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article imageCanada falls behind OECD partners in support for unemployed

By Stephanie Dearing     Jul 3, 2009 in Business
A study comparing unemployment benefits among countries belonging to the Organization for Economic Cooperation and Development shows that Canada offers some of the worst support out of the 30 nations that make up the OECD's membership.
Prime Minister Stephen Harper has been under fire for refusing to reform Canada's Employment Insurance (EI) program, a stance that almost saw the Liberal Party of Canada forcing a summer election. After threatening to call an election if reforms were not made to the EI program, Michael Ignatieff met with Prime Minister Stephen Harper twice in June. An announcement was issued on June 17th that the two parties would create a “working group” to develop EI reforms. The working group is to specifically examine permitting “self-employed Canadians to participate voluntarily in the Employment Insurance system; and to improve eligibility requirements in order to ensure regional fairness.” The working group is to submit recommendations to the government by September 28th. There was no mention as to whether or not the working group would examine extending EI claim periods.
Recently the Canadian Center for Policy Alternatives unveiled the results of its research into Canada's unemployment support programs. The report, Canada’s Declining Social Safety Net, the case for EI reform; was authored by Lars Osberg, the McCulloch Professor of Economics, University Research Professor and Chair of the Department of Economics at Dalhousie University. Osberg calls for reforms to Canada’s Unemployment Insurance program to better reflect the global economic crisis and its effects on individual earners in Canada. “Reforms to Canada’s EI system need to remedy its inadequacies as a safety net for both short-term unemployment and longer duration unemployment spells. In the current context, Canadians need [1] a plausible expectation that they can get unemployment benefits if laid off — i.e. an easing of entrance requirements and [2] a safety net for the possibility of a longer duration recession — i.e. a ‘second tier’ of unemployment benefits (combined with counselling and retraining) to deal with the problems of the long duration unemployed. The question for Canada’s political economy is — if the recession drags on — what happens if that is not forthcoming.” He goes on to say, “(Un)Employment Insurance is the major program by which the Government of Canada has historically helped offset the financial risks of unemployment faced by Canadian families. Unemployment in Canada is now rising at an unprecedented rate and is forecast to stay high for some time to come. Canada is far below OECD norms and the levels of Canadian unemployment insurance in past recessions. Budget 2009 did little to change that. Eligibility and benefit levels remained unchanged, while benefit duration was increased by only five weeks.”
Osberg criticized the 2009 Federal Budget tabled by the Harper government in January. “...Budget 2009 is a curious document. At the same time as it was being delivered, the IMF was beginning its update to the World Economic Outlook with the words: “World growth is projected to fall to ½ percent in 2009, its lowest rate since World War II.” But there is little sense in budget 2009 of a recognition that historically bad times are upon us."
Osberg concludes, “Now that they need a social safety net, many Canadians are discovering they do not have much of one. As Table 1 noted, in March 2009 the maximum duration of the EI benefits now being received by the minority who qualify is less than a year. This implies that current EI recipients will run out of benefits sometime before February 2010. What happens then? The OECD estimates Canadian unemployment in 2010 will be substantially higher (9.8%) than it currently is — a quick rebound in labour demand seems most unlikely.”
The latest Statistics Canada report on the number of unemployed (June 5th) cited an unemployment rate of 8.4%. The Province of Ontario was the source for the increased unemployment rate, with job losses racking up and an unemployment rate of 9.4%, the highest it has been in 15 years. The next statistics release will be out July 10th. An alternative think tank, the Progressive Economics Forum, claims that Canada’s unemployment rates actually sit at around 12%. It is anticipated that Canada’s unemployment rate will continue to rise.
What is left for Canadians after they run out of employment insurance (that is, if they qualify in the first place)? If a person has not been lucky enough to get a job, she or he can apply for welfare benefits. As Osberg says in his executive summary, “This study concludes that the inadequacies of Canada’s Employment Insurance — combined with weakened provincial social assistance programs — has produced a massive risk shift, the burden of which is being borne by Canadian families who have fallen victim to the global recession. Since low-wage individuals are especially likely to experience unemployment, the downloading of recessionary risk is having its biggest impact on disadvantaged Canadians — an impact that will only increase as EI benefits are exhausted in coming months.”
In other words, the number of people living in poverty in Canada is expected to increase as the recession continues to take its toll on employment levels and people exhaust their employment insurance allowances and other resources available to them. Ontario’s welfare rolls began to grow earlier this year. In London Ontario, welfare rolls have jumped 10% over the past six months (from January 1/09), and it is anticipated that requests for income support will only increase. London's Deputy Mayor, Tom Gosnell, told press "I hope I'm wrong, but I think we're underestimating the scope of the problem,” when speaking about a report tabled by city staff on the anticipated demand for financial assistance from Welfare.
More about Employment insurance, Unemployment, Comparison, Benefits, Canada
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