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Employment Insurance


Canada’s Employment Insurance policy is a bequest of the Great Depression. In many ways, it remains the foundation of Canada’s contemporary societal programs. Started in 1940, the program has gone through tremendous developments, both from philosophical and structural perspectives. Throughout the existence of the program, there has been a lot of debate as to its sustainability.

Early Unemployment Policy

Before the institution of the federal unemployment program, unemployment was not  a major concern to the government. As a matter of fact, the issue of unemployment was a relatively  recent feature in the history of the nation of Canada. Historically, there had hardly been any  appearance of stable reserves of labor in Canadian colonies until 1840s. However, following the economic depression of the 1870s, the nation experienced widespread unemployment that left thousands of Canadian citizens not only out of work, but also on the breadline (Makarenko, 2009).

However, at first, the issue of unemployment was viewed as an individual and local issue. This implies that it was considered that there was a problem with the individual, and not with the society at large. Consequently, any form of aid provided to those out of work was provided by charitable groups, churches, as well as municipalities.  Provincial or federal governments would only provide emergency assistance (Makarenko, 2009).

Additionally, there were some considerable uncertainties with regard to the constitutional jurisdiction on the issue of unemployment assistance. This is mainly attributed to the fact  that there was some  silence emanating from the British North American Act, which was set out on the Constitution of Canada. As a result, in-as-much as the issue of unemployment was a societal problem, the constitution was not clear as to which section of the government was responsible for dealing with unemployment, whether the provincial or the federal government.

Even though the policy of unemployment was not instituted in Canada, other European countries began to view it as a societal drift. As a result, they started putting in place public programs to offer short-term monetary support to individuals who found themselves jobless. Such policies were implemented  in Denmark, France and Britain.

The First World War and Unemployment Programs

The advent of the First World War made the Canadian population  face  key issues regarding the integration of returning soldiers back into the normal way of life, especially during the economic recession (Makarenko, 2009). As a result, the Employment Officers Co-ordination Act was introduced by the federal government in 1918. In this arrangement, both  federal and  provincial governments were to cost share in  subsidized provincial employments offices.

Additionally, the Department of Employment Services was set up by the federal government for the purpose of providing employment data and advice. That was a key step in taking the unemployment issue on the  national and permanent outlook. Further steps were taken in 1919 following the signing of a draft document by the Canadian Government in which the public unemployment insurance was discussed at the International Labor Conference.

Again,  the same year, the Royal Commission on Industrial Relations was set up by the federal government, which launched a broad range of labor restructuring, including the execution of a nationwide plan of social insurance for workers who lost their jobs as a result of faults not of their own (Makarenko, 2009).

Following the deepening of the recession, financial assistance was provided by the federal government especially to municipalities to boost their relief costs. However, due to the  losing stages of the economic crisis in the mid 1920s, the program was eliminated, resulting in the reduction of the Employment Service financial support.

Unemployment Policy during the Great Depression

The public unemployment insurance issue came up again following the onset of the Great Depression in the 1930s (Makarenko, 2009). With the election of the Conservative government in 1930, a public unemployment insurance scheme was put in place, to be managed by the federal government. In 1935, the Employment and Social Insurance Act was passed by the government, resulting in the establishment of a national unemployment scheme (Makarenko, 2009). A replica of the British style, the scheme incorporated flat-rate fiscal benefits for the jobless.

Following the election of a Liberal government in 1935, the program was put to an end. That was mainly because the elected Liberal Prime Minister William King questioned the constitutionality of the scheme (Makarenko, 2009). He felt that it was basically a provincial jurisdiction which the federal government was not supposed to handle.

The National Unemployment Insurance

In July 1940, the British North American Act was passed by the British Parliament. As a result, unemployment insurance was passed following a clear shift of views on the issue of unemployment (Makarenko, 2009). The fact that the Act was passed meant that the issue of unemployment was increasingly viewed as societal and instinctive occurrence, thus resulting in the need for state intervention. That was the position taken by  Canadian citizens and government officials alike (Makarenko, 2009).

Eventually, the Unemployment Insurance Act was passed by the federal government in 1940, thus putting in place a nationwide civic system of unemployment insurance. Financing of the scheme was carried out by contributions from the Government of Canada, employers and employees. The program, managed by the Unemployment Insurance Commission, was made up of commissioners appointed by the federal cabinet (Makarenko, 2009).

In the beginning, the Unemployment Insurance Fund, as it came to be known, was constricted in its exposure. That was  because it left out several types of employment, for example, forestry, agriculture, hospital care and education. Additionally, any kind of employment earning less than $2000 a year was excluded. Eventually, only a paltry 42% of the Canadian labor force was covered by the Unemployment Insurance Fund (Makarenko, 2009).

To be eligible for any kind of benefits, one had to provide evidence that he/she was unemployed and on hand for appropriate work. Additionally, a worker had to have made contributions to the program for over the last 180 days (Makarenko, 2009). Unfortunately,  workers could be disqualified from accessing any kind of benefits in case they had previously been involved in work stoppage or strike. Additionally, any form of unemployment resulting from injury, retirement, pregnancy, or illness was not covered (Makarenko, 2009).

