Alternative federal budget 2026-27: Employment Insurance

This is from a larger publication, Alternative federal budget 2026-27: Bridge to independence

Introduction

It is time for a decade of hearings and consultations on Employment Insurance (EI) reform to bear fruit.¹ It requires the kind of political will demonstrated recently with the introduction of the long-awaited tripartite EI Board of Appeal.²

Comprehensive EI reforms and modernization were first promised in 2016. So far, we have seen only piecemeal measures—temporary band-aid solutions fashioned on the fly and narrowly targeted to specific claimants. We see this now with the temporary EI measures in response to tariffs, which at minimum must be there for the duration of the trade war.

A broad swath of workers who contribute weekly premiums to this social insurance program are still shut out or managing on the barest of entitlements. The country pays a heavy price when we fail to maintain this critical pillar of our social infrastructure. We saw this most clearly when the 2020 COVID-19 pandemic hit and EI couldn’t do its job, necessitating the creation of emergency CERB benefits.

There are the long-standing challenges to expanding workers’ access to EI and improving benefits. The problems date back decades,³ but worrying trends of recent years have brought further deterioration in the share of unemployed contributors receiving EI regular benefits.^4,5

There are new challenges, too. Economic turmoil and uncertainty abound, making it critical that EI be made recession-ready. The ruptures and harsh realities of today’s geopolitics, including erratic U.S. tariffs and conflicts, are already impacting our labour market.⁴ At the same time, new technologies and AI are proving highly disruptive in many workplaces. And climate change disasters, from floods to wildfires, repeatedly threaten sudden and dramatic impacts in our communities.

Overview

At its core, Employment Insurance is meant to provide employed workers with income security when they’re separated from their job and normal earnings.

Canada established the program in 1940 after having learned the hard lessons of world-wide war and a Great Depression with only local welfare to fall back on. Social insurance that delivers some measure of income security and stability is as important to the larger economy as it is for individuals.

Employment Insurance is our most important automatic economic stabilizer, and it must be treated as such.

This is why this AFB will undertake sweeping reforms to strengthen and modernize the Employment Insurance program. These reforms reflect longstanding proposals advanced by a variety of community and labour organizations, including the Interprovincial EI Working Group,⁵ and submissions to government consultations on EI reforms.⁶

We urgently need to deliver on the government’s earlier promises of an “EI for the 21st century.”

Actions

The AFB will allow EI benefits for up to 104 weeks for all workers while in approved training (not just extended to those on a skilled trades pathway). This would provide $183 million per year in additional support in to an estimated 10,000 claimants for the full duration of approved training.

The AFB will introduce a new program of EI Emergency Response Measures. The program will provide an automatic, predictable response in the event of a recession, major climate events, pandemics and other disruptions. It will integrate lessons from the response to the COVID-19 pandemic about the most effective measures for accelerating EI access and ensuring economic stabilization for workers and their communities.

The AFB will relax eligibility requirements to the above measures, with affected workers automatically credited with additional hours and given a longer reach-back period for accumulating hours. The one-week waiting period will be waived and the normal rules for declaring other income will not apply. A minimum benefit rate will apply as will a simplified treatment of the reasons for separation. The current temporary measure providing an additional 20 weeks of regular EI benefits will be extended to all claimants and no longer limited to those deemed “long-tenured,” a problematic restriction.

The AFB will require employers to expedite records of employment for migrants. Special EI Work-Sharing Measures will be automatically triggered to fast-track applications and limit job losses. This will be modelled on the temporary measures used during the pandemic and now in response to tariffs. The government anticipated the need for automatic measures with the proposed Employment Insurance Disaster Assistance Benefit in its 2019 platform.⁷

The AFB will set a fixed, Canada-wide 360-hour qualifying rule for an entry level EI claim for regular or special benefits (12 weeks if to the claimant’s advantage). Regional unemployment rates should have no bearing on access. The current 420 to 700 hours is often onerous for those in jobs without full-year, full-time schedules. Workers in the retail sector average 26.1 hours weekly (including overtime); those in hotels and food service average only 22.7 hours.⁸ These workplaces are also subject to shoulder- and slow-season layoffs which means employment is not always full-year. Many of these workers are women and racialized people. These sectors, two of the largest in the labour market, employ the same number of workers as manufacturing and construction combined.⁹ When Canada dramatically reduced qualifying hours during the pandemic it greatly improved access, particularly for women and young adults.¹⁰

The AFB will also extend the maximum EI regular benefit period to 50 weeks in all regions and permanently provide at least five additional weeks for eligible seasonal claimants. One in three workers (34.4 per cent in 2024-25)¹¹ exhaust their regular EI benefit entitlement of between 14 and 45 weeks before they are re-employed.

