Income Security System Failing Working Age Adults

Katherine's picture

Several weeks ago,in a move to soften the blow of coming changes to the EI system, the federal government announced that it was expanding a pilot project that could boost benefits to jobless workers in high unemployment regions. But Dianne Finley, the Minister of Human Resources Development Canada, refused to give any details about other measures that were announced in the March Budget and referenced in the massive Budget Implementation Bill (Bill C-38), introduced on April 26th.

“The dichotomy we face,” according to Minister Finley, “is that in many regions where we’re experiencing higher unemployment rates, we are also dealing with labour and skill shortages.” Proposed changes to Employment Insurance will compel workers to move from areas struggling with high unemployment to booming western Canada – and introduce tougher compliance rules. EI recipients will no longer be able to turn down an available job if it is not in the claimant’s usual occupation, is at a lower rate of pay or involves “conditions less favourable than those … recognized by good employers.”1

EI was totally inadequate in responding to the 2008-09 recession: at the recession’s peak, only half of all unemployed Canadians were receiving benefits. Since then, the rate of EI coverage has declined again to the abysmal levels experienced through much of the last decade. Today, only 42% of unemployed Canadians are eligible for benefits. Instead of addressing the systemic failure of the EI system to respond to those in need, proposed changes will curtail access further.
 

Employment Insurance isn’t the only program that is failing to meet the needs of Canadians. New research from John Stapleton for the Mowat Centre EI Task Force documents the continuing failure of social assistance – our program of last resort – to extend support to those who need assistance most. Whereas in the past, the social assistance program acted as a stopgap in the EI system, far fewer people can now access the social assistance system – and the support on offer is much diminished.

Canada pays one of the lowest levels of social assistance for single persons among developed countries. For example, in Ontario, benefits were cut by 22% in 1995 and then frozen until 2004. The maximum Ontario Works payment to a single unemployed person is now roughly $7,000 per year. It would take an increase of 55% to return basic welfare rates to 1993 levels.

The introduction of an array of federal and provincial children’s benefits delivered outside of the welfare system has helped some lone parents move beyond social assistance. Over the same time, however, the proportion of individuals without children living on social assistance has grown significantly, by 65% between 2000 and 2011 in Ontario alone. Young single men – many from newcomer communities – now make up the largest single group of new applicants. Forced to live in abject poverty, the barriers to employment for this group are enormous.

Poor working-age individuals continue to be treated with disdain in Canadian income security policy. It is time to open up the debate to discuss the options for creating an income platform for the working-age population that speaks to the realities of today’s precarious labour market.

One option for addressing income insecurity is a so-called Basic Income, or Guaranteed Annual Income (GAI), program. As discussed at the North American Basic Income Guarantee Congress in Toronto earlier this month, a GAI would combine existing income support programs to create a basic income floor for all citizens, eliminating the need for costly administration and punitive oversight. This is the type of “big idea” that can force people to stop and think about moving in a bold new direction versus tinkering with our current, inadequate system. There are many details that would need to be addressed for GAI to become a viable option, but it is an example of the sort of progressive, alternative policy solutions needed in Canada.

Other organizations are proposing new programs to fill the gaping holes in our existing safety net. For instance, the Caledon Institute is calling for a new income-tested program to support people excluded from EI. The Jobseekers’ Loan program would provide forgivable loans to people searching for work, with repayment administered through the tax system.2 The Wellesley Institute is proposing a new universal housing benefit for low- and modest-income Ontarians to help address the widening affordability gap in the housing sector.3 The Institute for Competitiveness and Prosperity has identified steps to restructure the Working Income Tax Benefit (WITB) to provide more targeted – and enriched – benefits to those transitioning from social assistance to paid employment.4

Canadians are rightly proud of their record on reducing poverty among seniors and families with children. Rather than taking measures to forestall public discussion and debate, we look to our political leaders across Canada to join this vital discussion of income security for working-age adults – and take action.

  1. 1. For a detailed analysis of the Employment Insurance Provisions in Bill C-38 see the analysis by the Canadian Labour Congress: http://www.canadiansocialresearch.net/FederalBudget2012Details.pdf
  2. 2. Caledon Institute (2011), “Fixing the Hole in EI: Temporary Income Assistance for the Unemployed,” http://www.caledoninst.org/Publications/Detail/?ID=967&IsBack=0
  3. 3. Wellesley Institute (2008), “Housing, Homelessness and Ontario’s Poverty Reduction Strategy,” http://wellesleyinstitute.com/files/wiprshousing2008.pdf
  4. 4. Institute for Competitiveness and Prosperity (2009), Time for a “Made-in-Ontario” Working Income Tax Benefit,” http://www.competeprosper.ca/index.php/media/press_releases/time_for_a_m...
Katherine Scott is CPJ's Research Associate.

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