additional income support called the Family Supplement. In the absence of the income support provided by the EI program, some individuals (and their families) would have to rely on social assistance programs and be at risk of becoming poor or more impoverished.

The most important thing is that these benefits be available to more Canadians falling into unemployment. The reason is, if you fall into unemployment and are not able to get employment insurance, you have to sell off all your assets and sink down to a really low level of supported welfare, from which it is much more difficult to climb back out.[882]

Dennis Howlett, Make Poverty History

An expanded EI program is a key measure for poverty prevention. Individuals who cannot access EI, or whose benefits run out too quickly, are forced to turn to an inadequate social assistance system that requires them to strip their assets, provides benefit levels well below the poverty line, and creates multiple barriers to returning to productive employment. Maintaining adequate income supports in the short term through the employment insurance system will prevent many Canadians from falling into the poverty trap that is so difficult to escape.[883]

John Campey, Community Social Planning Council of Toronto

Witnesses were generally supportive of the provisions in Budget 2009 to extend EI regular benefits, enhance work sharing and increase spending on EI training. However, many witnesses also indicated that EI is in need of a major reform. These witnesses expressed the view that the current program needs to become more accessible and provide a higher level of income support for a longer period of time.

Mine is only yet another voice calling for the reform of employment insurance in this country. Unemployed workers are entitled to those benefits that will enable them to cope financially and gain the necessary support and/or training they need to re-enter the labour market. I'm sure many people who have appeared before you today have reminded you that in this province only 32% of unemployed Ontarians qualify for EI. So like many others, the Income Security Advocacy Centre is calling for uniform entry requirements based on 360 hours of work, benefit levels raised to 60% of earnings based on a worker's best 12 weeks, and an increase in the period in which benefits may be collected to a maximum of 50 weeks.[884]

Sarah Blackstock, Income Security Advocacy Centre

Employment insurance is a troubled program, to say the least. As you may or may not know, virtually all employees pay EI premiums but only a minority are able to draw upon the program's income benefits and employment services when they become unemployed. In fact, coverage of the unemployed fell from 83% in 1990 to 43% in 2008, which is the lowest number since 1976.

There is a gender gap in EI. Only 39% of unemployed women received EI at last count, compared to 46% of men. And that gender gap has widened over the years.

Benefits are by no means generous. The maximum benefit has declined from $595, in inflation-adjusted terms, in the mid-nineties, down to $447 in 2009. Average benefits for women amount to $4,544 below the poverty line. Even if you manage to qualify for EI, which most unemployed people don't, you don't get a very generous benefit.

What should we do? Most progressive organizations have called for an end to the variable entrance requirement. This is the regional aspect of EI whereby your eligibility for benefits and the length of time you get benefits varies by the regional unemployment rate. Groups have called for that to be substantially reduced and indeed removed. The earnings replacement rate could be increased. It's only 55% of insurable earnings; this could be up to 60% or 75%. And extend the duration of benefits.[885]

Ken Battle, Caledon Institute of Social Policy

With respect to employment insurance, fewer than half of the workers who lose their jobs are currently eligible to receive EI benefits, even though all workers contribute to the system. We consider that to be completely unacceptable and unfair. We are calling for a major improvement in benefit coverage, by setting the number of work hours required to be eligible for benefits at 360 hours, extending the benefit period to a minimum of 35 weeks, setting the percentage of insurable earnings at 60 % of wages, abolishing the two-week waiting period, extending the illness benefits, and enhancing the benefits for compassionate reasons.[886]

Élisabeth Gibeau, Union des consommateurs

Many women who become unemployed do not qualify for employment insurance benefits, and for many the overall situation is extremely difficult and fraught with well-founded anxiety.

[…]

We recommend that the Government of Canada implement…a sustainable reform of the EI system that would provide coverage to those working part-time and in precarious employment, including self-employment;…[887]

