Conservatives yield to critics on controversial EI changes

The Harper government is dialing back a controversial change to employment insurance after weeks of being criticized by the opposition. EI recipients can now revert to the previous system for part-time work calculations if they were not better off under the new pilot program.

Liberal MP Rodger Cuzner says low income Canadians still 'worse off' under new system

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 news 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.

But Rodger Cuzner, Liberal MP for Cape Breton – Canso, N.S., told CBC News on Saturday that the devil is in the details and that this now creates "two classes" of workers who are on EI while working part-time.

According to Cuzner, this will create "needless hurdles and excessive delays."

"The fact still remains that low-income Canadians who do not have the option to revert to the old program will still be worse off under the new one," Cuzner said in a written statement to CBC News.

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

Since 2005, the federal government has conducted a series of pilot projects meant to address a central criticism of Canada's employment insurance system: that it does not provide sufficient incentives to look for at least part-time work while receiving benefits.

When the previous pilot program expired, the government said it wanted to provide further incentives for accepting more work.

But 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 new pilot project, compared to $462 before the change.

Friday's change allows those EI recipients who qualify 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 who had an active EI claim between Aug. 2011 and Aug. 2012 can now choose whether they would be better off under the new system or the old – but they have to make a request with Service Canada to revert to the previous system, otherwise the new rules apply.

If claimants did not have an active EI claim during this time period immediately before the start of the new pilot project, the new rules automatically apply. For those who did have an active EI claim during this time period, future claims can be calculated under the old system provided they have not made a claim under the new rules in the meantime.

There's no going back to the old system once someone benefits from the new pilot project's rules.

Claimants can't switch back and forth between the two systems week to week, but must choose one or the other.

Adjustments meant to smooth transition

The human resources minister's office says Friday's move is meant to help claimants better adjust to the new system. The government is encouraging claimants to wait a bit to see if they might benefit from the new rules before reverting back to the previous program.

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 new 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 news release just as MPs were heading back to their ridings for a one-week Thanksgiving break.