(The following article is from the August 1-31, 2009, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.)

PV Vancouver Bureau

A new study from the Canadian Centre for Policy Alternatives (CCPA) reports that fewer unemployed workers are receiving regular EI benefits now than during previous recessions.      Released on June 30, the study by economist Lars Osberg also finds that in terms of access, benefit duration, and income replacement levels, EI in Canada falls far below most other OECD countries.

     In January 2009, the seasonally adjusted unemployment rate in Canada was 7.7%, the same rate as in February 1990, near the start of the early‑1990s recession. But only a bit over half as many of the unemployed are getting unemployment benefits in 2009, compared

to 1990. Perhaps not surprisingly, the International Monetary Fund in its World Economic Outlook of October 2008, argued that Canada's system of adjusting benefits to local unemployment levels should be emulated worldwide.

     The CCPA notes that until the late 1980s, unemployment insurance in Canada - as in most other OECD nations today - was an unemployment benefits program; its costs were the UI benefits it paid to unemployed workers and its revenues came from a payroll tax (the premium income collected from employers and employees).

     Over the last two decades, however, the federal government has shifted training expenditures, employment service and benefit costs from its Consolidated Revenue Fund expenditures to the EI Account. As well, throughout the late 1990s, premium income greatly exceeded expenditures, allowing the Chretien Liberal government of that time to use the surplus in EI revenues to reduce Canada's general government deficit.

     "In this global recession, the weakness of Canada's EI system has become a glaring federal policy omission," says Osberg. "Now that they need a social safety net, many Canadians are discovering they do not have much of one."

     According to the study, the inadequacies of EI - combined with weakened provincial social assistance programs - have 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 impacts on disadvantaged Canadians," Osberg says. "These impacts will only increase as EI benefits are exhausted in the coming months."

     The study warns that benefits for current EI recipients will run out sometime before February 2010, when the OECD estimates that employment will be 10.5% - substantially higher than it is now.

     The study recommends reforms such as the easing of entrance requirements, and a "second tier" of unemployment benefits to address the problems of those who are unemployed for long durations.