Proceedings of the Standing Senate Committee on
National Finance
Issue 12 - Evidence - Meeting of September 30, 2009
OTTAWA, Wednesday, September 30, 2009
The Standing Senate Committee on National Finance, to which was referred the subject-matter of Bill C-50, An Act to amend the Employment Insurance Act and to increase benefits, met this day at 6:30 p.m. to give consideration to the bill.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Honourable senators, on September 16 of this year the government introduced Bill C-50, An Act to amend the Employment Insurance Act and to increase benefits. That is part of the title. That bill was introduced in the House of Commons. This afternoon, the Senate authorized the Standing Senate Committee on National Finance to conduct a pre-study of the subject matter of this bill.
This evening we will begin that study and consider the next steps that we should take following our meeting this evening.
I would like to introduce our witnesses, who are here from Human Resources and Skills Development Canada; Mr. Paul Thompson, Associate Assistant Deputy Minister, Skills and Employment Branch; Louis Beauséjour, Director General, EI Policy, Skills and Employment Branch; and Philip Clark, Director General, Benefits Processing of Service Canada.
[Translation]
As always, I would ask that you keep your comments as concise and specific as possible so that all committee members have a chance to participate.
We will start with Mr. Thompson's presentation, after which, we will move on to the question period.
Mr. Thompson, the floor is yours.
[English]
Paul Thompson, Associate Assistant Deputy Minister, Skills and Employment Branch, Human Resources and Skills Development Canada: Honourable senators, I am pleased to be here this evening to speak to you about Bill C-50, An Act to amend the Employment Insurance Act and to increase benefits. My colleagues have already been introduced, Louis Beauséjour and Philip Clark, who will assist me in answering any questions that you may have following the opening remarks.
The purpose of this bill is to temporarily provide additional weeks of Employment Insurance regular benefits to long-tenured workers. First, let me explain who we are referring to when we use the term "long-tenured workers." These are experienced workers who have paid EI premiums for years but have made limited use of EI regular benefits. Some of them are unemployed for the first times in their lives.
More specifically, under the first part of the definition, these workers have paid at least 30 per cent of the annual maximum employment insurable premiums for a minimum of seven out of the last 10 years.
[Translation]
This allows claimants to remain eligible even though they had temporary absences from the labour market.
[English]
The second part of the definition pertains to EI use and Bill C-50 allows for up to 35 weeks of regular benefits in the past five years. This is in recognition of the fact that workers in some industries have had to use Employment Insurance during temporary shutdowns or layoffs.
[Translation]
There are long-tenured workers all over the country and in every sector of the economy.
[English]
It is estimated that about one-half of Canadians who pay EI premiums are qualified as long-tenured workers. About one-third of those who have lost their jobs since the end of January 2009 and have made an EI claim would qualify as long-tenured workers. The government is proposing to give these workers more weeks of income support while they look for jobs.
Let me take a few minutes to explain how the bill is laid out. I know that is of interest to the committee.
First, the bill deals with the benefit period; that period during which claimants must use their entitlements. This benefit period is normally 52 weeks, but it will be extended under this legislation where necessary to accommodate the additional weeks of EI regular benefits that are being provided to the eligible long-tenured claimants.
[Translation]
Then it sets out the different amounts of additional weeks of employment insurance regular benefits that will be provided to eligible long-tenured claimants and the gradual transition out of the measure. The number of additional weeks is determined by the level and number of years of premium contributions made to the program.
[English]
Specifically, Bill C-50 would provide from five to 20 weeks of additional benefits, depending on how long an individual has been working and paying EI premiums. For example, to be eligible for five weeks of extended benefits, the long-tenured workers must have paid at least 30 per cent of the annual maximum EI premiums for a minimum of seven out of the last 10 calendar years. For every additional year of contributions beyond that, the number of weeks of benefits would increase by three weeks, up to a maximum of 20 additional weeks of benefits.
[Translation]
The bill then sets out the different amounts of additional weeks of employment insurance regular benefits that are to be provided to eligible long-tenured claimants who reside outside Canada. That is part of a reciprocal agreement with the United States. The gradual transition out of the measure is also addressed.
[English]
Next, it addresses the coming into force of the legislation. It states that the measure starts two Sundays prior to Royal Assent. The bill concludes by listing the sections that will be used once the measure is terminated after September 11, 2010.
Stepping back from the bill itself, it is estimated that about 190,000 workers will be eligible for the assistance provided under Bill C-50. I know this estimate is of interest to the committee. For the committee's information, this number is based on information pertaining to three factors. The first is the current population of long-tenured workers that we are seeing; the second is the expected exhaustion rate amongst long-tenured workers who are receiving benefits; and third, since it is a forecast, it is based on private sector forecasts for the national unemployment rate. Those are the three factors that have gone into that estimate of 190,000 workers.
[Translation]
Among those 190,000 are many workers who have been in the same job or the same industry all their lives and who now face the prospect of having to start all over again.
[English]
Bill C-50 is a temporary measure, designed to provide additional support to long-tenured workers while they look for jobs in a recovering economy. Eligibility for extended benefits for long-tenured workers will continue for new claimants until September 11, 2010. This means that payments of those extended benefits would continue well beyond that, into the fall of 2011.
It is also important to note the extended benefits do not only apply to future claimants but to existing claimants as well. In fact eligibility extends back nine months from the coming into force of the legislation, as early as January 4, 2009.
Also, in order to ensure a smooth and gradual transition out of the measure, the level of benefits provided to new claimants would be gradually reduced in five-week increments, beginning in June of 2011.
[Translation]
Mr. Chair, this temporary measure for long-tenured workers builds on other measures introduced under the government's economic action plan.
