Canada’s Employment Insurance (EI) program urgently needs reform. Our EI system is out of step with today’s labour market and has failed to deliver for many Canadians during the COVID-19 pandemic.
Created in 1996 after an overhaul of the previous Unemployment Insurance (UI) system, the EI program seems stuck in the past.
As the COVID-19 pandemic revealed, the current EI system also cannot handle sudden labour market disruptions.
In 2020, when millions of workers lost their jobs or saw their incomes slashed because of business closures or reductions related to pandemic restrictions, the federal government had to create new income supports, like the Canada Emergency Response Benefit, administered by Revenue Canada, because the EI program was inadequate.
Government consultations have shown the program to be too complicated, not accessible enough, and to have among the least generous benefits when compared to similar countries. There are also huge problems managing and delivering EI benefits. Even the computer system used to administer the program is 50 years old and needs updating.
Canada is facing many economic challenges related to the pandemic, technological change, an aging society, globalization and climate change. Workers and businesses need a well-functioning EI program to help them adapt to new labour market requirements and realities and cope with recessions.
The good news is that the federal government recognizes this and has recently held consultations on how to modernize EI. However, for reforms to effectively address the challenges Canada faces, the government must treat employers and workers as true partners in finding and implementing solutions.
EI transformation must go beyond just consulting and engage in inclusive ‘social dialogue.’
What is social dialogue?
Social dialogue is a robust process that encompasses all types of negotiation, consultation and information exchanges between or among representatives of governments — and importantly, among employers and workers too, on economic and social policy issues.
While consultation generally puts all of the information in the hands of the party doing the consulting, social dialogue is more democratic, with government, employer and labour partners working together to find mutually beneficial solutions. The outcome is more innovative reform that meets all parties’ realities, making changes easier to implement.
Social dialogue is a proven governance tool that has worked well in several countries.
International organizations such as the Organization for economic co-operation and development (OECD) promote social dialogue through the Global Deal multi stakeholders’ initiative. The European Commission encourages social dialogue at the European Union level and among the country members. The International Labour Organization, of which Canada has been a member for over a century, embeds social dialogue at the heart of the United Nations.
It has also been used in several Canadian provinces for occupational health and safety governance (i.e., workers’ compensation boards). Social dialogue is also something that employers and unions engage in when negotiating contracts. It’s time the federal government harnessed it for EI reform.
A chief advantage of social dialogue is that it can achieve better outcomes than consultation alone because it focuses on consensus and transparency.
The original UI system was built on a social dialogue model. When the Canadian government created UI in 1940, it established a tripartite commission consisting of government, employer and worker representatives.
Over time, however, the government not only withdrew its financial participation in the program, it steadily stripped the commission of most of its powers. As succeeding governments began implementing reforms, often for political reasons, they also eroded the non-partisan nature of the program.
This is despite the fact that since 1990, employers and workers completely fund EI, contributing over $24 billion a year to it.
To ensure that future EI and workforce policies are non-partisan and always reflect business and worker needs, social dialogue must become a formal part of EI.
Bill S-244 before the Senate aims to do just that by creating an EI Council to advise and make recommendations to the Canada Employment Insurance Commission (CEIC) on all EI matters. The council would include an equal number of unpaid employer and labour representatives and be co-chaired by the CEIC employer and worker commissioners, giving employers and workers a meaningful role in shaping the country’s workforce policies.
Support for the council is widespread among business and worker organizations, with groups such as the Canadian Chamber of Commerce and the Canadian Labour Congress championing it.
The government needs to act now to create the EI Council — putting social dialogue at the heart of EI. This will produce reforms that will make EI more responsive, inclusive, sustainable and non-partisan, which will benefit Canada’s entire labour market, and our economy.
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