HUMA Committee Report

 

Mr. Bryan May, M.P.
Chair, Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities
House of Commons
Ottawa, Ontario
K1A 0A6

Dear Colleague:

Pursuant to Standing Order 109 of the House of Commons, I am pleased to respond on behalf of the Government of Canada to the recommendations made by the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities in its report entitled Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program, tabled in the House of Commons on June 15, 2016. 

The Government thanks the members of the Standing Committee (the Committee) for their valuable study examining recent changes to Employment Insurance and providing recommendations on ways to improve the program to better serve the needs of workers and employers. 

The Government also thanks the many witnesses, including businesses of all sizes, associations, research organizations, employers, labour groups, claimants, and experts who appeared before the Committee.  Their insights on the various elements of the Employment Insurance (EI) Program are both informative and valuable.

EI is an important social and economic program, helping Canadian workers and supporting an efficient labour market.  The EI Program fulfills a core need for Canadians as a social safety-net that provides economic security when they need it most. In addition to its role as an economic and social stabilizer for individuals and regions, a modernized EI Program could also play an enhanced role for the broader economy by supporting the labour market and family-related transitions of Canadians in a manner that corresponds to evolving labour market needs and improves productivity and competitiveness in Canada. 

The Government is committed to improving the EI Program and is engaging Canadians on improvements to EI special benefits and service delivery.  Along with the Committee’s report and recommendations, these consultations will help inform the next phase of EI changes to ensure the program serves the needs of today’s labour market.   

The EI program plays a key role in Canada’s economic and social union by providing temporary income support to replace lost employment income to individuals who become unemployed involuntarily; or, are off work due to sickness, pregnancy and childbirth, caring for a newborn or newly adopted child, caring for a family member who is seriously ill with a significant risk of death, or caring for a critically ill child. 

Beyond providing income support, the programs delivered under Part II of the Employment Insurance Act assist individuals to prepare for, obtain and maintain employment through training and work experience programs.  These benefits enable claimants to gain training, work skills and experience relevant to local labour market needs. 

Budget 2016 announced measures to improve and modernize EI in order that more Canadians get the help they need when they need it. 

The Government remains committed to further improving EI and this includes making compassionate care benefits easier to access, more flexible and more inclusive for those who provide care for seriously ill family members, providing more flexibility in parental leave benefits to better accommodate unique family and work situations, and reducing the EI premium rate in 2017.

The Government welcomes the Committee’s recommendations.  The Response addresses the Committee’s report and recommendations under three themes:  (1) Modernizing Employment Insurance; (2) Strengthening Labour Force Participation; and, (3) Enhancing Service Delivery and Accountability for Canadians.

Modernizing Employment Insurance

EI eligibility

The Committee’s report identifies the importance of access to the EI program and captures the fact that various measures are used to report on access.  The Statistics Canada EI Coverage Survey eligibility rate is a targeted measure to profile eligibility of those who have paid EI premiums and have a valid reason for separation.  This measure provides information on why some unemployed are not receiving benefits, such as those who did not accumulate enough insurable employment hours or did not submit a claim.  The EI Coverage Survey eligibility rate for 2014 was 83%. The beneficiaries-to-unemployed ratio is often cited by the media as a measure of access to EI, however this ratio includes individuals who have not contributed EI premiums in the past 12 months (e.g., long-term jobless individuals, formerly self-employed), therefore presenting a negatively distorted measure of access. 

A fundamental principle of the EI program is that to qualify for EI regular benefits claimants must lose their employment through no fault of their own.  In practice this means that workers who are dismissed as a result of their own misconduct, or who quit without “just cause” are disqualified from receiving benefits under the EI program.  However, there may be circumstances where it would be appropriate to have more flexible eligibility criteria or disqualifications.  The Government will consider exploring the eligibility requirement for “valid job separation”.