[English]
There is one initiative in particular that I would like to draw the committee's attention to, which is closely linked to this proposed new measure. The Career Transition Assistance initiative helps the same population of long-tenured workers. This is based on the same definition that I explained earlier in my remarks.
Long-tenured workers who have opted to undertake training are already eligible for extended income support for a period of up to two years while they undertake training to help them make a transition into a new field or a new occupation. In addition, those same workers can get earlier access to Employment Insurance if they pay for their training using part or all of their money from their severance package.
The Economic Action Plan also provides other measures to help all unemployed Canadians, regardless of whether they are long-tenured workers; measures such as providing nationally an extra five weeks of regular benefits and increasing the maximum number of weeks available in regions of high unemployment from 45 weeks to 50 weeks.
The goal of Bill C-50 is to help unemployed workers find a bridge to new employment.
Mr. Chair and members of the committee, my colleagues and I would be happy to answer any questions you have on the bill.
The Chair: I want to clarify that the points concerning the additional five weeks and the issue of paying for training using part of the severance package are not part of Bill C-50.
Mr. Thompson: That is correct. Those are elements from Bill C-10.
The Chair: This committee dealt with Bill C-10. I do not want anyone to be confused that we are dealing with those issues again.
Mr. Thompson: Correct. I merely wanted to say we are using the same definition of eligible workers.
The Chair: I do not recall the definition of "long-tenured worker" being quite as precise in the earlier legislation. In another piece of legislation, the same group, the long-tenured workers, could go into a retraining program. As I understand it, the same group of individuals benefits from this particular piece of legislation; is that correct?
Mr. Thompson: That is correct.
Senator Finley: Mr. Thompson, thank you for the presentation.
I would like to address forestry workers specifically. There have been many comments about whether or not forestry workers are covered by this legislation, and if they are, do they benefit equally to other long-tenured workers. I make these comments because of some of the seasonality that is in the forestry industry.
Could you tell me how the bill will help forestry workers and what else the government could be doing for these workers?
Mr. Thompson: The regional distribution of long-tenured workers is aligned more or less with the distribution of the labour force, so we see this eligible population dispersed across the country. We expect it to be dispersed across all sectors as well, and all these different sectors would be able to make use of these extended benefits.
It is targeted to those people who have made limited use of EI in the past, and to those who have had experience in their industry for at least seven of the 10 years. That definition will result in a pretty inclusive population. As I indicated, about one-third of our claimants will be eligible for this measure. It is a fairly inclusive definition of long-tenured.
This is one government measure and colleagues from other ministries could indicate the other measures the government has taken to support forestry in particular. I would not claim to be able to speak to those initiatives.
Senator Finley: I am also intrigued by one comment that you made about the 30 per cent of the annual maximum. What does the 30 per cent actually represent? Why was it set at 30 per cent?
Mr. Thompson: Thirty per cent represents what a full-time worker, at minimum wage, would contribute to insurance premiums over the course of a year.
Senator Finley: What sort of dollar figure are we talking about?
Louis Beauséjour, Director General, Employment Insurance Policy, Skills and Employment Branch, Human Resources and Skills Development Canada: I think it is around $ 16,000.
Mr. Thompson: I am sure that we can give the committee a precise number before the end of the meeting.
Senator Finley: If you would, please.
Critics of the bill have been pushing what is being called a 45-day work year. Could you tell me why this was not considered? Is this a fiscally responsible process? Is it feasible? I assume anything is feasible if you are willing to pay enough money for it.
Could you tell me, as you designed this enhanced bill, whether the 45-day work year was considered to be a realistic option and, if not, why not?
Mr. Thompson: I am not in a position to speak to the government's policy decision around that element of the bill, but the objective of this piece of legislation is to deal with those people who would otherwise be exhausting their benefits: The population of workers who have contributed for a significant amount of time and are finding themselves running out of EI benefits. That is a problem that could be growing in the coming months as the economy continues to move towards recovery.
The other issues you are referring to deal with a different policy question of access to EI; what is the required number of hours to qualify for Employment Insurance. That is not the policy objective of this piece of legislation.
Senator Finley: I was asking if your department had considered that as a possibility.
Mr. Thompson: As members of the committee know, a working group examined options over the summer, and part of their mandate was to look at questions around access to Employment Insurance. The policy objective of this piece of legislation, which I am speaking to today, is to deal with more of the exhaustion of benefits, not the entry threshold.
Senator Finley: What is the estimated cost of this enhancement?
Mr. Thompson: The total cost is estimated at $935 million.
Senator Finley: Have you done an estimate of the cost of the so-called 45-day work year?
Mr. Thompson: One has to be very careful, because Employment Insurance tends to be a fairly complicated program and there are many different assumptions that can underlie any specific policy proposal. There are many variants. I think any comments on costing would need to relate to a very specific question as to the program parameters in question. There are different levels of access and different levels of duration associated with hours worked.
Senator Finley: Based on 360 work hours per year.
Mr. Thompson: That is the entry threshold. It would depend on the duration, the number of weeks of benefits associated with the 360 hours of work. There are various proposals that have been floated from different quarters around how many weeks are associated with any given entry threshold.
Senator Finley: Why is this a temporary measure?
Mr. Thompson: This is in keeping with the spirit of the entire Economic Action Plan, which is intended to provide assistance to Canadians during a time when the economy is going through a downturn, and the benefits are provided at a particular time when evidence is showing that long-tenured workers are having difficulty finding re-employment.
There is a period of need and limited duration so the program will revert to its normal parameters once the economy is expected to improve.
The Chair: Mr. Thompson, you mentioned the coming-into-force clause in the bill. You explained that there are various categories when an individual makes a claim for Employment Insurance. For long-tenured employees, you are looking at how long they have worked with virtually no claims over the past number of years.
