Gregory Thomas, Federal Director
Canadian Taxpayers Federation
If Stephen Harper really wants to help working Canadians and their families, he needs to scrap the pork-barreling Employment Insurance system designed by Pierre Trudeau, and give Canadians back their own money.
This year in Canada, every working Canadian couple, with each worker earning at least $47,400, will watch as $4,277 in EI “contributions” are shipped to Ottawa on their behalf. The government has hiked that maximum EI tax haul by 25% since 2008, when it was $3,412.
Now some provincial premiers are beating the drum for a huge hike in the deductions taken from our pay cheques for the Canadian Pension Plan: They argue that Canadians aren’t saving enough for retirement.
But a working Canadian couple could save over $67,000 in 10 years, if they simply were allowed to keep their EI contributions in their own, personal, tax-sheltered rainy-day fund. They could use the money in the event of a job loss or keep it for their retirement.
For Canadians who plan their lives around staying employed — think about school teachers, bus drivers, lab technicians, accountants, business managers — EI is nothing more than a rip-off, pure and simple.
And it is a rip-off on a massive scale: Between 1981 and 2009, Ontarians paid $75 billion more in EI taxes than they collected in EI benefits. Albertans paid nearly $18 billion more than they collected. It’s a similar story across Western Canada.
Even worse, when workers in many parts of Canada find themselves suddenly out of a job, they can’t collect EI, because the regional rules tilt the playing field against them. City dwellers lose out while their laid off colleagues, who might have worked at the same company and even in the same building, might be permitted to collect EI cheques for weeks because their residence is located in a rural community. No other nation on the planet runs its employment insurance system this way.
Our EI system was morphed in the 1970s into a vote-buying machine for the government in power. Sadly, not much has changed in 40 years. Today, less than half of Ontario’s unemployed can collect EI benefits, while in other provinces, everyone who loses their job ends up collecting. No wonder that in Newfoundland and Labrador, 60% of EI claimants have made at least three claims in the past five years. Further details were released this week in the Canadian Taxpayers Federation’s new report Unmasking Employment Insurance: How EI Increases Unemployment and Steals Billions from Working Canadians.
Canada’s EI system is making Canadian workers poorer: robbing them of thousands of dollars that rightfully belong on their pay cheques, and providing a cruel incentive to others not to work, not to upgrade their skills, and not to seek opportunity where there are steady, year-round jobs available.
Canadian employers are filling hundreds of thousands of jobs with foreign workers, while we spend billions of dollars paying EI benefits for people who “go on unemployment” year after year after year. We spend more than a billion dollars every year, just on the administration costs for this wasteful, destructive pork-barrelling scheme.
Canadian workers deserve to keep their own money. They deserve to know that the money that comes off their pay cheque will be there — for them — when they need it, not shipped off to Ottawa to buy votes for politicians.