Louise Smith MacDonald, Women's Centres Connect

The Committee was told that the EI reform undertaken in 1996 was too restrictive and as a result many unemployed individuals are unable to gain access to regular benefits and employment benefits.[888] To bolster this view, some witnesses referred to the steady decline in the proportion of unemployed individuals who receive EI benefits. As shown in the Table 6.3.1, an estimated 39.7% of unemployed individuals received EI regular benefits in 2008. This EI access indicator, also known as the beneficiary to unemployment (B/U) ratio, is somewhat misleading for several reasons. For example, the numerator in this ratio includes individuals who are not counted as unemployed even though they are receiving EI regular benefits (e.g., claimants with earnings and claimants who are not searching for work). In addition, the denominator includes many unemployed individuals who did not have access to regular benefits prior to the EI reform (e.g., those with no employment in the last 12 months; self-employed workers, excluding fishers; and individuals who quit their jobs without just cause or are dismissed due to misconduct). While many attribute today’s low B/U ratio to the 1996 EI reforms, the fact is that this ratio began its decent in 1990. Furthermore, it is estimated that less than one-half of the decline in the B/U ratio between 1989 and 1997 was due to changes in the unemployment insurance system.[889]

Table 6.3.1 - EI Coverage and Eligibility for Regular Benefits as a Per Cent of Unemployed, 2008¹

¹ In 2008, the average number of unemployed individuals for the months of March, June, October and December was 1,095,000 individuals.

² This access indicator (i.e., the one used by the federal government), relates to those who received or will receive EI regular benefits (including those who did not receive benefits, but were eligible) as a proportion of EI contributors who had a job separation that met the program criteria. While this access indicator incorporates more consistency in the numerator and the denominator compared to the B/U ratio, the denominator fails to include a significant proportion of those who contribute to EI (i.e., individuals who are disqualified because they voluntarily quit their jobs without just cause or were dismissed for misconduct). An alternative and perhaps more inclusive access indicator would include those who received or will receive EI regular benefits (including those who did not receive benefits, but were eligible) expressed as a proportion of all EI contributors. This access indicator is estimated to be 61.2% [(a + b) / (d + e)] in 2008.

Source: Statistics Canada, “Employment Insurance Coverage Survey,” The Daily, July 23, 2009, http://www.statcan.gc.ca/daily-quotidien/090723/dq090723a-eng.htm and the Library of Parliament.

Members of the Committee agree that there is a sizeable number of workers engaged in non-standard employment who are unable to qualify for benefits under EI’s current coverage rules and qualification requirements. As well, the Committee was told that a regionally differentiated qualification requirement and benefit entitlement structure treat unemployed workers with similar hours of insurable employment differently across the country. Furthermore, these program features might also inhibit labour market adjustments.

To broaden access to EI, many witnesses proposed a uniform qualification requirement of 360 hours of insurable employment; this threshold would accommodate most workers engaged in temporary work and treat all workers more equitably by eliminating the regional and work attachment features (e.g., new entrants and re-entrants) inherent in the current qualification requirements. The estimated static cost of this measure (not including changes to the behaviour of workers and the unemployed) was recently estimated to $1.148 billion annually by the government; this estimate was evaluated to be a reasonable one by the Office of the Parliamentary Budget Officer.[890]

In the fall of 2009, the Committee was asked to examine a Private Member’s Bill that, if passed, would respond to the request by many witnesses to broaden access to EI. Bill C-280, An Act to amend the Employment Insurance Act (qualification for and entitlement to benefits), would establish a uniform requirement of 360 hours of insurable employment and set EI regular benefits at 55% of the average weekly insurable earnings in the highest-paid 12 weeks of the 12-month period preceding the week in which the interruption in earnings occurred. The Committee reported the bill back to the House of Commons on 5 November 2009.

Some witnesses also thought that workers employed in temporary and other short-hour jobs could be accommodated under EI’s regionally based qualification requirement if the current 52-week qualifying period was increased to, for example, 104 weeks.

We'd also call for changes in the way the qualifying period is currently structured to go only to 52 weeks, because it fails to recognize women, in particular, who may have been removed from the labour force for a period of time. We would welcome a study and a commitment on the part of this committee or Parliament to look at workers who have irregular attachments in the labour force.[891]

Neil Cohen, Community Unemployed Help Centre

The Committee was further told that EI should cover self-employed workers, a matter that has recently been considered by the federal government as it pertains to EI special benefits. In November 2009, the government introduced Bill C-56, An Act to amend the Employment Insurance Act and to make consequential amendments to other Acts (Fairness for the Self-Employed Act), to allow self-employed workers to voluntarily participate in the EI program and be entitled to special benefits (e.g., maternity benefits, sickness benefits, compassionate benefits and parental or adoption benefits). Under the bill, self-employed persons will have to contribute to the employment insurance scheme for at least one year before they may claim benefits. Self-employed persons who decide to participate in the scheme will pay a premium rate equivalent to the rate paid by employed persons.[892] Self-employed persons who reside in Québec will continue to receive maternity and parental benefits under the Government of Québec’s Parental Insurance Plan.[893] In addition, they will now be eligible for the sickness and compassionate benefits offered by the Government of Canada’s employment insurance scheme if they decide to contribute to the scheme.[894] Bill C-56 received Royal Assent on December 15, 2009.