You indicated that you go back to January of this year. That retroactivity I understand. The coming into force is retroactive to the second Sunday before the day the act receives Royal Assent. Can you explain why and how that fits into someone making an EI claim?
Mr. Thompson: Certainly. Often when changes are made to Employment Insurance, they apply to new claimants and the old rules apply to the existing claimants. The approach taken with this legislation was different. The extended benefits are offered to people currently on claim, going back nine months prior to the coming into force of the legislation, no earlier than January 4.
The Chair: Of this year?
Mr. Thompson: Yes, of 2009. The second reference you made to the coming into force two Sundays prior to Royal Assent refers to what weeks are payable. Under Employment Insurance, before receiving payment an individual has to submit a card indicating their activities over the past two weeks regarding employment and income. This is saying that the two weeks prior to Royal Assent being given to the bill would be a payable period for Employment Insurance and the entitlements are prospective rather than retrospective. There will be no back payment of multiple weeks of Employment Insurance.
[Translation]
Senator Robichaud: Are you thus eliminating the two-week waiting period?
Mr. Thompson: No, that is still in place. This is only to extend benefits for this group of long-tenured workers. There is no connection to the existing measures for the two-week waiting period.
Mr. Beauséjour: These people already had their waiting period when they applied.
Mr. Thompson: In January.
Senator Robichaud: Yes, but for those who apply later, you are saying that the extension will start two weeks before royal assent. Will these people already have applied by then or will they apply at that time?
Mr. Thompson: I am talking about those who will have applied in January and who may have already exhausted their benefits. They will now be eligible for this extension, which will begin two weeks before royal assent.
Mr. Beauséjour: That is along the exact same lines as the addition of five weeks in Bill C-10. It is the same provision.
The Chair: I did not understand why when Bill C-10 was being considered. That is why I am asking again.
[English]
Senator Callbeck: Thank you very much for coming this evening. Under this program, long-term workers are eligible if they applied after January 4, 2009 and it goes until September 11, 2010. Is that right?
Mr. Thompson: Yes.
Senator Callbeck: In other words, if someone applied last December, they will not be eligible?
Mr. Thompson: The legislation allows eligibility no earlier than January 4.
Senator Callbeck: There is nothing there for long-tenured workers who applied before January?
Mr. Thompson: They would not be eligible for the extended benefit.
Senator Callbeck: What is the reasoning for that exclusion?
Mr. Thompson: As I said, many of the measures are prospective. This measure made an effort to reach back into the past. For operational reasons, the further you go into the past the more difficult it becomes to implement the extension. More and more people have potentially exhausted their benefits and gone on to different things. They are no longer clients in our system, and it is operationally difficult to go back and reactivate their claims. These operational considerations were brought to bear on the measure. The extension as far back as January 9 is a longer reach-back than I believe we have ever done before on a measure like this.
Senator Callbeck: You use the figure of 190,000 people, which has been disputed in newspapers. I think I have seen estimates as low as 60,000-some people. That is within that period?
Mr. Thompson: Yes, that is the number of people we expect to benefit over the life of this measure.
Senator Callbeck: When did the Career Transition Assistance program start?
Mr. Thompson: That was introduced as part of Budget 2009, part of the Economic Action Plan. Some further design work had to be done, so the regulations to put that measure in place were not passed until the very end of May, and implementation of that measure started in June.
Senator Callbeck: Who is eligible for assistance?
Mr. Thompson: It includes the same definition of EI claimants. We have systems in place that identify qualified claimants if they qualify under this definition of long-tenured worker. They are immediately made aware of their eligibility for this Career Transition Assistance with up to two years of additional benefits.
To date we have sent out over 370,000 letters to eligible claimants who are long-tenured workers. Eligibility was retroactive to January 24, 2009. Already over 370,000 people meet this definition and have been made aware of this support for training.
Senator Callbeck: However, if they applied last December, they are not eligible for this program.
Mr. Thompson: Are you referring to the Career Transition Assistance?
Senator Callbeck: Yes.
Mr. Thompson: That had a reach-back to January for new claimants.
Senator Callbeck: That is what I say. If they applied last fall, there is nothing here for them.
Mr. Thompson: Not in this legislation. This is a measure from Budget 2009. That measure had a January start date. If you wanted to pursue training, that decision needed to be made fairly close to the beginning of your benefit period, because the training is intended to be long-term. There is a slightly different set of circumstances around the start and the eligibility for that measure.
The Chair: For clarification, 370,000 long-tenured people in the system have been notified that they are eligible for these programs. They are people in receipt of EI.
Mr. Thompson: They are on Employment Insurance. They have not yet exhausted their benefits necessarily.
The Chair: Is that from January 4, 2009?
Mr. Thompson: January through to today.
The Chair: Thank you. The figure I copied down is 370,000.
Mr. Thompson: It is over 370,000.
The Chair: Do you want to stay with 370,000, or do you want to go up to 375,000 or 380,000?
Mr. Thompson: It is slightly higher. Over 370,000 is the number I would like to put on the record at this time.
Senator Ringuette: What is the maximum weekly EI benefit?
Mr. Thompson: It is $447.
Senator Ringuette: I am looking at the third report on the Economic Action Plan on page 50 where you say that as of September, more than 300,000 claimants have benefited from the extra five weeks. Here you are saying that as of September, there were 300,000 claimants, and you have just mentioned that we are looking at 370,000.
The Chair: That was 370,000 long-tenured people, but the five weeks did not concern the long-tenured workers. They are apples and oranges.
Senator Ringuette: As of September, there were 300,000 EI claimants, and you have just mentioned that there are 370,000 long-tenured workers eligible for EI.
