This blog touched on the current federal government’s proposed Employment Insurance (E.I.) reforms last spring, breaking the story of the suddenly suppressed / frozen EI payments data tables that happened to coincide with the federal government’s Employment Insurance Act reforms announcement last May. Those same reforms are once again in the headlines as they are set to be implemented on April 1st, 2013:

Federal employees making house calls as part of EI audit:
1,200 EI recipients ‘randomly sampled’ from across country for ‘integrity’ program
CBC News February 21, 2013

Harper joins Finley in rejecting calls to suspend EI reform:
Quebec labour minister questions Ottawa’s comprehension of Quebec reality
CBC News February 28, 2013

Much of the recent attention focuses on the Employment Insurance Act reforms’ potential to further disenfranchise unemployed Canadians, disqualifying / disentitling them from benefits they would otherwise have previously qualified for. What is lost in the coverage is that unemployed Canadians had been experiencing a dramatic rise in disqualifications / disentitlements for years prior to the proposed reforms.

There are still a couple of EI data tables yet to be suppressed / frozen:

The charts above are based on CANSIM table 276-0003 and show the average monthly disqualifications / disentitlements for the period 1990-2012, bookending the last two major downturns in the Canadian economy  (and labour market). The three most used reasons for E.I. disqualification / disentitlement are “Not unemployed” (cyan), “Not capable / available (to work)” (red) and “Other” (navy). Reasons “Failure to search for work” (chartreuse) and “Refusal to search for work” (aqua) have rarely been used, their lines overlapping along the chart’s horizontal axis.

The charts also show that this is not the first time that large-scale E.I. disqualification / disentitlement has been proposed or undertaken in Canada. The last time it happened also happened to coincide with the last major economic recession in Canada, and the reasons offered by the government of the day were the same, deficit / budget concerns. While the total number of disqualifications was greater in the early 90′s recession, the magnitude was greater still given the significantly smaller size of the labour force twenty years ago (14.2Mill in 1990 vs 18.9Mil in 2012). In the early 1990′s, E.I. claimaints were being disqualified from benefits largely because they were deemed “Not unemployed”. In the recent economic recession, claimants have been disqualified for being “Not capable / available” to work or for “Other reasons”.

The charts above are based on CANSIM tables 276-0001 and 282-0001 and show the average monthly EI regular benefits recipients against the various measures of (un)employment for the period 1990-2012, bookending the last two major downturns in the Canadian economy  (and labour market). While correlation is not causality, the charts clearly demonstrate that simply disqualifying a large proportion of EI beneficiaries in the early 90′s did not correspond to an increase in employment. In fact, the early 90′s saw a significant increase in the gap between participation and employment rates, the gap rising nearly two percent (5.5 to 7.4%) between 1990-1993. Over that same period, the gap between the number of unemployed and those receiving EI benefits nearly tripled (195 to 570 thousand). Slashing EI benefits did not correspond with the unemployed suddenly finding work back in the early 90′s, nor has it in recent years.

Last year, the following Employment Insurance Act passage that referred to “suitable employment” was repealed:

Employment not suitable

(2) For the purposes of this section, employment is not suitable employment for a claimant if

(a) it arises in consequence of a stoppage of work attributable to a labour dispute;

(b) it is in the claimant’s usual occupation either at a lower rate of earnings or on conditions less favourable than those observed by agreement between employers and employees, or in the absence of any such agreement, than those recognized by good employers; or

(c) it is not in the claimant’s usual occupation and is either at a lower rate of earnings or on conditions less favourable than those that the claimant might reasonably expect to obtain, having regard to the conditions that the claimant usually obtained in the claimant’s usual occupation, or would have obtained if the claimant had continued to be so employed.

Effective January 6, 2013, EI claimants no longer have the “luxury” of searching for employment either in their field, within their previous rate of earnings, or even near their home. Subsequent to the repealed provisions, the E.I. Act does not explicitly state what the new standard of “suitable employment” is. Human Resources Minister Diane Finley has indicated it will be 70% of a claimant’s previous rate of earnings, within 100kms of their usual place of residence, with no regard for field of occupation. This blog has touched on why such a policy is ill-advised and has been avoided by previous Canadian governments.