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The endless wheel of EI reform

Posted by ealboim under Political Strategy


Elly Alboim

What goes around comes around. 

It was 14 years ago that the Liberals walked away from an ambitious Social Security Review and focused solely on reforming the unemployment insurance program. Beyond changing its name, the government moved the program along the continuum from an income support social program to a rules-based insurance program. The impetus was the substantial deficits the program had run during the recession of the ‘90s. They were driven, in part, by the crazy quilt of regulations for qualification based on weeks of work, leading to the infamous definitions of Short Weeks and Long Weeks and the absurd paper burden that was generated as employers filled out and filed Records of Employment.

Key to the reforms was the introduction of the hours-based qualification criterion which was designed to ensure that people had a strong tie to the work force before they got access to EI. It weeded out many part timers, newcomers to the work force and cut into the pattern of people working just enough to qualify for EI. The hours required varied according to regional unemployment rates and seasonal work patterns. The numbers of people qualifying drifted downwards and the EI surplus grew – in part as it was designed to do because of the automatic stabilizer EI is supposed to be during the ups and downs of the economic cycle.

As the surpluses grew, successive Liberal governments began to weaken the reforms, rolling back reform measure after reform measure largely because of pressure from its Quebec and Atlantic caucuses.  But the surpluses rolled on, despite reductions in premiums, and the Conservative opposition savaged EI as a disguised tax grab. They, along with the other opposition parties, created the fiction of a “cumulative EI surplus”, knowing full well that the annual surpluses and deficits were rolled into the government’s bottom line annually. There was never a separate account – it was simply a notional accounting device.

Now, the pressure’s on again to move the dial further back towards undisguised income support. The  device? Further reduce the hours of qualification and make them uniform across the country. The argument? It is fairer regionally and individually because so many people have been disenfranchised despite paying premiums. Unremarked upon is that a significant uptake on EI will further weaken the already loose  tie between premiums and benefits and result in ever growing deficits despite the Conservatives earnest but meaningless efforts to have EI be a stand-alone, self financing operation.   

So the Liberals who first tightened the rules because of the fiscal implications are now ready to virtually complete the roll back and turn back the clock.  The Conservatives hold to the notion that it is OK to have forced premium payments with no access to benefits. They also continue to hold to the view that even at its current low levels of benefits, EI can be a disincentive to work – a view that seems to ignore current economic realities.

But mostly, they have learned – as all governments have learned before them – that EI is another one of those “third rails” of Canadian politics. There are two fundamental truths.  Systemic and comprehensive reform is impossible politically and once you start changing the rules, the demands for further change are endless. 

And since it is unlikely that the Conservatives will permit an election on this issue – we will enter yet another process of tinkering. The result of which will last only until the next cycle when the old imperatives reassert themselves and it all comes around again.

Elly Alboim is an associate professor in the School of Journalism and Communications and a principal in the Earnscliffe Strategy Group, specializing in strategic communications and public opinion.