Mr. Thompson: Yes.
The Chair: I think his precise comment was that it was more than 370,000.
Senator Ringuette: It is more.
Mr. Thompson: Would like me to explain the relationship between those two figures?
Senator Ringuette: Yes, please.
Mr. Thompson: The number you are referring to from the progress report on the Economic Action Plan is the number of individuals who received the extra five weeks of benefits that were provided. Those would have been people who would have otherwise exhausted their entitlement and made use of the additional five weeks.
The second number, the over 370,000 number, pertains to the number of new claimants, once they apply, who are identified as long-tenured workers who receive the letter indicating they are eligible for this special measure of extended benefits for training.
Senator Ringuette: How many of the 300,000 who received the five weeks would be within the 370,000?
Mr. Thompson: I do not have that number readily available. I do not know if we could derive it.
Senator Ringuette: How many total EI recipients do we have right now, this week?
Mr. Thompson: My Service Canada colleagues have information on the current number of recipients.
Philip Clarke, Director General, Benefits Processing, Service Canada: We can look it up and get back to you.
Mr. Thompson: The number fluctuates dramatically from week to week and month to month.
Senator Ringuette: In the last month, was it 300,000, 370,000, or 670,000?
Mr. Clarke: I will look into that, senator, and get back to you before the close of the meeting. I am sorry that I do not have the number.
Senator Ringuette: Will you have that number before the end of this meeting?
Mr. Clarke: Yes.
Senator Ringuette: I am still on page 50 of this economic report. As of September, more than 300,000 claimants have benefited from up to five extra weeks of benefits at a cost of $446 million. An extra five weeks of benefits represents an additional $2,235.00 in EI benefits.
From your number, $446 million, you are saying that the 300,000 claimants that received extra weeks have received their maximum EI benefit of $447 a week. Has everyone received the maximum? The 300,000 claimants that have received up to a maximum of five weeks, have they received all of them, because that is what you are saying. If you look at the numbers that are stated here on page 50, you are saying that all of them have received the maximum weekly benefits of $447.
Mr. Thompson: That does not strike me as a reasonable proposition.
Senator Ringuette: That is what I read in the economic statement that the Prime Minister of Canada presented in Saint John, New Brunswick.
Mr. Thompson: I do not have the statement before me right now.
Senator Ringuette: I would like clarification on what you claim has been paid out, the number of claimants and the 190,000 workers in your current estimate. I find all of these figures questionable. I want to rationalize what was said so that we can see the reality.
With respect to the proposed bill, I have a question about some industries. Most of the laid-off forestry workers would not be eligible for the additional weeks because most of them were laid off prior to January. There were some in Quebec, but that is a small percentage of the national figure.
There are provisions for shutdown for market reasons or for maintenance reasons of certain sectors in the employment act. There was an agreement that instead of the benefit weeks being seen as EI weeks, they would have been seen as weeks that would compensate the current salary. I am looking at the auto sector, and you know that aspect of the act very well. When an auto sector worker was laid off for five to 10 weeks because of the market situation, or because of the need to do maintenance, or to upgrade a plant, an EI provision would top off his or her salary instead of it being considered an EI benefit. Therefore, it was more than $447 per week.
What will happen to these workers? Will the weeks they have been laid off due to maintenance, et cetera, be considered weeks that they received benefits? I do not think it was referred to as benefits in the act.
Mr. Thompson: I think your question pertains to the second part of the definition of long-tenured workers, which requires no more than 35 weeks of prior EI use. Just to make sure I understand the question, your suggestion is that some of this type of EI use for retooling or for temporary shutdown —
Senator Ringuette: I do not think it was considered as an EI benefit. I think it was interpreted as a top-off.
Mr. Thompson: In arriving at this determination of a 35-week limit on prior EI use, we certainly did take into account our historical experience with sectors like the automotive sector, which makes occasional use of EI for retooling. This definition allows for seven weeks, on average, over the last five years. That is on average, so it could be more in one year or less in another for the types of shutdowns to which you refer, whereby a factory may undertake retooling or may have an interruption in their supply for a short period of time.
Senator Ringuette: Could you provide specific information concerning my questions on this sector? I am interested in the seven weeks in the last five years.
Mr. Thompson: It is thirty-five weeks in the last five years of EI use.
Senator Ringuette: Thirty-five weeks of EI use. That is high. That could work.
I would like to receive more information concerning that sector. If it is seven weeks per year, that is low. Again, I am not certain that they are referred to as EI benefits in the act; I think it was a top-off formula.
Mr. Beauséjour: When the plants are shut down, people can apply for EI and they can receive EI benefits, which are considered EI benefits.
Senator Ringuette: They did not have a waiting period, which was a special deal for the autoworkers. I want to have the specific information pertaining to that sector.
Mr. Thompson: We will undertake to do some further follow-up on the specifics pertaining to those types of situations.
Senator Ringuette: Is the Career Transition Assistance the same program as the federal-provincial training agreement with Ontario? I seem to recall that Ontario had a similar initiative that is a mirror image of what you are proposing in this bill.
Mr. Thompson: There are connections between the Career Transition Assistance initiative and the relationship we have with provinces around training. As you may know, there are transfers of funds under labour market development agreements to provinces that can be dedicated to training EI-eligible claimants.
This measure allows claimants on training who meet the long-tenured worker definition to be paid income support for up to two years. Then the province could step in and provide additional training support for tuition and other training expenses on top of the income support. It complements measures delivered by provinces, including measures such as the Second Career Strategy, which is the Government of Ontario strategy.
Senator Ringuette: It is a mirror image of that program.
Mr. Thompson: They are complementary.
