Federal Budget 2016: Big changes coming to employment insurance

WATCH ABOVE: Liberals unveil budget

The Liberal government unveiled big changes to Canada’s employment insurance program in its inaugural budget on Tuesday; changes it says will better target people who most need the financial safety net.

Among other things, the changes will reduce the time Canadians must wait before they start claiming EI, as well as slash the number of working hours they need to have accumulated in the year prior to applying to receive EI.

When it comes to the amount Canadians must pay into the system, the Liberals have dropped employment insurance premiums for employees and employers to $1.61 per every $100 earned, down from $1.88. That’s not as low as what the Conservatives had pledged (in the $1.40 range), but Finance Minister Bill Morneau called it “appropriate” given the other changes to the program.

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According to economist Ian Lee of the Sprott School of Business at Carleton University, the reforms, which are expected to cost $2.5 billion over the next two years, line up with the Liberal government’s progressive agenda.

“Progressives believe much more in government intervention … the power of governments to make change,” Lee said. “So this is completely and perfectly consistent with who they are. It’s not a contradiction.”

It’s also politically astute, he added.

“When I saw those reforms, I thought those are the Maritimes reforms. The ‘thank you for voting for us.’”

The Maritime provinces, which overwhelmingly supported the Liberals last October, have some of the highest rates of employment insurance claims in the country. With an aging population and a large seasonal workforce, Lee said, they will benefit a great deal from Tuesday’s budget.

But the shifts are also targeted at regions like Alberta and Saskatchewan, which have seen a spike in unemployment rates in recent months as the price of crude has plummeted and the oil and gas sector has struggled.

Lee said that the changes mean that the ease with which people can claim EI will now be more dependant on the overall economic situation in the region where they live. The time for one-size-fits-all social programs is over, he noted.

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Armine Yalnizyan, a senior economist with the left-leaning Canadian Centre for Policy Alternatives, called the changes “very, very welcome.”

“It will help Alberta, it will get money where it is most needed without actually having to introduce an infrastructure program,” said Yalnizyan. “That’s why they call it an automatic stabilizer.”

Opposition parties react

Interim Conservative Leader Rona Ambrose called the overall budget “a nightmare.”

Click to play video: '‘This budget is a nightmare scenario’:  Rona Ambrose reacts to Federal budget' ‘This budget is a nightmare scenario’: Rona Ambrose reacts to Federal budget
‘This budget is a nightmare scenario’: Rona Ambrose reacts to Federal budget – Mar 22, 2016


“Most disappointing is the absence of anything resembling a jobs plan to help Canadians find work,” Ambrose said. “This is especially troubling for those families who make their livelihood in the oil and gas industry and will see today’s budget as a further condemnation of their desire to get back to work.”

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Ambrose also told reporters that the fiscal fallout of the government’s approach, including the change to EI premiums, is still unclear.

NDP leader Tom Mulcair, meanwhile, argued that even with the new rules, too many unemployed Canadians are still “being left out” of the employment insurance program.


Here are some of the major changes coming to employment insurance:

  • To begin claiming EI, Canadians will need to accumulate 420 to 700 hours of work in the 52 weeks prior to their claim, depending on the unemployment rate in the region where they live. That’s a significant drop from the current minimum of 910 hours.
  • The waiting period for EI claimants before they start receiving benefits is currently two weeks. It will be reduced to one week.
  • The duration of EI regular benefits will be extended by five weeks, up to a maximum of 50 weeks of benefits, but only for eligible claimants in the 12 economic regions with the sharpest increases in unemployment.
  • A ‘Working While on Claim’ pilot project will be extended to 2018. The pilot project allows people to keep 50 cents of their EI benefits for every dollar they earn.
  • Requirements for claimants to accept lower pay and longer commuting times the longer they rely on EI will be eliminated. Claimants will still need to conduct job search activities and accept suitable employment while on EI, however.

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