Economists and union leaders are calling on the federal government to immediately begin reforms of Canada’s employment insurance system to ensure workers impacted by job losses during the trade war with the U.S. can be adequately supported.
The EI system, they argue, is not equipped to dole out benefit payments quickly enough, and has an eligibility criteria that is too stringent in times of economic emergency.
“The government could start by waiving the one-week waiting period to apply for EI benefits, and allowing people in affected sectors to qualify for EI with fewer hours worked,” said David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.
Ottawa is considering making tweaks to the EI system as part of a package of yet-to-be-announced measures designed to support workers who are affected by U.S. President Donald Trump’s sweeping 25-per-cent tariffs on goods from Canada and Mexico, which took effect Tuesday.
Prime Minister Justin Trudeau, who announced retaliatory tariffs of 25 per cent on billions worth of U.S. goods in a speech Tuesday morning, said that the federal government is looking at how to make EI more flexible, though he did not specify what changes would be made to the system.
Various unions, including the Canadian Labour Congress, Unifor and the United Steelworkers Union, have been meeting with federal officials over the last month to discuss how to enhance the EI system in the event of a prolonged trade war with the U.S.
Access to employment insurance is limited to workers who have been employed for a minimum amount of hours that is based on region. Employees in Toronto, for example, have to work 660 hours before being eligible for EI.
Additionally, employees have to get a document called a record of employment, or ROE, from their employer before being able to begin applying for benefits. The monetary amount of an EI benefit cheque is based on the worker’s previous salary, but is capped at $650 per week.
Dr. Macdonald said Ottawa could consider forcing employers to expedite ROEs or waive it altogether so that workers have immediate access to benefits. But he cautioned that the government should be very clear on who exactly is eligible for emergency EI benefits.
That’s to avoid the situation that ensued during the COVID-19 pandemic, when a large number of applicants to the Canada Emergency Response Benefit ended up having their benefits clawed back because they were not eligible.
There is some precedent to enhancing EI in times of emergency. In 2016, the Liberal government extended EI benefits in 12 economic regions that were severely impacted by the downturn in the commodities sector. The extension allowed claimants to receive between five and 20 weeks of additional benefits.
Making drastic reforms to EI eligibility, however, will not be possible without legislative approval, according to Jennifer Robson, associate professor of political management at Carleton University. That will require Parliament – which is currently prorogued until March 24, after a new Liberal leader is elected – to return.
Dr. Robson said the government can make modest changes such as reducing or waiving the waiting period to receive EI with Cabinet approval, but major changes such as introducing a benefit floor will not be possible without actual modifications of the EI Act.
Andrew Bratt, an employment lawyer and partner at Gowling WLG, said the government could also expand the eligibility criteria for employers to opt into its Work-Sharing program, a system that allows an employee who has reduced hours to receive partial EI benefits.
“This could help encourage employers to retain some employees on a part-time basis, because they will be saving money with EI,” he said.
Business leaders, union heads and bank economists are all forecasting job losses across industries such as auto, steel, aluminium and the energy sector that are on the front lines of the tariff war.
The Canadian chapter of the United Steelworkers Union predicts that 30,000 jobs could be lost immediately in Canada, with more than 100,000 jobs at risk overall if the trade war prolongs.
In a note this week, CIBC economists predicted that there could be up to 350,000 jobs lost if the tariffs remained in place for the long term. The job losses would be concentrated in Ontario and Quebec because of their heavy reliance on manufacturing and resource exports, the note says.
Bank of Montreal economists expect the unemployment rate to climb to around 8 per cent, if the tariffs remain in place for a year, they said in a Tuesday morning note.
In an interview with The Globe and Mail, Unifor president Lana Payne said that job losses in the auto sector could come swiftly and within weeks, especially to workers in smaller auto parts manufacturing companies that cannot afford to absorb increased costs from the tariffs.
Ms. Payne said that she had not heard directly from any of the Big Three auto companies – GM Canada, Ford Canada and Stellantis – about whether plants would have to shut down and if temporary layoffs would take place.
“They are trying to figure this out in the coming days,” she said.
Prime Minister Justin Trudeau said U.S. President Donald Trump’s decision to pick a trade war is a “very dumb thing to do.” Trudeau says Canada is fighting back with retaliatory tariffs and will escalate that retaliation if the tariffs don’t come off.
The Canadian Press
