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An Employment Insurance system for the 21st century: Lesson 2, The future of work calls for better income insurance

Published by Anonymous (not verified) on Wed, 20/01/2021 - 4:24am in


Jobs, Unemployment

The 2020 Speech from the Throne boldly claims that “This pandemic has shown that Canada needs an [Employment Insurance] system for the 21st century, including for the self-employed and those in the gig economy.” That is a tall order, a major overhaul of a complicated program in the span of the next couple of months, with little or virtually no consultation of stakeholders or engagement of experts outside of the government.

Will Minister Qualtrough, her cabinet colleagues, and of course the Prime Minister, get it right?

After all the need for EI reform has long been recognized, with lessons learned well before the onset of COVID19, but always politically convenient to put off. What does the 21st century hold for us?

Well, we’ve seen a good deal during its first 20 years, and some big lessons are pretty clear.

I draw three lessons, and these should be used to judge what the government has in store. You can read about the first here: Big shocks matter and need a response in real time.  This post discusses the second and the reforms it calls for: Lesson 2 is “The future of work has arrived and needs better income insurance for all.”


Lesson 2: The future of work has arrived and needs better income insurance

I often wonder what has happened to Neil Piercey, the 58 year old man from London Ontario who walked, with a certain trepidation, into the Prime Minister’s office to speak to the newly elected Justin Trudeau during those heady days in the aftermath of the 2015 election.

Mr. Piercey was one of ten Canadians to engage “Face to Face with the Prime Minister,” as the CBC billed the televised series, each chosen to focus on a policy issue that touched their lives in a way representative of other citizens.

Mr. Piercey’s concern was “Manufacturing jobs in Canada,” and he may have walked in with trepidiation, but he spoke with a great deal of pluck about his plight as a laid-off factory worker who earned a decent income but now as a fruit delivery driver was struggling to piece together work that would give him some semblance of past security.

Savings exhausted, house sold, family disrupted, hard workers like Mr. Piercy were not well served by the first wave of free trade deals, and its attendant globalization of supply chains and contracting out that restructured many industries, particularly across large swaths of Southern Ontario’s manufacturing belt.

People like Mr. Piercey, those in the middle or tail end of their careers with significant seniority with the only employer they have likely known, took it on the chin and in the pocket book, suffering a permanent loss in their lifetime earnings. They were left carrying the cost of a social decision that benefited many, but left them uncompensated. Social policy makers and Finance Ministers at the time were telling these people that they should be “adjusting to win.”

But this man’s past, even now years later, teaches us important lessons about the “future of work,” lessons that still need to be taken to heart so that government has more to offer the next wave of Neil Pierceys than the Prime Minister could during that January 2016 encounter.

Mr. Piercey’s vote could go populist as easy as it might go progressive, and if the upcoming reforms to Employment insurance promised by the Speech from the Throne do not respond in an important way to his call for employment and income security, the reality of a policy agenda framed around “supporting the middle class and those working hard to join them” will more accurately be portrayed as “disappointing those treading to stay afloat and the middle class likely to join them.”

The Future of Work and the coming insecurity

The Speech from the Throne recognizes that the nature of work is changing and calls for coverage to be extended to the self-employed and to so-called “gig” workers.

With the exception of the COVID pandemic, the “changing nature of work” has to be—right up there with climate change—one of the hottest issues facing Canadians, a big cause of uncertainty and insecurity that underlies the middle class malaise that all political parties are hoping to address.

And quite rightly so. The future of work and globalization should raise a lot of anxiety.

Richard Baldwin’s 2019 book, The Globotics Upheaval: Globalization, Robotics and the Future of Work, argues that as powerful innovations in digital technology meet globalization many higher paid workers in service jobs will be confronted with the disruptions that workers in manufacturing jobs had to deal with during the first wave of globalization during the 1990s.

His argument that its “coming faster than most people believe,” has been rendered all the more believable as the COVID pandemic has advanced the pace at which technology is changing our workplaces and families.

Many employers have made dramatic changes in the hard and soft technology of how they manage, monitor, and motivate their workers, learning that working at home may disrupt productivity, but in many cases may do just the opposite if done right. If that is the case, then how long before your boss starts asking: “If you can do your job anywhere, can anyone do your job?