[Translation]
Senator Robichaud: Help me to understand this: to be eligible, a person must have worked at least 7 out of 10 calendar years and paid 30 per cent of maximum annual premiums into the system. Is that not right?
Someone in a low-paying job must work for the entire year to contribute 30 per cent of premiums, whereas someone in a high-paying job has to work only 30 per cent of the year. Is that correct?
[English]
Mr. Thompson: Eligibility is determined on whether the claimant meets the minimum threshold.
[Translation]
It is 30 per cent of the annual premium threshold. It is not a matter of the number of hours worked.
Senator Robichaud: I see what you are saying, but if we compare someone who makes $8 an hour and someone who makes $30 an hour, the person who makes $8 an hour will have to work the entire year to reach the maximum annual premium threshold of 30 per cent in order to qualify, whereas the person who makes $30 an hour will have to work just 30 weeks in order to qualify for employment insurance benefits.
Mr. Thompson: It is the level of eligibility for the measures. It is the contribution rate.
Senator Robichaud: I am trying to make you see that the person who makes less will have to work all the time, whereas the person who makes more will not have to work as much. The way I see it, it is still the little guy who pays the price.
Explain to me how someone who works 30 per cent of every year and who pays the maximum annual premiums can qualify when they have not exceeded the 35 week limit in the past 5 years? I do not understand. What does the person who pays 30 per cent of the maximum annual premiums do for the rest of the year?
Mr. Beauséjour: That is why the definition has two parts. Basically, it targets people who have paid into the system for a number of years. The 30-per cent threshold is designed to help low-income earners to qualify.
The second part of the measure, which limits the use of employment insurance, is designed to ensure that people have a more long-term attachment to employment. Thus, the person with a higher paying job who works only 30 per cent of the year should not receive more than 35 weeks of employment insurance benefits, just like the person in a low-paying job.
Senator Robichaud: Does that mean you are disqualifying a lot of people? We are talking about 30 per cent and 35 weeks in the past 5 years, so that means they should not have received more than 7 weeks of employment insurance benefits each year. I do not understand how these people managed to get by.
Mr. Thompson: The goal is to have measures that target long-tenured workers who work during that time and who use employment insurance frequently. That is the objective of the definition and the reason for it.
There is another measure that I mentioned: the five weeks of benefits.
Senator Robichaud: That is another program.
Mr. Thompson: Yes, and it is already in place. It is not a targeted measure; it is aimed at all employment insurance claimants. This covers a more specific, more targeted group.
Senator Robichaud: I may understand some day.
[English]
Senator Di Nino: This is not an easy program to understand, it is quite complex. Let me see if I can put it in my own words to shed some light on it, at least on my own behalf.
The measures contained in this bill, if I understand it correctly, provide additional weeks of EI benefits to those who have paid into the EI program for a long period of time and have not needed to claim or have claimed very little of it, referred to as "long-tenured workers." Is that correct?
Mr. Thompson: That is correct.
Senator Di Nino: To pick up on my colleague's point, if someone has been taking advantage — or "needed" I think is a better word, because that is what it is; it is a need — needed this program over the five-year period and received 15 weeks or 20 weeks of EI a year, that person does not qualify. The claimant does not qualify because he or she has gone over that, but they have the benefit from the EI program already, so they have already received sufficient benefit.
I am not trying to put words in your mouth, but you are saying this is a program designed for a specific number of Canadians who, having worked for a long period of time — in other words, the older workers. We may want to use that term, although that is not the term you used. That is just for me to understand. They have been working for a long period of time and have not needed to draw EI. However, now they find themselves, particularly if they are in the age group of 50-year-olds and 60-year-olds, where employment may be difficult or take longer to find. This is a program designed to meet that need. Is that correct?
Mr. Thompson: That is correct. It is very much oriented to those who have lost their jobs as a result of the downturn and are in circumstances you have referred to, such as having paid in for some time.
Senator Di Nino: That is a different program than those who need to access the program on a regular basis for a period of time much greater than the threshold being established for this one, right?
Mr. Thompson: Correct.
Senator Di Nino: What is the maximum number of weeks one can claim now?
Mr. Thompson: It is 50 weeks, including the five-week extension.
Senator Di Nino: It was 45 weeks, and this government increased it to 50 weeks. Now the maximum is 50 weeks.
Senator Robichaud: It can depend on the number of weeks one worked to qualify.
Mr. Thompson: The maximum number, yes.
Senator Di Nino: We are just talking about the maximum number, just to understand the program. The maximum number, depending on the formula designed to create a certain amount of fairness, one gets minimum five weeks to maximum 20 weeks, which means that the benefits to these individuals would increase by a minimum of 10 per cent to as much as 40 per cent, if I am doing my calculations accurately. Do not argue with me and numbers because I was a banker for four decades. However, I do make mistakes. Am I correct?
Mr. Thompson: Yes. There is a slight nuance in that some might have a lesser claim, depending on the region, the unemployment rate and so on. One's entitlement could be somewhat less. The maximum right now ranges from 41 weeks in the areas of lowest unemployment up to 50 weeks. Those people at the top end of the entitlement would be getting from five to 20 weeks.
Senator Di Nino: The percentages would be about the same.
Mr. Thompson: Yes.
Senator Di Nino: I am trying to suggest to you that those, in effect, who would have the largest advantage, the biggest increase, would get about 40 per cent more than normal for this period of time, which is for the temporary program. Is that correct?
Mr. Thompson: That is correct.
Senator Di Nino: With respect to the 30 per cent threshold, I think you have touched upon this a little bit. Let me clarify it once again.
The way I read this is that 30 per cent was established so that those who earn the lower annual incomes, which I think is about $16,000 if you do the math — again, I might have a slight advantage because I am comfortable with doing math. I will put it in those terms. I think it is about $16,000. If that threshold were a little higher, the higher it goes, the more people you would eliminate from the program, right?