The enactment of the Unemployment Insurance Act of 1940 saw its major amendments being put in place (Makarenko, 2009). For instance, in 1955, seasonal workers were integrated into the scheme, with its coverage rising to 75% of the Canadian labor force, up from 42%. Additionally, the new law reduced the maximum benefits period from one  year to 36 weeks (IMF, 2001).

Liberalization of Unemployment Insurance

The advent of the 1960s saw some changes in the unemployment policy. That was mainly  a result of the financial strain  experienced at the time (Makarenko, 2009). The period between 1957 and 1962 saw Canada go through an economic recession with unemployment rates going as much as 7%. Consequently, the scheme was reduced to a small reserve reliant on government subsidies to remain buoyant (Makarenko, 2009).

During that period, there was a belief was widespread  among government officials that it was vital to engage manpower and placement in Canada’s fiscal management. That came up as a result of  brisk technological changes taking place in the labor market (Makarenko, 2009). The increase in turnover levels in the labor market implied that it became vital for the unemployment benefits to shift from simple monetary payments to putting in place measures that could retrain and assist workers to be in a position of dealing with the changes in the labor market (Makarenko, 2009).

Unemployment Insurance in the 1970s

The federal government released a white paper in 1970, also referred to as the Unemployment Insurance in the 1970s (Makarenko, 2009). According to this proposal, the program was to be more munificent while at the same time including a wider range of services to the workers (Makarenko, 2009). In this regard, workers were to be given access to a combination of financial aids. That would be instrumental in assisting workers to deal with the labor market adjustments (HRSDC, 2012). This white paper led to the institution of the Unemployment Act, which was passed in 1971. As a result, unemployment insurance was significantly liberalized with regard to access as well as benefits (Makarenko, 2009).

Significant changes were ushered in. For instance, under the new program, contributions from the private sector were to be paid for administrative costs of the program, sickness, maternity, as well as retirement benefits (OECD, 2010). That included the national unemployment rate of 4%. On the other hand, the federal government became responsible for comprehensive benefits as well as standard benefits for national unemployment rates above 4% (Makarenko, 2009).

Trends in Unemployment Insurance Since 1971

Since the passing of the 1971 Act, unemployment insurance in Canada has gone through considerable transformation. Before the advent of the 1990s, the expenditure of unemployment insurance was mutually met by the federal government, employees, and employers. However, that was done away with by the federal government in 1990, thus making the program to be self-reliant. That implied that the cost of unemployment insurance would be collectively met by employees and employers (Makarenko, 2009).

The year 1996 saw Unemployment Insurance  changing its name to Employment Insurance. With these changes, the program set an objective of  contemporary economy enhancement as well as of enhancement of the labor force (Makarenko, 2009). As a result, the body shifted from the notion that it was in support of unemployment. Following these structural makeovers, there was a return to health insurance from unemployment insurance (IMF, 2001).

In 1993, there was a fall in the balanced budget, with the yearly contributions registering an equivalent to the benefits paid (Berry, 2001). Since then, there have been annual surpluses in the billions. However, it ought to be noted that that  was also the period of  a significant boost in the economy, resulting in a much lower rate of unemployment, with millions of job opportunities available to many. That greatly contributed to the surpluses. Unfortunately, following the economic recession  witnessed between 2008 and 2009, it is highly likely  that annual deficits could rise again (Berry, 2001).

Employment Insurance Benefits for Workers

If a Canadian worker who has paid  Canadian Employment Insurance premiums loses a job, there are benefits that one can apply for. For instance, there are  Regular Employment Insurance Benefits (OECD, 2010). This is meant for those who lose their jobs as a result of a fault which is not their own, and are able to work or are available for work. To be eligible, one must have worked for a certain number of insurance hours (HRSDC, 2012). Normally, this is  from 420 to 700 insurance workers over the previous one year. This is largely dependent on where an individual lives in Canada, including the rate of unemployment in that particular region (HRSDC, 2012).

Women who are expectant or those caring for a newborn or adopted child can apply for maternal and parental benefits program (HRSDC, 2012). Those who are not able to work as a result of sicknesses, injuries or quarantine are eligible for sickness benefits. Additionally, compassionate care benefits are available for those who are forced to miss work as a result of taking care of a dying relative (HRSDC, 2012). Those employed in the fishing industry can also benefit from the fishing benefits program (Makarenko, 2009).

Drawbacks of Employment Insurance Legislation for Workers

One of the main disadvantages of unemployment insurance benefits is the fact that at times, an individual is forced to make a judgment decision, especially when accepting any new postings. In this regard, an individual is likely to accept a new job for very little money. This means that if one accepts a new job, the unemployment benefits have to stop.

On the other hand, failure to accept a new job puts an individual at risk. In most cases, one is only eligible to claim for unemployment benefits for a limited period of time. This is again largely dependent on which part of Canada one resides ranging from  six to twelve months. This shows that one could be risking a future income.

Often, Employment Insurance is viewed by some people as an intentional condition that stems from dearth in an individual’s character. As a result, such people are of the idea that the whole issue actually promotes laziness in the society, at the expense of productivity and self-sufficiency of others  (Makarenko, 2009).


On the whole, the  benefits of Employment Insurance are greatly advantageous  to an average Canadian. This is mainly because it is a philosophy that provides financial benefits to workers who are out or work. In the era of rapid technological change, workers are increasingly vulnerable and could be out of work as a result of no fault of their own. In this regard,  short-term financial support that comes through Employment Insurance comes in handy.