UI changes promote low wage economy

Press release by Canadian Labour Congress, 1 December 1995

OTTAWA, Dec. 1 /CNW/ - "The federal Liberals are bent on dismantling and destroying our unemployment insurance program, and they don't care what happens to thousands and thousands of unemployed Canadians,'' says Nancy Riche, Executive Vice-President of the Canadian Labour Congress in response to the tabling of legislation to create a so-called "Employment Insurance System'' in the House of Commons today.

"The package is designed to pressure people into taking low-paying jobs.

According to Nancy Riche, the federal Liberals are catering to big business who want their share of premiums reduced and who want to drive down wages as people scramble for whatever jobs are available. This latest round of cut will chop almost $2 billion from UI benefits. This is on top of the $5 billion dollars which the federal Liberal government has already cut from unemployment insurance.

"This legislation will take money from unemployed workers and put it directly into the pockets of business. It is an obvious response to business demands for lower UI premiums,'' noted Riche.

"The provinces have no idea how much this is going to affect them,'' she adds. "Besides the welfare costs they will have to pick-up, the federal government is also abandoning its responsibility to finance training for workers.''

Since 1990 the economy of the Atlantic provinces has lost more than $700 million dollars because of cuts to unemployment insurance. Riche adds that the Quebec economy has lost more than $1.5 billion dollars during the same period.

"How can the Prime Minister of Canada say he is in favour of Canadian unity in one breath, and with the next allow even further cuts and downloading to the provinces,'' wonders Riche. "How can the premiers accept the price they will have to pay?''

The CLC Executive Vice-President underscores that this legislation is only the latest in a series of unnecessary cuts to unemployment insurance.

During the last five years the percentage of unemployed Canadians covered by UI has dropped dramatically. In 1990, 87 per cent of the unemployed qualified for benefits. by 1993, due to changes brought in by the Mulroney government, that figure had dropped to 64 per cent. When the federal Liberals formed the government two years ago, they too slashed UI, leaving only 50 per cent of the unemployed eligible.

The current legislation will increase the hours needed to qualify for benefits, reduce the amount of benefit, and penalize seasonal and part-time workers, among others. The CLC predicts that two-thirds of the unemployed will no longer receive any protection from UI.

According to Riche the tragic irony is that UI is a completely self-funded program. The federal government does not share in any portion of the premiums. The program also boasts an annual surplus. The surplus at the end of this fiscal year will be more than $2 billion and, despite these latest cuts, the cumulative surplus will be $7 or $8 billion next year.

Riche pointed out that with no further changes to the existing program the government would meet the expenditure reduction targets for UI that the Finance Minister set last February.

"Let's be clear about this,'' explains Riche. "The UI program is healthy financially. This legislation is just a way of robbing Canadians of their unemployment benefits. This is not a totally kneejerk reaction - there'a plan here. Finance Minister Paul Martin wants to meet his deficit target and he wants to do it on the backs of the unemployed - it's all quite dishonest and very, very heartless.''

Riche also asked what has happened to the vision of a high-skilled, high-wage economy that was supposed to result from economic restructuring. "If we are moving to a high wage future, why are we pushing the unemployed into low wage jobs?''

"Minister Lloyd Axworthy and his callous Liberal cohorts don't care about those who cannot find work. They don't want to take responsibility for the lack of jobs in this country,'' added Riche. "They see young people, women, seasonal workers left out in the cold to fend for themselves. They would rather blame the victims, blame the less fortunate, blame the unemployed for problems they were elected to solve.''