The White Paper on Unemployment Insurance : An Evaluation

The value of the White Paper submitted by the Honorable MacKasey depends, both absolutely and even relatively, on one's conception of unemployment insurance. The principles and criteria governing private insurance plans (degree of the risk, frequency of the risk, amount of the premiums, etc.) are definitely different from those of social security. Therefore, an analysis of the White Paper should previously define its author's outlook.

First, unemployment insurance is in my opinion a social security concept, purporting to sustain and provide for a short period of time a minimum income for every worker. In this respect, it should be considered as a segment or an element of the government's social policy. Consequently, its implementation and its financing should not in any case be ruled according to the same principles or criteria as a private insurance.

Secondly, unemployment insurance, as a social security scheme as well as any other scheme of that kind should be based on sound economic conditions, that should prevail not only in the different economic regions, but as well in the different industrial sectors. The soundness of the Canadian economy is a sine qua non condition, the foundation of a progressive social security policy. Our conception of social security and ipso facto of unemployment insurance pointing towards a more equitable income redistribution and a guaranteed minimum income for all, commands a policy to sustain the growth of the Canadian economy.

So that a progressive social security policy implies a dynamic economic policy. Otherwise, social security might become a too heavy liability on the economy and, as such, it would bring about a lot of problems, without solving any.

Third, the unemployed, both seasonal and permanent (in some Québec and Maritime regions) are the victims of unemployment and not the responsible for it, due to their total absence from the economic decisions centers. It is the overall economic conditions that bring about their unacceptable situation ; it is the carelessness of the government authorities which have left different regions of the country in a permanent unemployment situation. It follows that the Canadian population as a whole should bear the social cost of unemployment in conjunction with the employers, the only decision makers at the firms level as well as the industrial sector level.

Thus, unemployment insurance should be financed by a general tax levied upon the rate payers and by the contribution of the employers. In this respect, any category of workers would not be excluded from unemployment benefits, but every one would be compelled to contribute to a universal plan.

Fourth, and finally, unemployment insurance should be essentially an income maintaining scheme. This last position of the CNTU on unemployment insurance does put the emphasis on the temporary character of unemployment insurance, onits palliative objective, and on the role essentially complementary it has to play. In other words, any unemployment insurance program, however valuable, is a temporary solution to unemployment consequences or aftermaths : the objective is to combat unemployment itself.

In general, the White Paper on unemployment insurance is a document of great and sound value. It contains proposals which are by far more than an improvement of the actual program. The White Paper establishes quite a new system in better accordance with the requirements and problems facing all categories of workers in a modem economy. This metamorphosis of the actual program and the very characteristics of the new one proposed by the While Paper, in so far as the legislation to come will be based on adequate administrative regulations will lead Canada to the forefront in matter of unemployment insurance, on condition that government does accept to fill up the gaps and omissions of the new scheme proposer by the White Paper.

The extension of the scheme from 80 to 96% of the labour force (broader coverage), the lower entrance requirements, the higher benefit payments, the provision for people unemployed due to sickness or pregnancy are some among many positive features of the new scheme proposed by the White Paper.

It is also interesting to note that the proposals go farther away from the insurance concept at least according to the prevailling conception so far. In effect, the benefits are partly linked to the national and regional economic outlook and the government depending on this outlook accepts explicitely a greater financial responsability towards the unemployed workers. The employers contributions depend also on the lay off experience rating : « The basis for experience rating will be related to the lay off pattern in his establishment and compared to the pattern of all establishments across the country ». This feature will provide an incentive for employers to stabilize their employment patterns as much as possible. The quasi-universalisation of the new scheme will permit a more equitable distribution of the unemployment insurance cost between all the categories of workers instead of keeping the burden on the low income earner likely to be unemployed relatively more often than others.

However, the scheme proposed by the White Paper has shown some very serious and deceiving shortcomings. They are of two kinds. First, those which, in spite of the soundness of the proposals, undermine seriously their impact. This category includes : the relative sticking of the proposals to the insurance concept, the regressive rate system for the employees the inadequate and twisted justification of the federal government exclusive competence in matter of unemployment insurance and finally some omissions in the White Paper. The second category includes those problems which the White Paper will bring about if the proposals are not backed up by adequate economic policies. Among the problems to be listed in the second category are the following : the problem of full employment, the4% rate as an indication of the necessity for the Federal government to contribute to the plan, the absence of the sectoral dimension, the regressive way to levy the employees contributions and the constitutional aspect.