Canada News
Loosen eligibility criteria to EI parental benefits to improve inclusion
Parental benefits under EI in Canada are a labour market policy and not a care policy. It is a wage-replacement program that has historically been – and remains to this day – linked to activity in the labour market. (Pexels photo)
Along with subsidized child care, parental benefits under the federal employment insurance (EI) program are an important policy tool to help families balance paid work and child care. While the birth or the adoption of any child brings expenses for every family, only some parents qualify for these benefits. Even worse, in September 2022, after two years of pandemic-inspired increased accessibility to maternity and parental benefits, the federal government quietly reinstated the tougher pre-COVID eligibility standards for families outside Quebec.
What does that mean for diverse families across Canada? That some families, such as immigrant and one-earner families, will be further marginalized, in contrast with other privileged families who are likely to get government support. Currently, the architecture of the Canadian parental benefit program reinforces social inequalities between “parental-leave rich” and “parental-leave poor” families.
Canada needs to draw lessons from the temporary changes implemented in EI that made access to benefits easier and from the Québec Parental Insurance Plan (QPIP), so that access to parental benefits becomes a tool to foster social inclusion.
Insurable employment as a condition to access benefits
Parental benefits under EI in Canada are a labour market policy and not a care policy. It is a wage-replacement program that has historically been – and remains to this day – linked to activity in the labour market. When maternity benefits were first introduced by the federal government in 1971 under the unemployment insurance (UI) program, new mothers even had to prove they had been paid to work at least 10 weeks before conception.
That rule was abolished in 1984 and further changes were introduced in 1990 with the addition of 10 weeks of parental benefits payable to either parent, but eligibility criteria remained the same. Access to benefits was contingent upon having insurable employment for a minimum of 20 weeks at 15 hours or more per week during the preceding 52-week qualifying period, or a minimum of 300 hours per year of insurable employment.
Each parent who qualified to receive benefits then had to wait two weeks between the end of employment and the first payment of benefits. The waiting period served like the deductible that is paid in other types of insurance.
In 1996, when the UI program was replaced by the EI program, accessibility for maternity and parental benefits was made even more difficult because claimants had to work at least 700 hours during the qualifying period, instead of 300 under UI to qualify.
Parental benefits in Quebec
In 2006, Quebec implemented its own program of parental benefits. Under the Quebec Parental Insurance Plan (QPIP), benefits are available to any parent earning at least $2,000 during the previous tax year. Basing eligibility on flat-rate earnings, rather than on the number of hours worked, enables parents who are typically not covered by EI to qualify for QPIP benefits, such as part-time employees, contract workers, many students and the self-employed. Since then, the uptake of benefits has increased significantly in Quebec, while that has not been the case for the other provinces. Today, Quebec has the highest uptake of benefits by both mothers and fathers.
Eligibility criteria and access to benefits
Eligibility criteria have a determining effect on which parent and which families receive this government support when they welcome a new child. While paid employment has been a condition to receive benefits since 1971, it alone never guarantees access to these benefits.
Statistics Canada reported in 1999 that the proportion of mothers of newborns receiving income support through EI increased during the first two decades after the implementation of maternity benefits to a peak of 53 per cent in 1992 from 30 per cent in 1971, the first year of the program, but that it stopped growing after 1992. In 1998, with EI in place, the proportion of mothers of newborns receiving EI maternity benefits fell to 49 per cent, the same as in 1989.
In 2000, as an incentive for parents to split the shareable parental benefits, Ottawa reduced the waiting period formerly imposed on both claimants through amendments to the Employment Insurance Act. Following this change, only one parent had to serve the waiting period between the end of employment and the first payment of benefits. Ottawa also lowered the threshold to access benefits to 600 from 700 hours of insurable employment during the qualifying period. This reduction in required hours had an immediate positive impact on the uptake of benefits. In 2002, an additional monthly average of 4,900 parents received these benefits.
The early months of the COVID-19 pandemic
In the spring of 2020, in response to COVID-19, the federal government introduced the temporary Canada Emergency Response Benefit (CERB) to provide economic support to Canadians whose employment was negatively impacted by the pandemic.
In the fall of 2020, the government also transitioned to a simplified EI program. Under this change, new parents who wished to qualify for parental benefits received a one-time credit of 480 insurance hours and therefore had to accumulate only 120 hours of work, instead of 600, to access benefits.
However, one year later, the criteria to access benefits were raised to 420 hours. Finally, in September 2022, regular pre-COVID rules were reinstated. The consequences of this policy change on access to benefits have yet to be examined.
Looking forward
Factors other than eligibility criteria also have a determining impact on the uptake of benefits, including wage replacement levels and whether entitlement to benefits is on an individual basis (for instance, take-it or leave-it benefits) or are dependent on the partner’s uptake of benefits, as is the case in Canada outside Quebec. By both national and international standards, Canada does not fare well on any of these factors, with benefits paid at 55 per cent of income to the mother with a maximum ceiling of $650 per week in 2023 and no individual entitlement to benefits for the father or second parent. Out of the 36 OECD countries, Canada (along with Japan) provides the least-generous wage replacement rates.
Access to benefits is a key component of economic and material well-being. Parental benefits have consequences not only on work-family balance, but also on families’ ability to provide and receive care. Restricting eligibility criteria can have unintended consequences that further compromise the well-being of vulnerable families.
Currently, we know little about families who are not well-served by the parental benefit program in terms of social class, immigration status and indigeneity. We also know little about the reasons some parents and families do not receive benefits. We can hypothesize, however, that families with a marginalized structure (for instance skip-generation families and single-parent families) or an atypical work situation (students, part-timers and self-employed) may find it more difficult to qualify. Newcomers who may not understand well the accessibility rules are likely to be underrepresented among benefit recipients. This is particularly concerning, given that Canada has recently announced its plan to welcome 1.5 million immigrants over the next three years to address the challenges of record-low fertility and labour shortages.
The Vanier Institute of the Family policy brief on recent changes to parental benefits under the federal employment insurance program can be read here.
Le rapport de l’Institut Vanier de la famille qui porte sur ce changement dans la structure du programme de prestations parentales est disponible en français ici.
This article first appeared on Policy Options and is republished here under a Creative Commons license.
