Passage of the Unemployment Insurance Act

On August 5, 1940, the federal government passed the Unemployment Insurance Act, establishing a fundamental pillar of Canada’s social safety net. Years of political pressure from unions, social groups and the CCF (which became the NDP) forced the Liberal government to take action, even though the constitution had to be amended.

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More than 75 years later, the program has been expanded and adapted to changing times – even renamed for political reasons – but today it is badly frayed by successive cuts. A few key changes would restore EI and its ability to meet the needs of employers, workers and the economy as a whole.

This brief history shows the rise and fall of UI/EI in Canada.

1918 - Faced with the integration of returning soldiers back into the workforce, the Employment Officers Co-ordination Act is introduced in which the federal government subsidized provincial employment offices. The federal government also created the department of Employment Services, mandated to provide employment data and advice.

In 1919, the Government of Canada signed a draft document which recommended public unemployment insurance at the first International Labour Conference. In the same year, the federal government also appointed a Royal Commission on Industrial Relations. The Commission recommended the implementation of a national scheme of social insurance for workers who lost their jobs through no fault of their own.

1930s - In response to high rates of unemployment caused by the Great Depression, various levels of government set up a system of “relief”. This was often limited to vouchers not cash and tied to providing labour to public works or in work camps. 

March 1935 – Failed first attempt - Employment and Social Insurance Act passed third reading in Prime Minister Bennett’s Conservative government.

June – July 1935 – Dire conditions in work camps on the West Coast prompt the On To Ottawa Trek, which ends in a police instigated riot in Regina on July 1st. Relief camps are shut down, and the incident highlights the need for a social insurance system in Canada.

October 1935 – With Bennett’s government defeated, the Employment and Social Insurance Act is never implemented. It is deemed unconstitutional the following year, because employment falls under provincial jurisdiction.

Between 1935 and 1940 - Growing pressure from unions, social groups and the Cooperative Commonwealth Federation (CCF was the forerunner of the NDP) forced the Liberal government of W.L.M. King to take action. 

1940 - The effects of the depression so deeply marked Canadians that the provinces unanimously agreed to change the constitution. Prime Minister King finally gets British approval and unanimous provincial support to allow UI to fall under federal jurisdiction, and the Unemployment Insurance Act passes. Only 40% of labour force covered, as seasonal workers, public servants, and others excluded. Workers are required to show they are unemployed, available for suitable work, and have contributed to the program for 180 days over the past two years.  Benefits last between 6 to 52 weeks.

1955 – Under Prime Minister Louis St. Laurent, an extensive overhaul of program extends benefits to approximately 75 percent of the Canadian labour force and changes benefit duration to 15 – 36 weeks.

1971 – Prime Minister Pierre Trudeau passes a new Unemployment Insurance Act that covers 96% of wage/salary-earning workers. People need 8 weeks of work over past year to qualify, with a minimum of 20 hours per week. The maximum benefit duration is raised to 50 weeks, but calculated on a complicated formula based on labour force attachment, the national and regional unemployment rate. Benefits for illness, maternity, and retirement are added.

1977 – The Trudeau government simplifies the benefit duration formula, but adds a variable entrance requirement based on the unemployment rate in the region where someone lives. Workers who live in a low unemployment region must work twice as long to qualify for benefits as workers living in a high unemployment region.

1978 – Trudeau’s government increases the number of UI regions from 16 to 48.

1990 – Prime Minister Brian Mulroney ends federal (tax dollar) contributions to the program, making UI entirely financed by worker and employer contributions. The number of UI Regions is increased to 62 and a single benefit duration schedule is introduced based on weeks of insurable earnings and the regional unemployment rate.

1990 - 1996 – Successive Conservative and Liberal governments make a number of changes that reduce the benefit amount paid to recipients, reduce the duration of benefits, and increase the weeks needed to qualify in some regions.

1996 – Prime Minister Jean Chrétien’s government introduces major reforms, changing the program’s name to Employment Insurance (EI). The entrance requirement is increased substantially. In the lowest unemployment regions, for example, it increases by 240% from 20 weeks at 15 hours/week (300 hours) to 720 hours of work.

1996 - 2006 – Under successive Liberal governments, the reduced ability of unemployed workers to quality for EI benefits builds up a massive surplus of $57-billion. Rather than save the money for future employment needs, the money is taken out of the fund, and used to balance federal budgets that offer substantive tax cuts to corporations and the wealthy.

2008 – Prime Minister Stephen Harper’s Conservative government establishes a new Board to govern Employment Insurance financing (Canadian Employment Insurance Financing Board), wipes out the $57B “borrowed” by the federal government and reboots the program with only $2B in EI fund. Unions take the government to court, asking for the $57B to be repaid, but the Supreme Court sides with federal government. Later that year, the Great Recession hits.

2012 – Harper’s government changes the definition of “suitable employment” so that all EI claimants are compelled to accept job offers at wages lower than their previous job – between 10% and 30% depending on previous EI usage and length of time on current claim. The appeals process is also changed from face-to-face hearings with a three member Board of Appeals to mostly written submissions decided by a single member of the Social Security Tribunal.

2013 – 2017 –  see “Resources”