This is Professor Baldwin’s argument, that advances in communication technology are going to lead to another wave of globalisation and contracting out, but this time moving past manufacturing into the service sector, impacting many white collar workers. Many of them are relatively well-paid but they will likely be brought into head-to-head competition with equally skilled programmers, accountants, purchasing agents in other countries happy to work for a much lower wage.

What then should politicians be doing about this future which COVID has made to look like its just around the corner? Neil Piercey’s experience teaches us that the first step is not more training and exhorting mid-career workers to “adjust to win,” but rather it is to offer better insurance, compensating for the loss of firm-specific skills that have lost their utility when employers have gone belly-up.

Quick and easy reforms for better insurance

Quick and easy reforms to the existing Employment Insurance program involve increasing the fraction of income replaced by benefits in the event of job loss. The “replacement rate” is the result of two dials in the EI program that the federal government can easily notch up: the benefit rate and the maximum insurable earnings.

The benefit rate is currently 55%, meaning that an EI claimant receives 55 cents for every dollar of insurable earnings. This rate has varied from as high as 80% for certain categories of claimants to the current low, and is set by the government with an eye to keeping costs in line, and nominally to promote “work incentives,” encouraging workers to look harder for a job and move more quickly off the EI books. These past priorities don’t serve our present and future well.

There is a long history of legislative changes to this rate. The 1971 legislation introduced a major reform to all aspects of the program, and raised the benefit rate to 66 2/3 % from 40%, even offering a rate of 75% to claimants with children for the first two phases of a five phase benefit period. There were several reforms in the following decades, but the 1996 reforms significantly cut the benefit rate. It has been cut further since, now standing at 55% of insurable earnings. That said, the “Family Supplement” was also re-introduced by this legislation and has varied from as low as 65% to currently as high as 80% for some select groups of low income claimants with families.

My point is that given this history of change that sometimes quite sharply lowered the benefit rate in the name of deficit fighting and work incentives, it is both feasible and timely to raise the benefit rate and offer workers better insurance by covering more of their past earnings. Having roughly half of previous earnings covered is not the support that long-time contributors to the program facing the challenges of the future of work will expect.

But to suggest that claimants have roughly half of their previous earnings replaced by EI benefits is to overstate things. Earnings are replaced by benefits up to the “Maximum Insurable Earnings,” which is currently an annual income of $56,300. This maximum was set at $39,000 in the 1996 legislation that currently governs the program, and updated annually according to movements in Annual Average Earnings as determined by the “Industrial Aggregate” from a monthly Statistics Canada survey called the Survey of Employment Payroll and Hours.

So workers making more than the average face even a lower benefit rate, EI likely compensating them for less than half of their accustomed income. In other words, there is a whole bunch of relatively well paid workers, much like the manufacturing workers of Neil Peircey’s time, facing a lot more insecurity in their future, but being offered less than adequate insurance.

Source: Employment Insurance Act (S.C. 1996, c. 23), . Click image to enlarge.

The calculation of the maximum insurable earnings is not as complicated as the EI legislation makes it appear: basically take the average weekly earnings last year, and scale it up or down by how much it has changed over the year before that. The point is that it is an easy legislative change to scale it up to be based, say, on one and a half times the average.

Increasing the maximum insurable earnings significantly above the average and raising the benefit rate will increase the replacement rate of incomes and offer workers more complete insurance and foster their sense of security in a more and more uncertain future. These are quick and easy legislative changes the government can make without fuss.

Wage insurance not just employment insurance

An important change that might be a bit more “fuss,” in the sense of requiring more fundamental administrative changes to the EI program, has in fact already been promised by the government in its election platform, and figures in Minister Qualtrough’s original mandate letter:

Create a new Career Insurance Benefit for workers who have worked for the same employer for five or more years and have lost their job as their employer ceases operation. This new Benefit will begin as Employment Insurance ends and will not be clawed back if other income is earned

This is an important and very relevant change to Employment Insurance to address the future of work, enhancing regular benefits in a way that will offer insurance not just for the time unemployed in the search of a new job, but also for the income loss from taking a lower paying job.

This is a mild form of “wage insurance“, and will take an innovative step in making Employment Insurance more relevant for many workers, who may never have collected benefits in the past and are laid off from jobs that they have held for at least five years. It involves paying benefits to laid-off workers after they have accepted a job. The benefit would cover some significant fraction of the difference between their current and past incomes, for some significant period of time.

