Posted: Thursday, 25 February 2010

Canadian Labour Congress Budget Priorities

On March 4, 2010, the federal government will table a Budget that is widely expected to place a high priority on cutting the deficit through spending cuts, not on job creation. While temporary stimulus measures already in place are likely to continue, these will soon expire.

With the economic crisis still very much with us, the CLC has called on the government to address three key issues—jobs, Employment Insurance, and pensions.

The Jobs Crisis

Since October 2008, almost 500,000 full-time paid jobs have been lost as the manufacturing and forest industry jobs crisis intensified and spread to other sectors. In the last Budget, under intense pressure, the federal government passed an economic stimulus package that – combined with ultra-low interest rates – seems to have stabilized the economy.

But a significant proportion of lay-offs that occurred in the last few years are permanent, the result of bankruptcies and plant closures. Unemployment is expected to average 8.5% this year and the real rate of unemployment – counting people who have been forced into part-time jobs or have given up looking for jobs – is over 12%. Many unemployed workers are able to find only low wage, insecure jobs.

We face a severe social and poverty crisis as tens of thousands of workers who are unemployed through no fault of their own exhaust their EI benefits and as the incomes of working families fall. The crisis has also had a devastating impact upon retirement savings and pension plans.

Putting Canadians Back to Work:
Labour’s Plan for Action

The CLC has called on the government to launch, in partnership with the provinces and cities, a major, multi-year public investment program which would create good jobs now, promote our environmental goals, and build new “green” industries for the future. Building on the infrastructure program already in place, which funds short-term “shovel-ready” municipal projects, a comprehensive plan would cover: roads, sewers, and renewal of basic municipal infrastructure and infrastructure in first nations communities; health and educational facilities; mass transit; passenger rail; affordable housing; energy conservation through building retrofits; and renewable energy.

Federal government support for these investments should be linked to “Made-in-Canada” procurement policies so goods and services inputs are purchased in Canada. The current infrastructure program is far too small to have much impact on the jobs crisis, and excludes the larger and longer term projects which would have the greatest positive impact on our future economic potential.

The federal government should also make investments in child care, home care, and long-term care for the elderly which would create new jobs, and promote our social goals.

The federal government must invest directly in sector renewal strategies to save jobs and promote successful restructuring in hard-hit industries, such as auto, forest, and fish products. If nothing is done to support new investment, we will experience major permanent losses to our economic and job base. The government should also make investments to support cultural industries, environmental technology, renewable energy, and other promising industries of the future, as well as promote fundamental changes to unbalanced trade deals to reverse our huge manufacturing trade deficit, and promote higher value-added processing of our resources.

Employment Insurance

EI is a critically important program for Canadian workers. Laid off workers deserve adequate benefits to support themselves and their families. EI is an effective form of economic stimulus which can help maintain hard-hit communities.

Our EI program leaves far too many Canadians, especially women and lower wage, insecure workers, out in the cold. Only half of all unemployed workers qualify for benefits, and the average weekly benefit for those who do qualify is just $343. The more than 800,000 unemployed workers now on EI qualify for an average of just 38 weeks of benefits, and tens of thousands of workers who lost their jobs in the early stages of the crisis have already exhausted their claims. EI benefits have been temporarily extended for five weeks for all workers and up to 20 weeks for a few older workers. But this is not enough in a jobless recovery. Provincial social assistance caseloads are starting to rise rapidly.

Labour’s Plan for a Fairer EI System

The CLC has called for a uniform entrance requirement of 360 hours of work across the country so that more unemployed workers will qualify. We want higher weekly benefits based on the best 12 weeks of earnings before a layoff, and a replacement rate of 60% of insured earnings. We also call for longer benefits of at least 50 weeks in all regions. As in the United States, benefits should be extended on an emergency basis for at least 26 weeks so long as unemployment remains so high. Work-sharing agreements under EI have saved about 50,000 jobs, but they are about to run out and must be renewed. The unemployed must also be given access to long-term skills training.

Pensions

The financial crisis has exposed major faults at the heart of our pension system. Our public pensions—Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), plus the Canada Pension Plan (CPP)—provide a secure income in retirement, but the maximum value of public pensions falls well short of replacing the 50% to 70% of
pre-retirement income needed to maintain living standards.

Meanwhile, the private part of our pension system is in deep trouble. Only about one in five workers in the private sector today belongs to an employer pension plan. The average pension plan is seriously underfunded because of low interest rates and the recent collapse of stock markets, placing pensions at risk if employers go out of business. Those without pension plans must rely on high cost RRSPs, which will leave many with very low incomes in retirement.

Retirement Securityfor everyone
A Call for Action

The labour movement believes that Canadians should not have to “fend for themselves” in retirement. We have called for a phased-in doubling of benefits under the Canada Pension Plan, from 25% to 50% of pensionable earnings, financed by a modest increase in worker and employer premiums. This will require federal/provincial agreement. The pension priority for the federal budget is to improve the Guaranteed Income Supplement or GIS which is paid to low income seniors to bring their incomes up to a minimum level. We call for an immediate increase in the GIS of 15%, or about $100 per month, at an annual cost of about $1 billion. This measure would ensure that no senior lives below the poverty line.

The federal government should guarantee pension benefits in the federal jurisdiction up to $2,500 per month, and work with the provinces to create a national pension insurance system.

Conclusion

The priority now must be jobs and support for the unemployed, not deficit reduction. Our national debt is low, just half of what it was in the mid-1990s. Interest rates are and will remain very low. There is little prospect of a significant private sector-led recovery when many businesses are being squeezed by a high dollar and a still fragile global economy. Working families are deeply in debt. It is up to governments to deal with the human impacts of the crisis and to set the stage for shared progress in the next economy.

Now is the time for public investment-led growth to support job creation today and a stronger private sector recovery tomorrow. Now is the time for investment in good public infrastructure and good public services as key drivers of private sector productivity in the future. Now is the time for industrial development strategies and procurement policies that create jobs for Canadians.

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