Mr. Thompson: Correct.
Senator Di Nino: I saw it as a measure to include those who may be working at the lower end of the income spectrum. I see that more as a positive rather than a negative.
Mr. Thompson: Correct. The eligibility was not determined on average payments. We took the lowest possible minimum wage and used that as the basis.
Senator Di Nino: As well, when we are talking about EI premiums, those who earn a higher salary pay a higher premium, and those who earn a lower salary pay a lower premium. Am I correct?
Mr. Thompson: Yes, up to the maximum. Only $42,000 is insurable, yes.
Senator Di Nino: Someone who is earning $16,000 a year would pay a lower premium than someone who is at the maximum. Do you have an idea of what that is? Can you tell me what that would be?
Mr. Beauséjour: The premium is $173.
Senator Di Nino: I have to do my calculations again.
Mr. Beauséjour: For low-income people, it would be about $150 on $16,000 worth of income.
Senator Di Nino: The comment made by my dear friend Senator Robichaud is not quite correct in the sense that it is not that the one who is earning less would be at a disadvantage. It would be 30 per cent of a much smaller number, and the maximum would be 30 per cent of a much higher number.
Senator Ringuette: No. It does not work that way.
Mr. Thompson: You pay EI premiums work to the maximum insurable, which is $42,000.
The Chair: Is that sorted out now, Senator Di Nino?
Senator Robichaud: You brought up the point about the maximum annual premiums. Does that amount depend on where one is situated on the salary scale? Is it of the total one would pay if at the top of the scale? I think that is the answer Senator Di Nino was seeking.
Senator Di Nino: No.
Mr. Thompson: The current premium rate is $1.73 per $100 of insurable earnings. They are paid at the same proportion up to the maximum insurable earnings in the neighbourhood of $42,000.
Senator Di Nino: Those who earn less will pay less, obviously.
Mr. Thompson: They pay the same percentage.
Senator Di Nino: Same percentage, but actual dollars paid would be less.
Mr. Thompson: Actual dollars paid would be less.
Senator Di Nino: You made a comment that surprised me. You said the maximum benefit is $447. That is the same as 10 years or 15 years ago; is that correct?
Mr. Thompson: No. It has grown with the maximum insurable earnings, the maximum benefit.
Senator Di Nino: Do you know the maximum benefit in 1995?
Mr. Thompson: Not off the top of my head. I would have to get that figure.
Senator Di Nino: Could you get that for us? It does not make sense. I believe that the maximum weekly benefit 10-15 years ago was about $440. That it has grown so little surprises me. Maybe you can give us a response on that question.
Mr. Beauséjour: The maximum earnings had been frozen for a number of years, and it has been increased for the last two or three years.
Senator Di Nino: It was only frozen for a couple of years.
Mr. Beauséjour: We will get the numbers. It was frozen for a number of years.
The Chair: Could you try to get the information for us instead of speculating.
Mr. Beauséjour: Yes.
Senator Di Nino: I am happy with that. Thank you.
Senator Ringuette: You said tonight many times that you will get us the different information we have requested. You were before us in June regarding another bill, and we asked you then for information that you were supposed to provide, and we received that information yesterday, three months later. I hope your response will be faster this time.
The Chair: Of course, in June there are other factors involved and the bill was passed rather quickly, so you might have thought that the information was not as pertinent. We are doing a pre-study on this bill and the information is very pertinent to us because we will have to deal with the bill very soon.
[Translation]
Senator Carignan: I want to clarify a point that Senator Robichaud made when he suggested that a low-income earner is at a disadvantage compared with a higher income earner because the person with the higher income reaches the 30 per cent annual premium threshold faster. That is what I am getting at.
My question is about the 35-week period. The conditions are cumulative. So you have to have paid at least 30 per cent of the maximum annual premium for a minimum of 7 out of 10 calendar years and not have collected more than 35 weeks of employment insurance benefits in the past 5 years.
That 35-week period adds a condition that cancels out the idea that there is an inequity between lower and higher income earners, as Senator Robichaud was suggesting. Although someone who makes more may reach the 30 per cent threshold faster, that person will not be able to qualify for the measure if they have exceeded the 35-week limit.
Mr. Thompson: That is true in the case of a higher income person who paid more than 30 per cent of the annual premium and who received more than 35 weeks of benefits. That person would not qualify for this measure. It all depends on what the person did during the period when they were not working.
Senator Carignan: This additional condition would cancel out any inequity that may arise.
Mr. Thompson: That is true for those who collected employment insurance benefits during the period when they were not working. Both conditions are cumulative.
Senator Carignan: The purpose of my question was to clarify things.
Senator Robichaud: Someone who paid 30 per cent of the annual premium and who collected more than 35 weeks of employment insurance benefits in the past 5 years would not be eligible. Is that right?
Mr. Beauséjour: That is correct. Regardless of the contribution rate, a worker who collected employment insurance benefits for 35 weeks would not qualify for this measure. And that condition applies to all employment insurance claimants.
Senator Robichaud: May I continue?
The Chair: Senator Gerstein still has to go; he has not yet had his turn in the first round.
[English]
Senator Gerstein: I am most interested in the preface that Senator Ringuette made when she started to pose her very good questions, and that was to put this in a proper perspective. To put something into proper perspective, I find I have to remove myself and move back a little to look at a larger picture.
