CANADA

The new rules hit home

A tough law limits unemployment payments

NANCY WOOD July 15 1991
CANADA

The new rules hit home

A tough law limits unemployment payments

NANCY WOOD July 15 1991

The new rules hit home

CANADA

A tough law limits unemployment payments

From his desk in a corner of the Winnipeg Harvest food bank in suburban St. Boniface, David Northcott has a firsthand view of the suffering. The 40-year-old coordinator at the food bank has worked for Winnipeg Harvest for six years—and over the past year has seen demand for its services increase dramatically as the recession drove the national unemployment rate to 10.5 per cent from 7.5. That stark reality is reflected in

the empty shelves of the food bank in St. Boniface, a largely working-class city on the eastern fringe of Winnipeg. Last week, only one of the warehouse’s four huge shelving units contained any food. And the demand will likely increase over the summer. In the coming weeks, the bulk of the first unemployed workers who qualified for payments under the newly toughened federal unemployment insurance rules will find their funds running out—leaving many with little choice but to add their names to the country’s burgeoning welfare rolls and to turn to food banks for help. Declared Northcott: “What we’re anticipating is that the folks who were laid off last year are going to have some tough decisions to make come this fall.” As a result, food banks and other social services organizations are preparing for what they fear will be an onslaught. Winnipeg Harvest, Northcott said, is intensifying its public appeal for donations. Underlying those activi-

ties is the recession—coupled with changes to the unemployment insurance system that came into effect last Nov. 18, after a year of standoffs between the governing Conservatives and the opposition Liberals in the Senate. At the time, the changes were overshadowed by the fierce national debate over the Tories’ Goods and Services Tax. The legislation, known as Bill C21, dramatically reduced periods of unemployment insurance eligibility for many unem-

ployed workers. And many social service workers say that the changes represent an undermining of Canada’s social safety network. Said Neil Cohen, executive director of the Community Unemployed Help Centre in Winnipeg: “There is a sense of betrayal. There is a lot of anger towards the federal government.” Under the new rules, the deficit-cutting federal government withdrew its annual $3billion financial support of unemployment insurance. Instead, employers and workers assumed total responsibility for funding, with employers putting in 60 per cent and workers paying the rest. Then, with February’s federal budget, then-Finance Minister Michael Wilson announced a 24-per-cent increase in premiums, or $2 billion for the current fiscal year, which came into effect at the beginning of this month. Many business leaders complained that the new financial burden would slow Canada’s recovery from recession.

For workers, meanwhile, the new legislation introduced tougher conditions for receiving unemployment insurance. Penalties for those applying for unemployment after quitting their jobs became stricter. And in many cases, workers now have to log at least 20 weeks of employment to be eligible for benefits—compared with 14 weeks under the old system. The previous maximum payment period of as much as 50 weeks was reduced by up to 10 weeks. Still, then-Employment Minister Barbara McDougall said that those reductions would be more than offset by a new, $800-million government job-retraining program to analyse the needs of the labor force and direct workers to areas of need. Overall, she declared, the new legislation represented “the next step in the process to develop a Canadian workforce that is able to meet the challenges of today’s demanding labor market.” Robert White, president of the Canadian Auto Workers union, complained that there was little point in offering retraining if there were no jobs for which to retrain. And in fact, the recession has drastically shrunk the Canadian job market. Meanwhile, jobtraining programs have not yet materialized. “It was an empty promise,” says Richard D’Arcy, who works at the Unemployed Help Centre in St. Thomas, Ont., 200 km southwest of Toronto. “I have no clients on it and I would love to see it, but I think it was a false promise.” Added Winnipeg’s Cohen: “No new programs have been announced.”

Federal officials explain m the delays by pointing out

1 that wide-ranging programs ï to help shape Canada’s future

2 workforce cannot be put in place without adequate preparation. Said Employment

and Immigration spokesman Richard Fix: “The facilities and courses have to be put in place. There was not meant to be an overnight increase in training.” Indeed, after Bill C-21 became law, the government established seven task forces to evaluate Canada’s labor needs. Those task forces then recommended that Ottawa create the Canadian Labor Force Development Board to oversee the development of the new job-retraining strategy. That board, established in January, held its first meeting in May. Its recommendations for the job-retraining program are now due to be delivered to new Employment and Immigration Minister Bernard Valcourt this autumn.