The Government recognizes that many new workers—such as young Canadians and recent immigrants—find it difficult to access EI support when needed. Prior to Budget 2016, new entrants and re-entrants to the labour market had to accumulate at least 910 hours of insurable employment before being eligible for EI regular benefits. Budget 2016 amended the rules to eliminate the higher EI eligibility requirements that restricted access for new entrants and re-entrants to EI benefits. With these changes, which came into effect on July 3, 2016, these claimants have the same eligibility requirements as other claimants in the EI economic region where they live. An estimated 50,000 additional claimants annually will become eligible for EI benefits as a result of this measure.  Also, like all other EI regular claimants, these claimants will be eligible to receive EI funded training and other supports through the Labour Market Development Agreements which were increased by $125 million in 2016-2017. 

Special Benefits

The EI special benefits represent a growing proportion of total EI benefits paid.  These benefits serve a key insurance function and along with corresponding leaves under employment standards legislation, the benefits play an important role in helping working Canadians across the country to balance their work and family responsibilities and maintain their attachment to the labour force.  Rather than remove these benefits from EI, the Government has committed to introducing more flexible parental benefits and more inclusive and flexible caregiving benefits.  The Government continues to engage Canadians in order to further improve special benefits.  Over time, consideration could be given to further changes to ensure that special benefits remain responsive to the evolving needs of Canadians. 

The EI sickness benefit is designed to provide temporary income support for short-term absences from the labour force due to illness, injury or quarantine. While the 15 weeks of benefits appear adequate for the majority of workers, some claimants do exhaust their sickness benefits and stakeholders often request an extension in the case of more serious illnesses. In 2014/2015, on average, claimants of the EI sickness benefit collected 10 weeks of benefits and 34.8% used all of the 15 weeks available to them.  The EI sickness benefit complements a range of other supports that are available for workers with longer-term illnesses, including benefits offered through employer-sponsored group insurance plans, private coverage held by individuals and long-term disability benefits available under the Canada Pension Plan and provincial and territorial programs.  Improvements to the sickness benefit including potential extension of the maximum duration would require careful consideration of the interactions with other supports, impacts on employers, and would be expected to have a significant cost implication, with resulting premium rate increases.

EI economic regions

The Government is committed to ensuring that the EI program is better aligned with the realities of labour markets and serves workers and employers.  A review of EI boundaries is a multi-step process in which the Government analyzes and compares labour markets across the country.  The purpose of boundary review is to determine whether the current EI economic regions continue to reflect current labour market characteristics, ensuring that those living in similar labour markets are treated similarly by the program. A boundary review is currently underway.

Strengthening Labour Force Participation

Promoting a successful return to the labour force

Budget 2016 simplifies the job search responsibilities for EI claimants by reversing the 2012 EI changes that specified the type of jobs that unemployed workers were expected to search for and accept.  As of July 3, 2016, the Government has reversed job search responsibilities, requirements, and obligations that strictly defined suitable employment as it pertains to job search responsibilities of unemployed workers with respect to commuting times, offered earnings, and types of work.  The Government continues to maintain the long-standing requirements that claimants must search for and accept available work while on EI.  The Government remains committed to providing EI claimants with flexible and modern job search support. 

Employment and Social Development Canada (ESDC) currently promotes claimants’ responsibilities through Client Information Sessions, and has implemented initiatives to strengthen and integrate online employment services, including a targeted e-Marketing campaign focused on encouraging unemployed Canadians to use Job Bank Services, and improved automation of the enrollment in Job Alerts of Job Bank to provide claimants with flexible and modern job search support.  Job Alerts is a free e-mail service that notifies users when new job opportunities are available on Job Bank.

Working While on Claim Pilot

The new Working While on Claim pilot, which took effect on August 7, 2016,  provides flexibility to claimants (receiving regular, fishing, compassionate care, parental or parents of critically ill children benefits) to have their earnings while on claim treated using the default approach that reduces claimants’ weekly EI benefits by 50 cents for each dollar earned while on claim (up to the threshold of 90% of average weekly earnings) or opt to use an allowance of $75 or 40% of their weekly EI benefits. This flexibility will reduce disincentives to accepting work for claimants unable to find more than one day of work per week. In addition, this option is already being promoted through the Service Canada website with information targeted to EI recipients, and will also be promoted through videos to be posted on social media (e.g. ESDC Facebook and Twitter feeds) and on Youtube.

