Human Resources Minister Diane Finley's office issued a press release late Friday afternoon to respond to concerns over an August change to the way employment insurance is clawed back when part-time work is found. (Sean Kilpatrick/Canadian Press) The Conservative government is dialing back a controversial change to employment insurance after weeks of being criticized by the opposition.
The changes left some low-income recipients worse off than they were under the previous system. In a late Friday afternoon press release, Human Resources Minister Diane Finley's office backtracked, now offering claimants the choice of opting to return to the old system if the new one wasn't to their benefit.
"We have listened to those concerns and today I am announcing our intent to make adjustments to the new pilot program," Finley was quoted as saying in the release.
In early August, Finley announced changes to the "working while on claim pilot program" for EI recipients who find part-time work while still collecting benefits.
It replaced the previous system that clawed back claims once the part-time wages exceeded 40 per cent of their benefits, or $75 a week, whichever was greater.
The government felt the old system discouraged Canadians from accepting more available work to earn wages beyond that threshold.
The new pilot program reduced the clawback on new earnings to 50 per cent. But it kicked in with the first dollar earned, not at 40 per cent.
The effect was that claimants who found only a little part-time work wound up penalized by the new system, while those who worked longer hours and at higher pay could keep more of their earnings.
Disincentives under both old and new systems
Opposition MPs argued the change hurt the most vulnerable and took away any incentive even to start to work while collecting EI.
For example, a person receiving benefits of $330 a week and earning an extra $150 at a part-time job would bring in $405 under the pilot system, compared to $462 before the change.
Friday's reversal allows EI recipients to keep the first $75 they earn in benefits while working part-time, as they could under the old system. Above the 40 per cent threshold, benefits would be reduced dollar for dollar.
Claimants must now decide whether they'd be better off under the new system or the old – but they have to make a request with Service Canada to revert back to the previous system, otherwise the new rules still apply.
Claimants can't switch back and forth between the two systems week to week, but must choose one or the other.
The changes come into effect Jan. 6, 2013, but will be applied retroactively to Aug. 5, 2012, the day the pilot program took hold.
Starting in January, claimants must request to revert to the old pilot program's regulations within 30 days of their last EI benefit payment. For claims that have already ended, claimants will have 30 days from the introduction of this option.
The working while on claim pilot program is set to run until Aug. 1, 2015.
Earlier this week, New Democrats introduced a motion for debate in the House of Commons that said the pilot project was "not benefiting the vast majority of EI recipients, creating a disincentive to part-time work and leaving low-income Canadians worse off than before." The motion called on the government to take steps to fix it immediately.
On Wednesday evening, the Conservative caucus voted against the motion. Two days later, Finley's office announced the reversal quietly in a late-afternoon press release, just as MPs were heading back to their ridings for a one-week Thanksgiving break.
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