For his part, Fix acknowledged that the changes to the unemployment insurance program occurred at a time when the country was hit by a recession that has increased the hardship experienced by the unemployed. Still, he insisted, Bill C-21’s eventual effects will be

positive. “This was a long-term strategy,” said Fix, “not one meant for a oneor two-year period.” And he added that when the jobretraining program is in full operation—probably by next year—it will be adaptable and sensitive to changing economic conditions across Canada.

But in the view of some social services workers, the federal government’s slow pace and its emphasis on reducing unemployment benefits are clear signs that it is abandoning Canada’s tradition of social safety nets. Armine Yalnizyan, program director with the Social Planning Council of Metropolitan Toronto, said that Ottawa is in effect telling workers “to live with less—just lower your expectations.” She added: “These are the new rules. It’s a whole new ball game.” Yalnizyan also said that the new unemployment insurance regulations have left workers even more at the mercy of market forces.

“The whole thrust behind the new system is to make the workforce more malleable, more flexible, more willing to move, more willing to accept whatever is thrown their way,” she declared.

Meanwhile, many social workers say that the recession—and the tougher unemployment insurance rules— are having a devastating effect on families. In British Columbia, Allan Zdunich, a counsellor at the Burnaby Unemployment Action Centre, said that many people who lose their jobs but are ineligible for unemployment insurance payments under the new rules turn to relatives for room and board and for emotional support. Noted Zdunich: “The biggest burden ends up on family members and friends.”

The recession, coupled with the tougher unemployment insurance guidelines, is also being reflected in the swelling ranks of those applying for welfare. In Ontario, the proportion of people on welfare who are able to work but cannot find employment has risen to fully 63 per cent from 14 per cent in 1988. Said Pauline Carter, executive director of the Ontario Municipal Social Services Association: “It is going up steadily. Unemployment insurance is supposed to be income support for the workforce, but social assistance has become the fallback.” Carter also noted that in the past, employable people forced to go on welfare usually spent only three months on the rolls. Now, she said, they are staying on for twice as long on average.

Such trends are also having a devastating effect on municipal budgets in Ontario, Nova Scotia and Manitoba, where municipalities must share in funding welfare programs along with the federal and provincial governments. In Dartmouth, N.S., Mayor John Savage said that

welfare payments have become a major drain on his city’s resources. Savage estimated that at least 20 per cent of recipients are people who left Nova Scotia for jobs in Ontario and returned home when they lost jobs there as a result of the recession. And Ontario Liberal MP Joseph Fontana (London East), who chaired a Liberal task force on the recession during the winter, noted that the costs of swelling welfare rolls often result in a heavier burden on municipal taxpayers. In Ontario, Nova Scotia and Manitoba, Fontana said, municipalities have “either had to increase their taxes substantially or decrease services, or both.” Municipalities may face tougher decisions if the situation continues to deteriorate throughout the summer, as the people receiving benefits under the new unemployment insurance rules are cut off and begin turning to welfare. Declared Toronto’s Yalnizyan: “The legislation got rammed through last fall, so we will start seeing those who have exhausted their benefits just about now—and throughout July.” She added that, with the ranks of the poor swelling, “by about the fall of this year the food banks are going to be totally swamped.”

The economy itself seems to offer little relief. Last week, the Paris-based Organization for Economic Co-operation and Development predicted that Canada’s unemployment rate would remain constant at around 10 per cent until 1993. In fact, new statistics released last week showed that the unemployment rate, which decreased slightly in April to 10.2 per cent, rose again

marginally to 10.5 per cent—

equalling the recessionary peak reached in March. And while some recent favorable economic indicators have suggested that the economy may be starting to recover, many analysts caution that it will be a long, slow process.

In fact, some business leaders have charged that the new unemployment insurance system may contribute to a slower recovery. In raising the premiums, Wilson said that the increased funding was needed because unemployment insurance payments had soared because of the recession. But business leaders say that the higher premiums they and employees have to pay as of July 1 could result in increased inflation as they raise prices to cover the new costs. Noted Irene Ip, senior policy analyst for the Toronto-based C. D. Howe Institute: “I think it will definitely dampen the recovery.” One way or another, the changes that took place with little fanfare eight months ago are starting to take their toll.

NANCY WOOD

GLEN ALLEN

JOHN DeMONT