Posted: Monday, 7 May 2012

The Honourable Diane Finley
Minister of Human Resources and
Skills Development Canada

Dear Minister Finley:

I am writing to request an urgent meeting with you regarding your recent announcements outlining major changes to Canada's Temporary Foreign Worker Program (TFWP) and the Employment Insurance program.

The Canadian Labour Congress has significant concerns with both, in particular your announcement to fast track employer applications under the TFWP and to allow employers to pay migrant workers 15% less than average wages, as well as the changes to the Employment Insurance (EI) program to be implemented through Budget 2012.

Both amount to unprecedented government interference in the labour market to the detriment of workers, their families and their communities. Both require serious consultation with all stakeholders and in fact, the proposed changes to the EI program are so significant they should be severed from the budget implementation bill altogether.

Temporary Foreign Worker Program (TFWP)

Your announcement to fast track employer applications under the TFWP is of great concern and opens up the process to even greater employer abuse than we have documented to date. An earlier pilot program called the Expedited Labour Market Opinion (ELMO) in Alberta suggests that allowing employers faster access does not improve protections for migrant workers. A 2010 evaluation of 400 workplaces by the Alberta Ministry of Employment and Immigration showed that 74% of employers had violated the provincial Employment Standards Act relating to pay rates and record keeping. It is disappointing to us that your government would formalize this pilot that has encouraged employer violations of minimum employment standards without regulatory attention to addressing the many cases of rampant abuse of the existing system.

Your speech on April 25 acknowledges that employers will be eligible to pay migrant workers up to 15% less than the average wage for an occupation in a region, yet you have tried to distance yourself from that announcement recently in the media. Migrant workers, indeed all workers, deserve clarity. Is it truly the intention of the government to allow migrant workers to be paid just 85% of the average wages of workers in certain occupations? If indeed this is the case, then is this not an unprecedented interference in the free market in an effort to drive wages down for all workers?

Employment Insurance

It is disappointing, to say the least, that the government is failing to respond to the fact that less than 40% of unemployed Canadians are now qualifying for EI, and that many hard-hit communities are having to deal with large numbers of unemployed workers who have exhausted their benefits.

It is also very disappointing to us that all of the talk about skills shortages in Canada has not resulted in increased investment in EI supported training which would assist unemployed workers to find good jobs.

The CLC is concerned about four elements of the Budget as it relates to EI: the new Social Security Tribunal; proposed changes to regulations regarding job search and reasonable offers of employment; the proposed new rules regarding working while on claim; and the impact of changes to the pilot projects in high employment regions.

Before setting out my concerns, let me state that we appreciate that the proposed changes with respect to the calculation of the best weeks of earnings and working while on claim will be helpful to many workers, and that we support initiatives to provide all workers on EI with up to date information on job opportunities. The vast majority of regular EI claimants welcome sincere efforts to assist them in a search for a new job and will not turn down reasonable employment opportunities, including opportunities to take temporary or part-time work while on a claim.

With respect to the new Social Security Tribunal which will replace the current system of EI Boards and Referees and the Umpire, we view this as a change with potentially far-reaching negative consequences for unemployed workers in terms of fair process.

As you know, appeals, which mainly concern denial of claims, are currently made to local EI Boards of Referees for 83 regions, which have three members, one appointed from each of labour and business by the respective Commissioners, and a neutral chair appointed by the government.

The part-time members of Boards are knowledgeable of local labour conditions as well as of EI legislation and regulations, and deliver timely decisions, usually within 28 days. Many claims that were initially denied are upheld, underlining the importance of the process of getting a fair hearing. The incidence of claims which were unfairly denied has risen recently due to automation of the claims process which results in many mistakes.