Am I correct that during the 1990s, in effect 1994 to 1997, the Liberal government cut EI benefits? It started in 1994 with Bill C-17, in which the minimum number of weeks to qualify in high-unemployment areas was increased. It became harder for persons to qualify. The benefit rate was reduced. The Budget Implementation Act, Bill C-31, in which — I believe Senator Di Nino was asking the question — maximum insurable earnings were reduced to $750 a week from $815 a week, followed this in 1996. Then Bill C-12, the Employment Insurance Act of 1996, in which again there were higher standards applied in order to receive benefits, followed this. Interestingly enough, Senator Eggleton, Senator Ringuette and Senator Robichaud were all in the House of Commons at this time.
That is the starting point. Starting with that point, we now come to 2009. In 2009, our government has acted, in my view, extremely responsibly to help those hardest hit in the global recession. They extended benefits by five weeks, work sharing was expanded, EI premiums were frozen, and substantial amounts were given to training — $500 million for training long-tenured workers that helped 40,000 Canadians back.
I ask you, within this context of trying to understand a perspective: Would you agree that there has been a reversal of trend in terms of how we are now paying benefits to the unemployed?
The Chair: Do you feel qualified or do you desire to answer that somewhat difficult question?
Mr. Thompson: I am not in a position to speak to the history of the EI program, but the purpose of this legislation, as with the purpose of the other measures in the Economic Action Plan, is to respond to a very significant economic challenge facing the country. It is designed to provide additional EI benefits to Canadians at a time when they are needed. That is really the purpose of this legislation.
Senator Gerstein: We hear a reversal of fortune. This is a reversal of trend. I am not surprised with your answer. I was interested to see, for example, Chief Economist of the TD Bank, Don Drummond, say that this legislation is quite powerful, particularly in the current context. My premier, Dalton McGuinty referred to it as a step in the right direction. Ken Luenza — someone was asking questions about the auto workers — indicated his support of us moving in this direction.
I thank you very much for the clarification of getting a better perspective on what is happening with EI.
The Chair: That is the kind of argument we hear at second and third reading, but it was nice for you to experience it here. We are here to try to understand what is contained in the bill so we can make a better-informed speech at second and third reading.
Senator Callbeck: When I questioned you before, I said the program ended in September 2010. However, in reading the information here, I see that you have to apply for your benefit by June 5, 2010. Is that right?
Mr. Thompson: I referred in my remarks to the fact that we have a phase-out period for fairness and to ensure a smooth transition back to the regular benefits regime. The amount of extended benefits will gradually diminish over a period of months between June and September so that as of June, the number of extended weeks will be five weeks less than the previous month. They would gradually reduce five weeks per month, so that by September the extended benefit would revert back to the normal entitlement.
Senator Callbeck: So you could apply in July and get some benefits.
Mr. Thompson: Yes, but it would not be the five to 20 weeks at that point.
Senator Callbeck: How did you arrive at the conditions that a person would have to have paid 30 per cent of the maximum premium for seven out of 10 years, and could not have drawn out more than 35 weeks of regular benefits over five years?
Mr. Thompson: One of the objectives of the legislation is to make sure it applies to those sectors impacted by the downturn. As I was saying earlier, we took into account our experience over the last few years with sectors such as manufacturing, sectors that have made periodic use of Employment Insurance for temporary shutdowns and retooling. We arrived at the amount of an average of seven weeks over five years, and in our judgment, that limit appropriately captured those types of circumstances.
Senator Callbeck: Did you really just look at the manufacturing?
Mr. Thompson: That sector makes use of this type of shutdown; however, I would say that looking forward, it is difficult to predict with any certainty where the future applications from any given sector will come from.
Senator Callbeck: I am interested in the 35 weeks. In Atlantic Canada, we have so many seasonal workers. Thirty-five weeks is very low. You say you really just looked at the manufacturing sector.
Mr. Thompson: That was one of the factors underlying the choice.
Senator Callbeck: What were the other factors?
Mr. Thompson: We looked at average EI use across the whole country. As I indicated in my remarks, our definition is fairly inclusive. Roughly one-half of all the people who contribute to EI would be eligible for this measure and about one-third of the people currently coming onto EI would be eligible for this measure. It does have a degree of targeting around it, but it is a fairly inclusive definition.
Senator Callbeck: Do you have a breakdown of claimants from the provinces and regions?
Mr. Thompson: You refer to the estimated 190,000 people who will benefit.
Senator Callbeck: Right.
Mr. Thompson: We unfortunately do not have a breakdown by sector or by industry because it is based on a national unemployment forecast.
Senator Callbeck: I mean by a region or province.
Mr. Thompson: Again, it is based on a national unemployment forecast and the precision of provincial unemployment rate forecasts are not to the point where one could credibly disaggregate that 190,000 into what province these applicants will come from. We derived it on a national basis and that is where the degree of confidence was around that figure, not on adding up individual forecasts of provincial unemployment rates.
Senator Ringuette: I want to make sure you have the history right about EI. Changes to the system started in 1990 under the Mulroney government, and that is why in 1993 there were only two Tory members left in the House of Commons.
I am sorry, sir. Could you put that on the record, please?
Senator Finley: It could be the same for you guys next time around.
The Chair: Let us carry on with this.
Senator Ringuette: You can give it, but you cannot take it.
Senator Finley: Sure, I can.
Senator Ringuette: I have received this table from our research. Does this information come from the department? The table shows four different groups, depending on the time they apply for EI benefits. For instance, the first group starts in January 2009.
Mr. Thompson: I am familiar with that table.
Senator Ringuette: For instance, group 3, which would apply next year, because this is a two-year thing, having made the 30 per cent contribution, for nine out of the 12 years, is entitled to only one week.
