From Unemployment Insurance to Employment Insurance and Beyond

Abstract This chapter introduces readers to the income benefit components of Canada’s Employment Insurance (EI) program. It traces the evolution from Unemployment Insurance in 1971 to EI in 1997 to its state as of 2024. It cites some of the more recent proposals for reforming the program but argues that significant reform seems a distant prospect. This chapter focuses on three key policy concerns: the declining rate of coverage over time, the persistently high incidence of frequent use, and the impact of the rules and provisions on shaping hiring and job separation decisions. The administrative superstructure remains an unwieldy, inflexible circumscription for two distinct programs that are appended together. One is loosely based on insurance principles that serve the majority of claimants without part-year employment. The other constitutes an income maintenance scheme serving the minority with seasonal employment patterns, which the government has targeted with extraordinary coverage since 1971 and mostly protected from cutbacks. Decoupling these two components, as recommended by two royal commissions in the mid-1980s, would facilitate a less costly, more efficient, and more modern EI system that could better accommodate the evolving labor market structure going forward. It would be extremely problematic to extend coverage to “gig” workers.