By Canadian Press

How an extra EI benefits program from 2016 could affect how feds help GM workers

Nov 27, 2018 | 2:08 PM

OTTAWA — The federal government finds itself being asked to consider extra employment insurance benefits to help cushion the blow for workers at the General Motors plant in Oshawa, Ont., that GM plans to close in a year.

This scenario has played out once before for the Liberals: An extended EI benefits package to 15 regions smarting from a sharp downturn in commodity prices that led to high unemployment rates. 

The program announced in the 2016 budget was supposed to cost $827.4 million over three years. Instead, it cost more that $1.92 billion. Here’s what went into that program, and how it might influence federal decisions today.

1) The Liberals were a fairly fresh government and had promised to make evidence-based decisions, so officials crafted a formula to decide where benefits should flow. The Liberals hoped the formula would insulate them from any criticism that program recipients were chosen for politically-motivated reasons. In the end, that formula — rather than narrowly targeting where and who qualified for benefits — helped send final costs skyrocketing. But a similar method could also be used today to decide where any benefits should go.

2) There were other considerations for the extended EI program that could be linked to today’s situation with GM.

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First: What is past precedence? The Liberals didn’t want to deviate too much from past practice, lest they bind future governments to similar standards. Following a similar pattern this time would mean an extra five weeks of regular benefits for all workers, and an additional 20 for eligible long-tenured workers, to a maximum of 70 weeks.

Second: What are the demographics of the workers affected? Age, education and job experience feed into how quickly they might find jobs, and how long they might need benefits. Unifor, the union representing workers at the plant, says the majority are in their 30s and 40s with families.

Third: What are the local conditions? If there are high unemployment rates, it may take longer for all workers, not just older ones, to find new jobs. In Oshawa, the rolling three-month average unemployment rate has increased to 5.9 per cent, up from a low of 4.2 per cent in July. The figure nearing the end of the calendar year is almost identical to the 5.8 per cent recorded in January.

The answers to all three questions frame the value and rules of any extended benefits program. Two years ago, the combined result of policy decisions and economic conditions was that 412,000 people qualified for extra benefits, instead of the 235,000 federal officials originally estimated would use the program.

3) In the 2016 program, older workers accounted for $1.7 billion in payments, despite being only 28 per cent of all recipients of the extra benefits. Also worth noting: Only about one-quarter of EI claimants usually use up benefits before going back to work, but almost half of workers exhausted their benefits under the Liberal program. The exhaustion rates would be something officials would look at in deciding how many extra weeks are needed.

4) The program from 2016 was a one-time project. The government regularly uses these kinds of pilot projects when it comes to quick alterations to EI because they don’t require major legislative changes. The Liberals would look at something similar today so the measure could be quickly implemented and help workers before the plant finally shutters its doors after December 2019.

The Canadian Press