The government should proceed full throttle on this reform, and indeed even enhance it and make it more significant than originally imagined. Giving some workers strong wage insurance for an extended duration will offer them income security, and help many long-tenure mid career workers adjust to a future of lower pay. You could call it, at least in spirit, “Neil’s benefit.”

What I’m trying to say in all of this is that our current Employment Insurance program does a good job at insuring small risks and offering regionally-based income support, but falls short of insuring potentially big losses. That is a major shortcoming as a wave of big losses is likely coming.

As consumers our welfare depends much more on insurance for losses of potentially catostrophic consequences for our assets: we look to solid home insurance, and worry less about our bicycles. And so as workers, facing the transition to a  new economy, we will increasingly need comprehensive income insurance, not partial and small scale employment insurance.

The future of work calls for better income insurance.


The Country That Invites New Immigrants to Dinner

Published by Anonymous (not verified) on Wed, 06/01/2021 - 7:00pm in

Breaking bread

A program to break down barriers between natives and newcomers in the Czech Republic has brought together some 1,676 families.

Started in 2004 by a film producer who fled to the Czech Republic from war-torn Sarajevo, Next Door Family brings together immigrants and Czech natives for casual conversation over a leisurely meal. In its first year, 200 families participated, half of them Czech and half of them foreign. To ensure compatibility, participants are matched based on traits like age, language and hobbies. A migrant “assistant” shares in the meal and facilitates the conversation. 

The fact that so many of the participants continue to stay in touch afterward speaks to the program’s success. According to a study, 65 percent of the participants meet up at least once later on, and some 47 percent are still in touch over a decade later. As word of the effort has spread, the organizers have received requests from around the world asking them to bring the model to other countries. It has since been implemented in Belgium, Slovakia, Malta, Hungary, Italy and Spain, to name a few. And they recently heard from a family in Texas who wants to use it to bring Americans and Mexicans closer together.

Read more at The Local

Any special skills?

Of course, it’s not just in the Czech Republic where immigrants can have trouble gaining a foothold. The example of the taxi driver who used to be a surgeon is often used to illustrate the difficult task of transferring foreign credentials to the U.S. Tulsa is pursuing a fix for this problem with a program called Flourish Tulsa, which creates career pathways for internationally trained immigrants and refugees.

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There are approximately two million college-educated immigrants in the U.S. working in low-skill jobs. Flourish Tulsa helps these folks put their foreign certifications to use in the American workforce. If a direct transfer of their credentials isn’t possible, Flourish Tulsa can help them reapply their skills in fields like education, engineering or mental health — professions that the initiative says many immigrants are qualified for. “We are trying to reduce the number of years it takes individuals to build a career in the U.S., as well as the trial and error that costs them time, effort, and financial resources,” said one organizer. 

Read more at Next City

Keep on greenin’ on

We recently told you about 112 good things that happened in 2020. This week, Grist is offering six more. For instance: 2020 was the year that major universities like Georgetown, Brown, Oxford and Cornell divested from fossil fuels. New York State’s $266 billion pension fund laid out a solid plan to do the same.

solarA solar powered house at Cornell University. Credit: Department of Energy

Meanwhile, green energy continued its upward surge, with renewable power generation outpacing coal on many days of the year. In the U.S. alone, wind power alone has doubled in capacity since four years ago. And across the world, cities, countries, companies and utilities made commitments to achieving carbon neutrality over the next several decades — promises that Grist has vowed to follow up on to make sure they’re sticking to them.

Read more at Grist

The post The Country That Invites New Immigrants to Dinner appeared first on Reasons to be Cheerful.

Class strategy: Red and Black Notes interview AngryWorkers

Published by Anonymous (not verified) on Mon, 16/11/2020 - 4:15am in


UK, communism, Jobs

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Original published here:

The middle-class left always turns to the working class when workers’ are fighting and turns their back on them as soon as they are defeated. There is not much more to say about this.

read more

Employment Insurance reform that promotes agency

Published by Anonymous (not verified) on Tue, 20/10/2020 - 12:04am in



Benefits for employee initiated time away from work should be delivered through individual accounts, and a new program for maternity and parental benefits should be started outside of Employment Insurance.

More than one out of every three dollars distributed through the Employment Insurance program are for so-called Special Benefits, those parts of the program associated with maternity and parental leave, with caregiving, and with sickness.

