Unemployment Insurance Examined and Found Wanting
January 1, 1987 -
The response to the recent report of the Commission of Inquiry on Unemployment Insurance underscores the difficulty of changing a social support program that has come to be widely accepted as a basic right and entitlement.
Before the report was even released, it was obvious that the 6-member Commission was divided. In the end, only the Commission chairman, former Quebec Social Affairs Minister Claude Forget, and one other commissioner supported the report in its entirety. Two others appended their dissenting opinions on a number of detailsa procedure that is quite usual. However, in an unprecedented move, commissioners Jack Munro and Frances J. Soboda, both vice-presidents of the Canadian Labour Congress, denounced the Forget report in bitter language and issued their own alternative report.
Sensing political dynamite, the Mulroney government has carefully distanced itself from the recommendations of the official Forget report. Nevertheless, the Commission has clearly pointed to a number of shortcomings built into the current unemployment insurance system, and argues convincingly that these flaws must be addressed.
A Major Assignment
The Forget Commission was assigned a formidable task: "to inquire into the role of the Unemployment Insurance Program within the context of the Canadian social security system, as a means of improving the operation of labour markets in Canada, supporting more effectively Canada's economic development, ensuring the equitable financing of the Program and providing new and better opportunities for Canadians experiencing temporary unemployment." The Commission began its work in October 1985 and by March 1986 had completed 60 days of public hearings in 46 communities across Canada. At a total cost of $5.2-million, the work of the Commission is contained in a 5l6-page report, which has been conveniently summarized in an 85-page document. The Commission listened to a wide range of workers, and interspersed its report with letters from individuals who describe in vivid detail the problems they encountered.
The flaws pinpointed by the Commission include: a complex and bureaucratic system that often fails to serve recipients well; benefits unrelated to previous employment; varying criteria for eligibility; built-in disincentives, and poor targeting of funds. For example, it was found that only ll per cent of unemployment insurance money goes to families who earn less than $10,000 a year, while 20 per cent goes to families with an income of more than $40,000 per year. The Commission's recommendations aimed at directing the money to where it is most needed.
The Commission provided telling examples of the bureaucratic entanglement encountered by UIC clients. They include the following account of a Newfoundland fisherman's experience at the St. John's UIC office. He tells how, after waiting an hour, he spoke to a staff member.
We went through the whole issue . . how I qualified . . . 22 weeks insurable earnings . . . everything was fine. But for some reason my SIN was not on the slip. "Oh," I said, "that's no problem, I'11 give it to you." "Oh no, sir, it has to come from your employer." "My ..., that will take weeks. Go to last year's file." "Oh no, sir, we can't do that. If your SIN is not on the form, we can't process your claim." So I hit the roof, but it probably didn't do any good because my claim was delayed for another four or five weeks. (Summary, P. 48)
The strong opinions I have about UI stem from what can happen after people are hired. Employees have come to my personnel manager and said they want to leave and asked to be laid off so that they can collect UI. Once an employee has said that kind of thing you have serious doubts as to whether their work will be as good as it should be, so some managers think there's no harm done in doing them the favour. But I do . . . I say that's my money. It's not the government that pays UI, but working Canadians.
The changes recommended by the Commission include a drastic overhaul of the UIC itself, including a cutback in UIC staff, which now numbers some 28,000. One of the most controversial recommendations is to "annualize" the basis on which payments will be calculated. This would mean that short-term workers would receive much less than they do presently. However, the savings envisaged by the Commission (nearly $3-billion on a total payout last year of $12-billion) are to be rechannelled to help create local employment opportunities, to upgrade the workers' education and to introduce a so-called Income Supplementation Plan. The CLC and its two representatives on the Commission denounced these proposals as a heartless abandonment of the unemployed. However, it is clear that an attack on the root causes of unemployment, rather than a simple alleviation of its effects, is in the long term much more beneficial to everyone involved.
A number of commentators have praised the report for its thoroughness and good sense. At the same time, they have expressed doubts about the possibility of achieving consensus and the required political courage from the Mulroney government. For example, under the headline "Forget's Report, Refreshing, But Doomed," Toronto Star columnist Carol Goar wrote on December 9, "It is a shame that the Forget report on unemployment insurance has become such a piece of political dynamite. Judged on the quality of its ideas, it is one of the boldest, most thought-provoking documents to come out of Ottawa in a long time. But that is not the way it will be judged." Goar goes on to explain why this report will probably be swept under the rug and Canada will continue to muddle through with a badly flawed system.
The public reception of the Forget Report is symptomatic of the current state of Canadian politics, in which intimidated politicians refuse to make hard decisions in the face of pollsters and powerful lobby groups. This approach to policy-making was painfully evident in the behaviour of the two labour representatives on this Commission. Instead of seeking consensus and compromise, Munro and Soboda decided to represent the Canadian Labour Congress. In their extensive "alternative" report, prepared by the CLC staff, they argued that the present UI program is "basically sound" and only needs certain improvements. They described the Forget report as "misleading and spurious," claiming it is based on the belief that the unemployed are themselves responsible for being without jobs, and warned that the report's "reactionary proposals" would virtually destroy the UI program.
Munro and Soboda's attack forced the Commission chairman to defend himself in a supplementary statement. In it, Forget accused Munro and Soboda of misrepresentation and of questionable ethical behaviour, pointing to their refusal to fully participate in the discussions of the Commission, their leaking of confidential information to the Canadian Labour Congress, and their reliance on CLC research staff to write their "alternative" report.
My sympathy lies entirely with Mr. Forget in this messy disagreement. Commenting on the behaviour of the two labour representatives, columnist Douglas Fisher stated: "Such an outrageous breach of good citizenship isn't criminal, but it's sleazy and dishonest. Munro and Soboda ought to have resigned in mid-course of the inquiry, stating their reasons. But such open leadership and honest dissent doesn't exist anymore in the CLC" (Toronto Sun, December 10, 1986).
Although this report is not the final word on the complex issue of unemployment insurance, it is certainly a significant contribution to a much-needed discussion about public policy in Canada. If the pessimists are correct in saying that the ideas of the Forget report are worthwhile but will not go anywhere, we should worry not only about the state of the unemployment insurance program, but even more about the health of Canadian politics.