REAL Women has written about the misuse of the Employment Insurance Fund under the Liberal government (see REALity, March/April 2002 “Tossing Taxpayers Dollars into the Garbage Bin”, p.3) and REALity March/April 2004 “Maternity and Compassionate Leave at Risk”, p. 4).
The problem with the fund is that it was supposed to be an insurance fund to provide short-term income when an employee lost his job. This fund is derived from contributions from both the employer, who pays 60%, and the employee – the latter paying by way of a payroll tax deduction. The government does not financially contribute to this fund at all. The difficulty is that only 56% of the fund is actually used for its intended purpose, i.e., for employment insurance, and the remaining 44% of the fund is used by the government as a slush fund to provide other government social services such as financial benefits for new parents, benefits for those caring for family members, maternity leave benefits, etc. All those programs are beneficial – no question about it – but they should not be paid from a fund comprised solely from compulsory contributions paid by employees and employers, which funds were intended for another purpose. That is, the government should not be transferring the surpluses from the fund into its general revenues to distribute them at its own discretion.
The government, however, is happily doing so and the funds it is collecting in this regard are enormous. In the last fiscal year, the EI fund grew by $2.4 billion to more then $53 billion – quite a gift for the government to use as a slush fund, even though derived entirely from the compulsory contributions of employers and employees. Auditor General Sheila Fraser pointed out in her report in December 1, 2001, that a surplus of $15 billion was only necessary to keep the EI fund operational, and that the remainder of the surplus was a huge overpayment by the employees and employers.
What is necessary is that the government should stop using the compulsory contributions paid by employers and employees as a fund to finance its own social programs. Further, the current EI contributions should be substantially reduced to halt the huge accumulation of contributions in the fund. If the government wants to provide other social services for Canadians – fine – but not on the backs of the workers and employers. The excess surplus should be returned to the employers and employees who have been greatly overcharged.
There are further problems with the EI. One of its major problems is that it’s a 20th century social program struggling to assist workers in a rapidly changing 21st century labour force. Immigrants who are looking for their first jobs, or who have little labour experience, and the self-employed cannot qualify for benefits, even though the self-employed constitute 15.7% of the work force and its numbers increased by 7% in the past eight months whereas the number of employees rose by only 0.7%. The work world has changed but EI has not. It just continues on as a great government slush fund more than a help to those in the labour force. It is time for the entire programme to be revamped.
It is necessary in fact that the whole issue of EI be reviewed. There must be a public debate, with the public providing input into any amended programme since they are the ones who are so dramatically affected by it.
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