The AFB will immediately restore EI special benefits coverage for workers employed through Temporary Foreign Worker Program streams and the newer International Mobility Program, as was the case before 2013.¹² Migrant workers already contribute EI premiums. Access to EI regular benefits will be enabled by changes in immigration policies covering work permits, especially closed permits that perpetuate the kind of inequities that restrict access to EI. The Ontario Superior Court of Justice recently certified a class action challenging migrants’ exclusion from EI to proceed to court.¹³

The AFB will allow new parents to combine EI regular benefits with special benefits for parental leave. This requires extending parents’ reference and benefit period to 104 weeks. The current 50-week limit means a loss of EI benefits if workers are laid off just before, during or soon after a parental leave.¹⁴ The Social Security Tribunal found this limitation to be in breach of the equality provisions of the Charter of Rights and Freedoms and the Federal Court of Appeals upheld that decision.¹⁵ EI’s broad economic and social objectives support the replacement of earnings during parental leave as well as during layoffs. In 2024, 78.6 per cent of new parents living outside Quebec had insurable employment, with 90.7 per cent of them receiving maternity or parental benefits. The introduction of a shared EI parental benefit has been instrumental in encouraging more partners to take parental leave. Since 2019 the incidence has continued to rise, with 42.1 per cent of partners accessing EI parental benefits by 2024. Only 11.9 per cent of partners did so in 2017.¹⁸Other improvements will be reviewed, borrowing from Quebec’s QPIP plan and European models, for example, where there is more flexibility in the timing of benefits.¹⁶

The AFB will increase the current EI benefit rate to 66.6 per cent from the current 55 per cent—a historical low. For many years Canada’s unemployment insurance system replaced two thirds of a claimant’s normal earnings.¹⁷ Inadequate benefits are punishing for individuals and act to undermine access to EI, deterring some workers from even applying.

The AFB will introduce an EI benefit floor, as was done during the pandemic. This will ensure EI is more relevant to low-wage earners—many of whom are women, racialized, Indigenous or adults with disabilities—who are otherwise forced into a vicious circle of survival jobs. At the outset, the AFB will set a floor of $500/week, to be increased annually at the same rate as maximum insurable earnings and the maximum benefit.

The AFB will increase net revenues for the EI operating account by raising 2027 maximum insurable earnings (MIE) to $83,000 and increasing it to $103,000 over the following five years. This is linked to Quebec’s 2026 MIE for its QPIP parental benefit program.¹⁸

The AFB will set a 2027 maximum benefit rate of $1,063, triggered by the new MIE maximum and benefit rate percentage ($83,000 ÷ by 52 weeks × 66.6%). It is unacceptable that the many claimants with earnings above the MIE (which was $68,900 in 2026) end up with a benefit rate that is less than 66.6 per cent of their normal earnings. The EI Monitoring & Assessment Report reveals that just over half of all regular EI claimants (50.9 per cent)¹⁹ had earnings above the MIE in 2024–25, an all-time high.

The AFB will limit sanctions when a claimant’s employer reports an “invalid” job separation to a three-week disqualification. Such claimants are currently denied any EI benefits, including workers who did not file a complaint about harassment, exploitative conditions or wrongful dismissal. Historically, the program limited the sanction to three weeks beginning in 1971, and then seven to 12 weeks until 1993.²⁰ Other advanced economies apply a shorter disqualification period. The OECD has argued that harsh sanctions or the fear of them “can trap vulnerable individuals in low-wage positions, forcing them to accept the first suitable job offer, leading to skill degradation and reduced long-term earning potential.”²¹

The AFB will permanently eliminate EI provisions that treat separation payments as earnings for EI purposes. This will allow workers to start receiving EI benefits sooner. This approach was applied repeatedly in 2020-22 and 2025-26. It has the added benefit of simplifying Service Canada processing.

The AFB will also undertake actions to do the following:

Establish a government fair share contribution to annual EI costs with an initial contribution of 10 per cent and a pathway to a target of 20 per cent. The AFB measures in this chapter amount to 10 per cent of overall EI benefits. This re-establishes government as a tripartite contributor, a principle that held for most of the history of Employment Insurance in recognition that government bears some responsibility for unemployment. Prior to 1990, program costs were shared by employees, employers and the federal government. The restoration of a government contribution will allow for enhancements, while potentially lightening the premium-load on workers and their employers with more predictable increases. Employers and workers will continue to share the remaining program costs on a 1.4:1 basis.
Offer self-employed workers a new “Special Benefits Plus” package with a training support benefit and an adjusted premium.
Revise outdated provisions, such as making EI unavailable to unemployed teachers. Historically, when unemployment insurance was first introduced, teachers were able to cover their expenses over a 12-month period with the pay they received during the school year. Today there are other lower-paying arrangements in place for part-time and newer teachers on fixed-term contracts who are only paid for 10 months of teaching. They pay EI premiums and should have access to EI benefits if they’re available for other work in the non-teaching, non-paid months.
Permanently enhance EI Part II transfers for training and employment supports via provincial/territorial labour market agreements with the addition of the $570 million temporarily allocated in response to tariffs and global market shifts. Such transfers will require a new emphasis on adjustment programming. They will also prioritize delivery using public education institutions, union training centres and community literacy organizations for all training and upgrading, including new EI Work-Sharing while learning agreements. Many current labour market agreements exhibit weak accountability and a lack of strategic focus, requiring a strengthened planning role for labour and business.

All the measures proposed here will be paid from the EI operating account, except for EI Emergency Response Measures (where they are enhancements of regular EI entitlements). Enhancements will be funded by the Government of Canada’s Consolidated Revenue Fund.

The Monitor

Our Schools/Our Selves

Alternative federal budget 2026-27: Employment Insurance

Introduction

Overview

Actions

About the author

Alternative Federal Budget Working Group

Alternative federal budget 2026-27: Health care

Alternative federal budget 2026-27: First Nations

Alternative federal budget 2026-27: Health care

Alternative federal budget 2026-27: First Nations

Alternative federal budget 2026: Employment Insurance

Budget fédéral alternatif 2026 : Assurance-emploi

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