The Canada Employment Insurance Commission will continue to monitor the effectiveness of the WWC pilot through the annual Employment Insurance Monitoring and Assessment Report, which is tabled in Parliament.  An assessment of the new pilot project will be completed and be presented in the Employment Insurance Monitoring and Assessment report when available. As data is available, it will be used to inform a potentially permanent approach to the treatment of earnings while receiving EI benefits.

Work-Sharing Program

The Government of Canada agrees with the Committee’s findings that the Work-Sharing program is a good tool to prevent lay-offs during challenging economic times, and Budget 2016 enhances the Work-Sharing program by temporarily extending the maximum duration of Work-Sharing agreements from 38 weeks to 76 weeks across Canada for business directly or indirectly affected by the downturn in the commodities sector. Work-Sharing agreements help employers retain skilled employees and avoid the costs of recruiting and training new employees when business returns to normal levels.  This program also enables employees to continue working and maintaining their skills while supplementing their wages with EI benefits for the days they are not working. 

ESDC continues to implement measures to raise awareness of the Work-Sharing program through Ministerial announcements, media engagement, engaging Provincial and Territorial partners, social media, and other online tools.  Between April 1, 2016 and July 31, 2016 there were over 1,000 active work-sharing agreements in place, impacting more than 23,000 employees. These represent significant increases compared to the same period last year.

Enhancing Service Delivery and Accountability for Canadians

Improving service delivery for Canadians

The Government understands that Canadians want better and faster services from their Government – services that are delivered in a way that meets their expectations.  That is why, in Budget 2016, the Government committed funding to support a number of improvements to the EI system to ensure that Canadians get timely access to the benefits they need.  Among these investments: $73 million over two years to enhance access to EI call centers. This will allow the EI call centre network to immediately increase the number of call centre agents, improve accessibility and reduce call wait times; and, $19 million for EI program responsiveness in 2016-17 to enable Service Canada to process an increased number of claims.  

In addition, the Government is currently conducting the EI Service Quality Review, which includes nationwide consultations with EI stakeholders and Canadians on: streamlining applications and processes; reducing wait times for service delivery; and, reducing administrative burden for employers. The purpose is to make recommendations on improvements to the EI system in the fall 2016.  Consultation feedback will inform how Service Canada administers the EI program so that resources are focused on providing the best possible service to Canadians. 

Review of the Social Security Tribunal

The Social Security Tribunal is a fairly new administrative organization mandated to provide a fair, credible and accessible appeals process for Canadians.  It is an independent body that makes quasi-judicial decisions on appeals related to the Canada Pension Plan, Old Age Security Act or the Employment Insurance Act.

The Government is committed to providing a quick, effective and efficient system of appeals that will ensure that Canadians get the support they need when they need it most. To that end, the Government notes the Committee recommendation and will consider a review of the Social Security Tribunal, under the direction of the Minister.    

Improving accountability to Canadians

Beginning with the 2017 EI premium rate, the Canada Employment Insurance Commission is responsible for setting the annual premium rate according to a new seven-year break-even mechanism, based on the forecasts and estimates of the EI Chief Actuary. This mechanism was established in response to public consultations with key stakeholders, and the EI Commissioners for Workers and Employers who represent the interests of their respective constituencies.

The new seven-year rate-setting approach was designed to promote stability and transparency in the EI premium rate-setting mechanism with the aim to balance the EI Operating Account over time.  Since the EI Operating Account is fully consolidated in the Government’s financial statements (EI revenues and expenses are part of federal Government revenues and expenses) this rate-setting approach promotes fiscal accountability in addition to stability and transparency in the EI premium rate.

The Government is committed to improving EI and reducing the premium rate in 2017. The EI initiatives announced in Budget 2016 have made significant improvements to enhance access, particularly for youth, to simplify job search obligations for EI claimants, to reduce the waiting period from two weeks to one week, and to provide additional temporary EI support to the regions most affected by the commodities downturn. 

The Government agrees with the Committee’s objective to improve the EI Program and will continue to engage Canadians through consultation processes on service delivery and on parental and caregiving benefits.  Finally, the Government will take the Committee’s recommendations into consideration, as it continues with the next phase of improvements to the EI Program to better align the program with today’s labour market realities.

Yours sincerely,

Jean-Yves Duclos
Minister, Families, Children and Social Development