Some witnesses also called for the elimination of the two-week waiting period, a feature that has been part of Canada’s unemployment insurance system since its inception in 1940 (originally the waiting period was 9 days). The purpose of the two-week waiting period is to require insured individuals to bear some of the cost (like a deductible in the case of home or automobile insurance policies, for example) and to lower administration costs. In terms of the latter, the waiting period allows EI to forego the cost of processing short-term claims (i.e., claimants who become re-employed very quickly after becoming unemployed). Members of the Committee note that the elimination of the two-week waiting period would not increase the number of weeks of benefits paid to those who exhaust their benefit entitlement, but it could potentially result in a higher payment to all other claimants. We also recognize that the waiting period subjects claimants to a short period of unemployment for which there is no partial replacement of wages, an issue that is undoubtedly critical to low-income workers. In October 2009, our Committee examined Bill C-241, An Act to amend the Employment Insurance Act (removal of waiting period), a private member’s bill which seeks to eliminate the two-week waiting period. The cost of eliminating the waiting period was estimated to be between $0.8 and $1.4 billion annually by various organizations.[895] We reported the bill back to the House of Commons without amendment on 2 November 2009.

Some witnesses called for a higher benefit rate and increased benefit entitlement.[896] The wage replacement rate under EI is 55% of average insured earnings, up to a weekly maximum of $457 (2010). According to the Canada Employment Insurance Commission’s most recent assessment of EI, the average weekly EI benefit was $347 in 2007-2008, roughly four-fifths of the maximum weekly benefit during that period.[897] Somewhat surprisingly, little attention was paid during our hearings to the Family Supplement, a payment that provides additional EI benefits to low-income (i.e., family income below $25,921) claimants with children. Designed to help low-income families care for their children, this supplement can increase EI’s wage replacement rate from 55% of average weekly insurable earnings to a maximum of 80% (up to the maximum weekly benefits). It is estimated that some 127,340 claimants received this benefit top up ($135.4 million) in 2007-2008, down 7.5% from the previous fiscal year.[898] The proportion of EI claimants receiving this top up has been declining since 1999-2000, an observation that is due primarily to the fact that the family income threshold for eligibility has remained fixed during this period, while family incomes have risen. Many members of the Committee consider this result to be a significant shortcoming of the program’s feature to assist low-income claimants with children.

In the past we have had variable levels of benefits. We started off the UI program in 1942 with seven different categories of benefit receipts, from as low as 33% to as high as 75%, and with rates for dependants. We can fix the EI system to support families that have dependants so that they are not in poverty at 55% of whatever their previous rate of earnings was.[899]

Armine Yalnizyan, Canadian Centre for Policy Alternatives

It is important to note that most of the witnesses who recommended significant enhancements to the EI program did so with little or no consideration to the cost of their proposals. In many cases, their proposed reforms would generate a significant increase in EI program costs and, as a consequence, EI premiums. Some members of the Committee are concerned that a prolonged period of premium rate increases could undermine future growth in employment, something that we should try to avoid given our current economic situation.

Recommendation 6.3.1

The Committee recommends that the federal government immediately adjust and index the income threshold used to determine eligibility for the Family Supplement under the Employment Insurance program.

Recommendation 6.3.2

The Committee recommends that the federal government provide a fair and adequate wage replacement for all unemployed individuals who can demonstrate a reasonable attachment to the labour force. Moreover, the program’s financing structure should afford premium payers long-term premium rate stability.

b. Income Support for Displaced Older Workers

As noted in the Committee’s report, Employability in Canada: Preparing for the Future, unemployed older workers typically experience longer spells of unemployment compared to younger age groups. Thus, it is not surprising that unemployed older workers are more likely to exhaust their EI regular benefits than younger ones. In 2006-2007, 34.3% of older claimants (i.e., 55 years of age and older) exhausted their regular benefits compared to 27.9% for all claimants.[900] The data on exhaustion of benefits, for technical reasons, is only available two years after the fact. Knowing the proportion of EI beneficiaries that exhaust their benefits would be helpful to better understand the extent to which these individuals are able to find work or are forced to resort to social assistance programs, especially in the event of a recession. It has been suggested that HRSDC and Statistics Canada are currently studying issues related to the analysis and publication of “exhaustee data”. The Committee supports these efforts and would like to see “exhaustee data” published more frequently and consistently to ensure that we have access to the best analysis needed to support EI reforms or new initiatives.

