May 24, 2012 / 3:23 PM / 7 years ago

Canada to tighten employment insurance rules

OTTAWA (Reuters) - Canada announced tighter rules for payouts to the unemployed on Thursday, requiring jobless workers to be willing to accept jobs at lower pay or commute farther for work if they want to collect unemployment insurance.

Minister of Human Resources and Skills Development Diane Finley takes part in a news conference in Ottawa May 24, 2012. Canada's Conservative government announced tighter rules for employment insurance on Thursday to try to deal with the anomaly of high unemployment alongside job shortages in certain areas. REUTERS/Blair Gable

The Conservative government said the changes would help deal with the anomaly of high overall unemployment at a time when there are labor shortages in certain areas.

Opponents said the government is demonizing people without jobs, and would force skilled workers to accept unskilled jobs.

“Let me be crystal clear,” Human Resources Minister Diane Finley told a news conference. “The changes that we are proposing...are not about forcing people to move across Canada or to take work that doesn’t match their skill set. Our goal is to help Canadians find local work that matches their skills.”

Noting that some employers are hiring foreign workers even while Canadians are making claims for employment insurance in the same occupation and province, she added: “We want to redress the balance right now so that Canadians get first crack at the jobs before we bring in temporary foreign workers.”

The changes to employment insurance rules mean that frequent claimants, for example in the seasonal fisheries industry, must be willing to take any job in their region for which they are qualified after seven weeks of benefits, even if taking the job means taking a 30 percent pay cut.


An unemployed fisherman, therefore, would have to take a job flipping burgers at McDonald’s if the restaurant were offering wages equal to 70 percent or more of his fishing earnings. If he did not, his unemployment benefits would end.

People will not have to be willing to move to get benefits, but may have to be willing to commute up to an hour if they have the means of transport.

The changes, expected to take effect from early 2013, are part of what Prime Minister Stephen Harper has called transformational changes to help Canada compete better.

Opposition politicians have raised the prospect of the new rules forcing people to move to oil-rich Alberta for work, or leading to such situations as unemployed teachers having to pick apples in local orchards.

Canadian unemployment was 7.3 percent in April, but regional jobless rates range from 4.9 percent in resource-rich Saskatchewan and Alberta to rates as high as 12.3 percent in Newfoundland and Labrador.

In March, almost 550,000 people received benefits across Canada, out of a total of nearly 1.4 million unemployed, which includes people who have quit their jobs and those who have not paid into the system, such as new immigrants and the self-employed. The government says its surveys of companies show 250,000 jobs are unfilled.

“What we heard today is the minister scapegoating unemployed Canadians, that they’re not trying hard enough to find work,” said Peggy Nash, of the left-leaning New Democratic opposition.

The government plan could spark a backlash in regions of high and seasonal unemployment, for example in Atlantic Canada, which has 32 of the 308 seats in the House of Commons. The Conservatives have 14 of those seats.

With no requirement for the jobless to consider moving, the changes will have a limited impact in Alberta and Saskatchewan, which are in the midst of a resource boom and face acute job shortages in some areas. Nonetheless, even in those provinces there were nearly 37,000 employment insurance claims in March.

The Canadian Federation of Independent Business said the new rules were a small step to return some balance to the system.

“The shortage of qualified labor is a problem for small businesses across the country - not just in Western Canada,” CFIB President Catherine Swift said.

“While the concern is highest in Saskatchewan, over half of our members in Nova Scotia, Newfoundland and Labrador and Quebec reported problems finding people.”

The new rules are more lenient for long-tenured workers than frequent claimants. They will only be asked to take a pay cut of 10 percent and can insist on taking jobs within their usual occupation for the first 18 weeks of benefits.

Canadians can usually claim employment insurance for between 14 and 45 weeks, provided they have built up enough contributions in the system before they start claiming.

The benefit rate is 55 percent of their insurable earnings, with a maximum weekly benefit of C$485 ($471). Finley said that because this percentage is lower than the 70 percent of past pay that frequent claimants would have to accept, there is a financial incentive for them to return to work.

The unemployed have always been required to search for and accept “suitable employment” to draw benefits. The government says its changes add clarity to these terms, which previously left a gray zone and caused some employers to say they cannot find willing Canadians.

($1=$1.03 Canadian)

Additional reporting by David Ljunggren and Louise Egan; Editing by Padraic Cassidy, Janet Guttsman; and Peter Galloway

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