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Disciplining Labour - gutting Unemployment Insurance.

When federal Finace Minister Don Mazankowski delivered the government's Economic and Fiscal Statement on December 2, 1992, most observers were caught off guard by the proposals for Unemployment Insurance (UI).

The proposed changes would totally deny UI benefits to workers who quit their jobs without "just cause", or are fired for misconduct. Benefit rates would be reduced from 60 to 57 per cent of average "insurable earnings". The enabling legislation, contained within Omnibus Bill C-105, would effect those workers who apply for UI after April 3, 1993.

Mazankowski estimated these proposed changes will reduce expenditures by $850 million in 1993-94 and $1.6 billion in 1994-95. Employment and Immigration Minister Bernard Balcourt stated that these measures are necessary in order to maintain the UI Account at a manageable level as the premiums paid by workers and employers are not sufficient to cover the costs of the program".

Latest in a series

This round of proposed changes follows similar government initiatives to dismantle the UI Program.

In 1985, the Unemployment Insurance Commission (UIC) created Regulation 57 of the UI Act, which allocated vacation and severance pay as earnings for UI purposes. This change had the effect of delaying the payment of benefits, reducing workers' benefit entitlement, or denying benefits entirely for workers in receipt of large severances packages.

In 1986 the UIC created Regulation 58, whereby pension monies were allocated as earnings for UI purposes, having the effect of lowering benefit rates.

Subsequent to these changes the federal government introduced Bill C-21 ( see Canadian Dimension June, 1989) in April, 1989, which despite delays by Parliamentary and Senate Committees was finally proclaimed in November, 1990.

Bill C-21 increased qualifying periods, shortened benefit duration periods, increased maximum disqualifications from six to twelve weeks for workers who quit their jobs without "just cause" or were fired for misconduct, while reducting their benefits rates to 50 per cent of average "insurable earnings" and further, increased UI premiums for workers and employers by 15 per cent. These changes were motivated by the federal government's newly embraced policy objectives of withdrawing from the financing of the UI program, and while reducing the payment of benefits, funding the program entirely through UI premiums.

While previous changes had simply nibbled away at the program, Bill C-21 was a wholesale dismantling of the cornerstone of Canada's social programs. When C-21 was tabled, the federal government estimated that the changes would reduce the payment of regular UI benefits by $1.29 billion. Equivalent monies formerly spent on the income support component of UI would now be spent on training. Training programs previously funded out of the Consolidated Revenue Fund would now be paid for in large part by the UI account.

While the currently proposed legislation is not as far reaching as Bill C-21, it poses as great a threat to workers. Statistics provided by Employment and Immigration indicate that over 250,000 workers quit their jobs last year (6 per cent of all claimants) or were fired (1 per cent of all claimants). Should the present trend continue, Bill C-105 would have the potential to totally deny UI benefits to an equivalent number of unemployed workers. It will compel workers either to "roll teh dice" in the hopes that can successfully demonstrate "just cause", or to endure the most intolerable employment and the abuses of the worst employers for fear that they will not be eligible for UI.

Just cause

To understand the magnitude of the problem, one must examine the concept of "just cause" and the nature of the UI appeal system. When the federal government tabled Bill C-21 in April, 1989, unions and social action groups successfully forced the inclusion of a more comprehensive definition of "just cause" within the UI Act. As a consequence, the UI Act now provides the following grounds as "just cause" for leaving one's employment: sexual or other harassment; obligation to accompany a spouse or dependent child to another residence; discrimination on a prohibited ground of discrimination within the meaning of the Canadian Human Rights Act; working conditions that constitute a danger to health or safety; and obligation to care for a child.

While the UI Act contains no further grounds for "just cause," jurisprudence holds that "just cause" for voluntarily leaving one's employment exists where the employee had no reasonable alternative to immediately leaving their employment.

While having a limited definition of "just cause" is preferable to none at all, it is by no means comprehensive. Many circumstances give rise to workers leaving their employment. They may include changes in working conditions, duties, or hours of work, to name but a few. In fact it may be argued that most workers who voluntarily leave their employment do so for reasons other than those cited in the UI Act. Herein lies but one of the many injustices of the government's proposals.

In Manitoba, for the 1991-92 fiscal year, with 136,053 UI claims filed, the UI Commission imposed 52,097 disqualifications and disentitlements. Yet only 622 appeals were heard before the Board of Referees (an administrative lay tribunal independent of the UIC). Of the 622 appeals, only 207 were allowed. These data provided by the Canada Employment and Immigration Commission are alarming in that so few workers appeal decisions and further, that they are largely unsuccessful.

It must be concluded that for various reasons, UI claimants are discouraged from appealing disentitlements and disqualifications. This is likely due in part to their lack of understanding of the appeal system, their belief that decisions of the UIC will not be overturned, and the complexity of preparing and presenting appeals.

The onus of proof on appeal rests with the UI appellant. Women will not ensure entitlement of benefits simply by alleging that they were victims of sexual harassment. Other workers will not ensure entitlement to benefits simply by alleging that their workplace was unsafe or that their employer asked them to act in a manner which was immoral, unethical or illegal. The complexities of appealing UI decisions are obvious and the lack of success experienced by unassisted appellants is cause for concern.

The infrequency of appeals and the very low success rate on appeal provided part of the rationale for the establishment of the Community Unemployed Help Centre in Winnipeg. In its twelve years of operation the Centre has experienced a consistent 80 per cent success rate, while the success rate of unassisted appellants is inversely proportionate to that.

The federal government, in defense of the indefensible, contents that Bill C-105 affords adequate protection for workers with legitimate reasons for leaving their employment. They claim the legislation is intended to deny benefits only to those without "just cause" for leaving their employment. But they fail to acknowledge that most workers who leave their employment for justifiable reasons will be declared ineligible for UI benefits, simply because they are unable to prove "just cause" or unwilling to disclose details of the circumstances which compelled them to leave their employment. C-105 has little regard for these considerations.

Workforce discipline

This legislation and its forerunner, Bill C-21, are intended to enforce workforce discipline in the new globalized economy. It is no coincidence that Bill C-21 was introduced at the time of the signing of the Canada-US Free Trade Agreement. In the USA 32 per cent of the workforce is covered by Unemployment Insurance at a benefit rate of 35 per cent. In Canada, 70 per cent of the workforce is covered at a rate of 60 per cent. And throughout the past four years the federal government has carried out its plan to lower benefits to fewer workers. The federal government, in carrying out its agenda, has abdicated all responsibility for fiscal and monetary policies which have resulted in the loss of 600,000 Canadian jobs in the past four years.

Yet, with a federal election pending, one can take little consolation from a likely change in government. It was after all the Trudeau government which increased maximum penalties from three to six weeks for workers who quit their jobs without "just cause" or were fired for misconduct, and the same government with Jean Chretien as Finance Minister which reduced the UI benefit rate from 66 2/3 to 60 per cent of average "insurable earnings".

Neil Cohen is Executive Director of the Community Unemployed Help Centre.
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Author:Cohen, Neil
Publication:Canadian Dimension
Date:Mar 1, 1993
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