According to the report prepared by the Expert Panel on Older Workers, some older workers, especially those with low levels of education who lose a job in a declining industry (e.g., fishing, forestry, pulp and paper) or single-industry community, have considerable difficulty finding a new job. These “laid off older workers are vulnerable because their capacity to adjust in the labour market—such as by finding employment in a different industry or occupation—is limited. These vulnerable older workers are, therefore, an appropriate target group for policy intervention.”[901]

Subsequent to an evaluation of the Older Workers Pilot Projects Initiative, the federal government announced, on October 17, 2006, that it would introduce a federal-provincial cost-shared (70%-30%) program called the Targeted Initiative for Older Workers (TIOW).[902] The TIOW is targeted at older workers 55 to 64 years of age who have lost their jobs, are legally entitled to work in Canada, lack the skills needed to secure new employment and reside in communities that are experiencing high unemployment or that rely heavily on a single employer or industry affected by downsizing or a closure.

Initially, the federal government’s share of funding under this program was $70 million over two years. Budget 2008 extended this program for three years to March 31, 2012 at a cost of $90 million. Budget 2009 further increased funding for TIOW by $60 million over the next three fiscal years. This additional spending will accommodate a change in the program’s criteria by including all cities with a population of less than 250,000, including cities that are located near larger metropolitan areas. The change in eligibility criteria is expected to result in the inclusion of more than 250 additional communities.[903]

Members of Committee were told that some displaced older workers have no realistic opportunities for re-employment and, as a result, face the prospect of a prolonged period of joblessness until they are able to access Canada’s public pension system. While TIOW addresses the needs of some displaced workers, many unemployed older workers are unable to participate in this program. And given the limited earning opportunities facing some of these workers, we were told that the federal government should re-establish an income support program for unemployed workers 55 to 64 years of age.[904]

Another measure that is part of the joint platform of Québec's four labour congresses is the creation of an income support program for older workers.

[…]

We are not asking the federal government to pay the entire bill. We have already approached the Québec government, and they have agreed to establish a program and to contribute 30% of the costs. It is now up to the federal government to buy into a program like that and to contribute 70% of the costs.[905]

Claude Faucher, Centrale des syndicats démocratiques

[T]he CSN has long been demanding a financial support program that would allow older workers who have lost their jobs to bridge the gap between the end of their employment insurance benefits and the beginning of their retirement benefits.

Since POWA [Program for Older Worker Adjustment] was cancelled in March of 1997, nothing has been done to help a whole category of workers who are more severely affected than young people during periods of unemployment. … We made representations to the Government of Québec which were acted on. Unfortunately, there has been no response from the federal government.[906]

Denise Boucher, Confédération des syndicats nationaux

Members of the Committee recognize that there is a need for both active labour market programming and income support to help displaced older workers, especially those with low levels of education and skills, make a successful transition to a new job and/or retirement. The Expert Panel on Older Workers made proposals in this regard that relate to changing the treatment of severance payments to long-tenured workers for the purposes of EI, making greater use of the employment benefit called temporary earnings supplements to encourage older workers to accept low-paid employment, and extending the duration of regular benefits for long-tenured workers.[907] Members of the Committee encourage the federal government to review the extent to which the TIOW underserves the adjustment needs of displaced older workers in all communities and, as required, make the necessary adjustments to enhance program participation. Finally, as recommended in our report entitled Employability in Canada: Preparing for the Future, we suggest that the federal government examine ways to better accommodate concurrent work and partial pension payments. In addition, we think that the Ministers of Finance, in their next triennial review of the CPP, should examine the feasibility of paying non-adjusted CPP pensions to workers between 60 and 64 years of age, provided their incomes are below a prescribed threshold. All these proposed measures should have an impact on the rates of low income among displaced older workers.

Recommendation 6.3.3

The Committee recommends that the federal government implement more income support and active labour market measures to assist displaced older workers, especially low-income workers between the ages of 60 and 64, who face the prospect of persistent unemployment.