The fact that the COVID19 pandemic is a health crisis with important job market consequences has sharply exposed and widened gaps not just in EI’s coverage and delivery of job loss benefits, but also with these Special Benefits.

Constructive reform will require rationalization of coverage for demographic and family risks and should proceed in a way that recognizes both their collective and individual nature, with a delivery design that gives citizens agency in an incentive compatible way.

This can be best accomplished by delivering Special Benefits through individual accounts, while at the same time devising a new program for maternity and parental benefits outside Employment Insurance.

Source: Employment and Social Development Canada, Employment Insurance Monitoring and Assessment Report: Fiscal Year 2018/19, Annex 5.1. Accessed October 16, 2020. Click on image to enlarge.

Over the course of three decades there has been an incremental and haphazard building up of more and more contingencies associated with Special Benefits, the associated rules and regulations being repeatedly revised as successive governments realize they inherently lack full knowledge of the evolving and dynamic risks millions upon millions of very different families face over their life course.

There are Maternity and Parental Benefits – including maternity, standard parental, extended parental benefits – with a host of regulations associated with which partner collects benefits, when they can collect, and for how long they collect.

There are Sickness Benefits that vary according to whether a citizen already has employer-paid benefits. These may also cover long-term or permanent disability, as well as bed rest during pregnancy.

And there are Care Giving Benefits for specific contingencies: a Family Caregiver Benefit for Children; a Family Caregiver for Adults; and Compassionate Care Benefits.

Source: Employment and Social Development Canada,, accessed October 16, 2020. Click image to enlarge.

Governments have incrementally expanded coverage according to perceived need, bad publicity, or political expediency, all the while layering on rules and regulations to ensure the public purse is not abused. The most egregious example of the paternalism involved is the requirement that citizens – during one of the most stressful periods in their lives – produce a doctor’s note to attest to the fact that their loved one is on their deathbed. This is a far cry from the “trust and verify” rule that was so valued in the delivery of the Canada Emergency Response Benefit.

All of this can be made more effective, more dignified, more simple by using personal accounts, designed in a way inspired by the three tiers of Canada’s retirement income system.

Just as Old Age Security and the Guaranteed Income Supplement offer an income floor for the lowest income seniors, so to would the government make an annual contribution to each individual’s EI Special Benefit Account, and in this way recognize that some demographic risks are a collective responsibility.

Beyond that, each individual’s EI premiums would be allocated to their own account, much in the way that the Canada and Quebec Pension Plans are financed on the basis of work history. Everyone would be free to use their accounts to support a period of time away from work, whenever, for whatever reason, and for whatever length subject to the balance in the account.

This reform of EI would start with a careful assessment of what is and what is not a “demographic risk.” It is reasonable to suggest that maternity and parental benefits should be taken out of the Employment Insurance program altogether, and be delivered universally as an aspect of an expanded childcare program.

Individual accounts for family events that are truly unforeseeable would have the dual purpose of recognizing that individual citizens know their own needs and circumstances better than politicians, while also promoting incentive compatible behavior. Individual accounts that can be accessed for whatever reason raise the value of having a job in order to build up the account, encouraging job finding and job holding. At the same time, the balance in the account puts limits on the duration of benefits. Any balance in the account at the end of an individual’s working life would roll over into a registered retirement account.

[ This post was published under the same title on October 19, 2020 by the CD Howe Institute. ]

‘Do What You Love’ Mantra Makes People Feel Like Failures

Published by Anonymous (not verified) on Mon, 19/10/2015 - 10:25am in



New Tools for Retrenched Workers

Published by Anonymous (not verified) on Mon, 07/09/2015 - 11:31am in


employment, Jobs

Partnership Creates Indigenous Jobs

Published by Anonymous (not verified) on Mon, 17/08/2015 - 11:02am in



Unemployment Not Due to Lack of Motivation

Published by Anonymous (not verified) on Fri, 06/03/2015 - 3:23pm in


Jobs, Unemployment

Australians to Work Harder and Longer Than Ever

Published by Anonymous (not verified) on Fri, 06/03/2015 - 2:56pm in


research, Jobs

Considering a Project Management Office (PMO)

Published by Anonymous (not verified) on Fri, 06/03/2015 - 2:52pm in