Maternity benefits for all?

Low income women are least likely to qualify for EI.

Ottawa recently floated an interesting trial balloon by suggesting that employment insurance (EI) maternity benefits be extended from one to two years. Is this evidence of a social policy renaissance in Ottawa?

At first glance, it’s a great step forward. Parenting is difficult enough, even for families with adequate incomes. For low and modest income families, replacing a new mother’s forgone earnings is essential for parenting. Careful design of government maternity benefits is critical because the majority of parents are now in two earner couples and research indicates that a mother’s return to paid work is associated with the end of maternity benefits.

A simplistic view would see mothers in two groups; those who work and get EI maternity benefits and ‘stay at home’ mothers who don’t. The real world is more complex and reveals that the income support available for new mothers varies markedly, depending on their work history.

In fact, our analysis of Statistics Canada surveys demonstrates that, far from helping the most vulnerable, government and employer income supports primarily benefit new mothers with higher incomes working full-time, often in the unionized public sector.

The first harsh reality involves how difficult it is to receive employment insurance. Only about 58% of new mothers, representing about 200,000 annual births, qualify for EI benefits. About 26% of new mothers were not in the labour force in the year immediately before giving birth and so are not entitled to EI maternity benefits (90,000 annual births). The remaining 16% (60,000 annual births) were in the labour force but did not qualify for EI benefits because they were self-employed, contract workers or worked seasonally, temporarily or part-time. Thus they could not meet the new stringent minimum hours for EI maternity benefits set by Human Resources Development Canada. For those who worked in the year prior to childbirth, about 25% do not qualify under this hours-based system.

For those working in the year prior to childbirth, the proportion of new moms receiving EI was 75% overall. Here again, better-off moms benefited most, with 93% of those with incomes of $70,000-$80,000 receiving benefits, versus only 49% for those in families with incomes under $20,000. Because they often work part-time, seasonally or temporarily, only 62% for those earning less than $7.50 per hour receive EI maternity benefits — far less than the 91% of those earning $15-$25 per hour.

New moms who are lone parents are especially hard hit by tough EI rules. Only 38 percent of them qualify for EI maternity benefits.

Mothers often prefer part-time employment because of its flexibility. Yet HRDC changed the EI eligibility criteria from weeks to hours, which hurts those who work part-time. For example only 58% of new moms with pre-schoolers who had worked part-time received maternity benefits.

The courts in the Lesiuk case — involving a Manitoba nurse and mother who was denied maternity benefits when her second child was born — have concluded that the change discriminated against women. HRDC is appealing this decision.

Then there’s the problem of low EI benefits overall, for all recipients, which replace 55% of earnings to a maximum of only $413 per week. Some employers ‘top-up’ these EI maternity benefits. For example, federal employees get 93% replacement of their income for one year (there is no upper limit to this ‘top-up’). Again, the new mothers most likely to receive ‘top-ups’ from their employers are higher income, full-time employees, in the public sector or other strongly unionized areas. More than half of higher income new moms get top-ups, while less than 10% of low-income women do so.

The facts are clear: low-income women are least likely to qualify for EI maternity benefits. The 1996 changes to EI made a difficult situation worse by further discriminating against part-time employment.

You can debate the pros and cons of extending EI maternity benefits from one to two years. But a far bigger immediate priority is to correct the design flaws in the eligibility criteria so that those mothers who most need income assistance have equal access.

Ottawa, are you listening?