Simmering beneath the surface of the sponsorship scandal is a sleeping giant of such magnitude that it could cause major headaches for Paul Martin as he seeks his first mandate from anxious voters.
As unemployed workers struggle to make ends meet on the meagre benefits provided by Employment Insurance - that is, if they are eligible for benefits in the first place - the surplus in the EI account has reached $44-billion.
At the same time that she brought attention to the sponsorship scandal, Auditor-General Sheila Fraser emphasized that the EI program would not need more than a $15-billion cushion to meet workers' needs, even in rough economic times.
The surplus is the direct result of changes introduced in 1996 to the former Unemployment Insurance program. Paul Martin was a chief architect and proponent of the shifts that caused a dramatic decline in the number of workers able to collect benefits when they lose or can't find jobs.
There has been a sharp descent in the percentage of unemployed workers eligible to receive benefits since the changes. Overall, coverage fell from three-quarters of the unemployed in 1990 to less than 40 per cent today. In a number of cities, less than a quarter of the unemployed receive EI.
We all work hard - and notice the EI deductions from our pay cheques. These deductions are supposed to ensure a minimal level of security, a mere 55 per cent of our wages to a maximum of $413 a week, if we find ourselves unemployed. However, many workers are finding they can't access these benefits when they need them - workers such as the hotel and restaurant staff who were laid off during the SARS crisis last year. To make matters worse, $44-billion of workers' hard-earned money is sitting in the government's general revenue fund - the same fund from which as much as $100-million was taken for federal sponsorship contracts.
While government coffers get fatter, unemployed workers unable to collect benefits they have paid for are forced to apply for social assistance and are catapulted into poverty. It is worth noting that the restrictions on eligibility found in the EI program are echoed in the social assistance rules. In other words, unemployed workers can find themselves without income from any source.
There is a hideous irony in all of this.
Unemployment insurance was first introduced in the early 1940s in response to an uprising by unemployed workers who had been compelled to work in "relief" camps in remote areas of northern Ontario and British Columbia. These workers, who endured inhumane conditions for 20 cents a day, insisted their unemployment was not a result of their personal failings, but rather structural inadequacies in the economy. They demanded a UI program that acknowledged this. And indeed, the original UI program did.
But the government's subtext was that the UI program was to get people off welfare. The 1996 reforms, however, compel unemployed workers to apply for social assistance. And there has been a nasty reversion to the blame-the-worker mentality that predated the original UI program.
To add insult to injury, the ever-mounting surplus is disproportionately at the expense of women, immigrant and disabled workers, all of whom are overrepresented in part-time and contingent work, and are therefore least likely to be able to meet the hours-of-work requirements that determine eligibility. In 2001, only 33 per cent of unemployed women received EI benefits, compared to 44 per cent of unemployed men.
The number of hours required to gain entry to the program has doubled, and in some locations tripled, while the length of the benefit period was cut by as much as half of what it was in 1990. The icing on the cake is that the benefit rate dropped to 55 per cent of average weekly earnings. For minimum-wage workers, this spells almost certain disaster.
And it is minimum-wage workers who are most likely to be shut out of receiving benefits because these workers are most likely to have precarious and short-term jobs that just don't add up to the hours needed to establish eligibility.
Of course it is low-wage workers who most need the protection. And not surprisingly, it is women, immigrants and people of colour who are overrepresented among low-wage workers.
Prior to the 1996 changes, UI had to be financed on a break-even basis. "Break-even" was defined in terms of the average payout over three years. The 1996 law removed the prohibition against running a surplus in the insurance fund.
The International Monetary Fund cheered when Paul Martin and his government introduced the new restrictive eligibility rules.
But this scandalous money grab from workers may not cause cheers to go up across the country as the Martin government asks voters for a mandate.
Jacquie Chic is the director of advocacy and legal services at the Income Security Advocacy Centre. Deena Ladd is the executive director of Toronto Organizing for Fair Employment.
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