Mr. Thompson: I described this phase-out approach earlier for the vast majority of time that the measure is in place. What is referred to here as group 1, it is more of a time period. It is a group of claimants over a period of time. This would be the claimants from January 2009 to June 2010. That is the vast majority of the time period that the measure is in place. The benefit extension ranges from 5 weeks to 20 weeks. The remaining groups are for one-month periods to ensure a smoother transition back to the normal benefit entitlement to avoid a situation where a claimant in August was entitled to 20 weeks more than the same claimant is a few days later, in fact. We wanted to ensure fairness and a gradual transition out of the extended benefit. That is the rationale behind the table.
Senator Ringuette: Does that take into consideration over a two-year period the 190,000 workers that you referred to earlier?
Mr. Thompson: The estimate of 190,000 workers refers to those claimants reaching back to January 4 and extending new claimants until September 11, 2010.
Mr. Beauséjour: That takes into account the phase-out.
Senator Ringuette: How did you get to the $935 million over two years?
Mr. Thompson: How did we get to that number? I would say it is a number that spreads over several fiscal years as well, because these are paid benefits. I would note that for claimants in September 2010 who get this benefit extension, it would be paid well into 2011. There is a long period of time over which that payment is made.
Senator Ringuette: We are looking at about 18 months in reality.
Mr. Thompson: Then the benefit period for those claimants extends beyond that.
Senator Ringuette: The $935 million is over that 18- to 24-month period. How did you arrive at that number?
Mr. Beauséjour: We made an estimate of average weekly earnings. We also estimated the average new additional weeks of benefit, for these 190,000 individuals, and we arrived at $935 million.
Senator Ringuette: Mr. Thompson, in your responsibility as Associate Assistant Deputy Minister, Skills and Employment Branch, does your branch signify to Immigration Canada whether there are skilled Canadian workers available in certain trades and so forth? Which branch is that, if it is not yours?
Mr. Thompson: We work closely with Citizenship and Immigration Canada on a number of issues. We are working on the Foreign Credential Recognition Program that was part of Budget 2009. We have ongoing discussions around the Temporary Foreign Worker Program, which is another program within our branch as well. There is ongoing dialogue with Citizenship and Immigration Canada on broader labour market discussions.
Senator Ringuette: You are aware that the last statistics showed 207,000 temporary foreign visas. Of those 207,000 foreign workers, one-half are without recognized skills.
I want to bring to your attention, because this is very important, that yesterday, on the site jobbank.gc.ca, there was an advertisement for 40 vacancies, education not required, licensed certificate membership courses not required, in construction, in the area of farm work, with the requirement that the applicant speak Arabic and Russian. I will not name the employer.
There is a need for 40 workers here in Canada. Those workers do not have to have certification, except maybe the requirement to speak Arabic and Russian. I am going to follow this item very specifically, and if there is a temporary visa for foreign workers while we have Canadians looking for jobs, something will happen.
[Translation]
Senator Robichaud: I am trying to understand the scope of this bill. I understand that we are trying to help people who are in need given the current economic situation. But I would have expected the economic situation to have the same impact on seasonal workers as everyone else.
Have you done any calculations to determine how a certain number of weeks could have been added for seasonal workers who normally receive lower wages than what is offered in some industries?
Mr. Thompson: I mentioned that the purpose of this bill is to assist a targeted group. There are other measures. The government has launched a number of pilot projects in regions with a higher unemployment rate, one of which is a different method to calculate benefits using the 14 best weeks.
Before, there was a measure that set out five extra weeks. Those benefits were available in certain regions of the country; that is still part of a pilot project. So there are a number of measures that were put in place for this kind of situation. I have already explained the purpose of those measures.
Senator Robichaud: Did that provide the same level of support to the groups you just mentioned as to those affected by this bill? Is it comparable?
Mr. Beauséjour: It is hard to say whether it is comparable or not. Seasonal workers still have access to other programs such as training programs under part II, programs delivered by the provinces and other types of support that are provided to all workers, including seasonal ones.
[English]
Senator Ringuette: Our seasonal industry is 25 per cent of our GDP. You do not seem to understand that the employers that create that 25 per cent of GDP need these employees each year. You seem to think that they should move to other sectors. What will these seasonal employers do?
Mr. Thompson: I do not think anyone is making any claims of what the workers should do. I am just explaining the provisions of this piece of legislation, indicating that there were other measures taken in the past that were aimed more at seasonal workers.
As Mr. Beauséjour has indicated, other measures in the Economic Action Plan were made broadly available to all Canadians, even those who are not eligible for Employment Insurance, through certain training investments.
Quite a range of investments has been made in training and income support for different populations. This measure has a more targeted benefit to a certain category of workers.
Senator Ringuette: The United States introduced a program that provides for any laid-off worker. Regardless of their contribution to what they call the "quarters," if they are laid off, they are allowed four years of compensation plus two years of training, in whatever program. There is no 30 per cent of that as a condition of having not received more than 35 weeks in the last five years of EI compensation. There is no prerequisite at all in their program to assist laid-off workers.
The Chair: We are moving, I think quite unfairly, into the area of policy. All of us are concerned about the economic situation. We are dealing with this piece of legislation and this government's reaction and attempt to deal with this situation. You may or may not agree with the policy decision, but we want to understand what the government is doing. That is why these witnesses are here today. Unless there are any other specific questions on the bill before us, I think we will adjourn this meeting.
Mr. Thompson: My colleague can put a number on the record in response to an earlier comment.
Mr. Clarke: To your question, Senator Ringuette, around the number of active claims, in August 2009, we had 1.553 million active claims.
Senator Ringuette: Thank you very much. That was quick.
The Chair: Thank you for being here. As Senator Ringuette pointed out earlier, because of the urgency of this particular piece of legislation, if you could get back to us as quickly as absolutely possible with respect to those undertakings that you have given, that would be very much appreciated.
Mr. Thompson: We will undertake to do so.
(The committee adjourned.)