It is my understanding that the some 1,000 part-time members of Boards of Referees who currently handle in excess of 25,000 cases per year are to be replaced by just 39 full-time members of the EI section of the new Social Security Tribunal (plus a very few part-timers up to a maximum of about 4 full-time positions.) Hearings from April, 2013 will be by a single, supposedly expert, full-time member of the Tribunal. It is unclear if hearings will be held in the community and how the volume of complaints can be handled without leading to long delays. There are serious grounds for concern that determinations will be much less informed by knowledge of local conditions and the changing realities of the job market than is now the case, and will instead be decided on narrow legal and technical grounds.

It is also of concern that appeals from an initial determination will not have to be heard. Currently, the EI Umpire hears all appeals.

The functioning of the new Tribunal is of even greater concern when put in the context of the new "Quick Return to Work" initiative which is likely to significantly increase the number of claims which are denied.

Minister, the proposed changes require consultation with the representatives of workers and employers and those who have close experience in the way in which the current system of Boards of Referees works.

I urge the government to pull these provisions from the Budget Bill and to have them considered by the HUMA Committee of the House of Commons. If left to stand without careful consideration, we foresee a massive increase in constituency caseloads for all Members of Parliament due to a large increase in the volume of complaints coming to them from constituents.

Our second major concern with the Bill is that it gives the Minister the power to set regulations to define what constitutes "suitable employment for different categories of claimants" and to define "reasonable and customary efforts" to find work. Claimants can be cut off benefits if they decline "suitable employment" and do not make "reasonable and customary efforts" to find work. This measure is linked to directing workers to jobs now filled through the Temporary Foreign Worker Program.

Our concerns include fears that EI claimants may be expected to move out of their local communities to take temporary jobs, and may not continue to have the opportunity to seek a new job suitable to their skills and work experience. Forcing workers to take the first available job is not good labour market policy since periods of job search allow for a better fit between unemployed workers and job vacancies across the country. For example, an unemployed welder in Moncton may need time to find a suitable job in Western Canada, and deserves income support from EI for the needed period of active job search.

I urge you to consult widely on these new regulations before they are issued and proclaimed into law.

Our third concern is with the proposed new rules regarding Working While on Claim which are intended to encourage EI claimants to take up offers of part-time and temporary employment while on claim. While the intent is welcome and some will benefit, others will be unfairly made worse off.

This pilot project was introduced in 23 high unemployment regions in 2005, and extended to all regions of Canada in 2008 because it was working well. It allowed claimants to earn and keep either $75 per week or 40% of their weekly benefits, whichever was greater. All earnings above that amount were clawed back. An evaluation of this project in 2010 showed that Working While on Claim had the greatest benefit for women, single parents, part-time and temporary workers and resulted in unemployed workers taking up more offers of short-term work. The 2011 Budget extended the pilot an additional year, to August, 2012, with an estimated cost of $130 million and HRSDC estimated that 545,000 claimants would benefit.

Changes announced in the 2012 Budget eliminate the option of keeping all of the first 40% of weekly benefits, and instead only allows claimants to keep 50% of any earnings. For example, under the previous pilot project, a claimant could work about 1 day a week and keep those earnings on top of their weekly benefits. Under the new rules, a claimant would have to work for about 2 days per week to earn the same amount of money. The new rules will certainly help some workers who can find several days of work, but they will penalize those who can find only a limited number of hours of work. Amendments should be considered to deal with this anomaly.

Our final concern is with the impact of the Budget Bill on workers in regions of high unemployment.

The Budget fails to renew a pilot project that gave claimants in areas of high unemployment five extra weeks of benefits, and this measure will expire in September. Another pilot project that based benefits on the best fourteen

weeks of earnings in very high unemployment regions will be replaced by a program that will benefit workers in most regions, but will harm claimants living in high unemployment regions with unemployment rates of less than 13%. The changes to the Working While on Claim pilot project will have the most negative impact in regions of high unemployment. The combined impact of these changes will be significant.

Again, Minister, I request an urgent meeting with you to discuss these highly controversial changes.
Sincerely,

Kenneth V. Georgetti
President