Alternative federal budget 2026: Employment Insurance

Introduction

The folly of procrastinating on permanent Employment Insurance reforms rears its head at every turn.

Too many workers still can’t access Employment Insurance (EI), and the program’s benefits remain inadequate. Meanwhile, economic disruptions have become a constant. It’s now quite predictable that there will be a new climate emergency, a new AI disruption, another natural disaster, another private equity bankruptcy, another recession. And then there are the exceptional events, like pandemics.

Our EI program is ready for none of this. It wasn’t prepared for the chaos unleashed by U.S. President Donald Trump’s bully tactics and damaging trade war and their severe consequences for our labour market, including key sectors like auto and steel.

As our most important automatic economic stabilizer, Employment Insurance must be ready to kick into high gear when needed. AFB 2026 proposes to do just that, with a more coherent EI program that is responsive to workers’ needs and set to go when there’s a crisis.

Overview

The Employment Insurance program is the primary source of income replacement when workers lose jobs, face temporary layoffs, are on leave for parenting or caregiving, or need time off work due to sickness or injury. It is financed by premiums from workers and employers, with forecast expenditures of $29.44 billion in 2025.¹ EI pools risks and costs across the larger population so that individuals are not left carrying the burden alone. It also funds the training and employment services delivered by provinces and territories through federal labour market agreements.

EI plays a critical economic role. Since 1940 it has maintained purchasing power and supported communities during labour market disruptions. EI also ensures workers can search for suitable new employment instead of falling into a revolving door of cheap labour jobs. This is critical now that Canada wants to strengthen its domestic market to replace dependence on U.S. trade. Doing that will require the preservation of workers’ skills and their ability to earn enough to support domestic demand.

Statistics Canada Labour Force Surveys confirm continuing labour market challenges.² In May 2025, unemployment rose for the third month in a row to seven per cent, with 1.6 million people unemployed. Student unemployment, particularly among new graduates, climbed to 19.1 per cent in May 2025,³ with a worrying slowdown in employer job postings.

Meanwhile, increasingly widespread wildfires remind us of the climate crises and natural disasters that continue to plague communities, and these will likely worsen with time. The 8,000 workers who lost their jobs with the Hudson’s Bay Company bankruptcy highlight the urgency of improving EI access for those facing layoffs and working short shifts prior to closure. With reduced hours, some workers may not have sufficient hours to qualify for EI benefits, or they may face a shortened benefit period.

And now Canada faces a special challenge. Trump’s trade war has created a crisis for large swaths of the labour market, with many indirect impacts amid generalized uncertainty and instability.

Against this backdrop, Canada still struggles with historically low recipiency rates for regular EI benefits, averaging 39.9 per cent of unemployed workers in 2023-24.⁴ Fully 83 per cent of unemployed workers received regular unemployment benefits in 1989;⁵ by 1998, it was half that.⁶ As of January 2025, regular benefit recipiency averaged 32 per cent Canada-wide and only 21 per cent in the three largest metropolitan areas.⁷

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

AFB 2026 sets out to repair Employment Insurance. It will expand access by reforming EI’s qualifying rules and providing better benefits. It will end the bad habit of ad hoc patchwork solutions whenever there’s a crisis, which happened when the Canada Emergency Response Benefit (CERB) had to replace EI during the COVID-19 pandemic, and which happens every time a large-scale wildfire requires yet another pilot project.

Actions

In keeping with proposals advanced by a wide variety of community and labour organizations, including the Interprovincial EI Working Group,⁸ and submissions to the government consultations on Employment Insurance reforms,⁹ the AFB will undertake a comprehensive reform of the EI program with the following actions.

The AFB will introduce a new program of EI emergency response measures, integrating lessons from the COVID-19 pandemic about what makes EI more responsive and relevant to workers while reducing administrative costs. We need an automatic, predictable response in the event of floods, hurricanes, wildfires, pandemics and the like. Eligibility requirements will be relaxed, and affected workers will be automatically credited with additional hours and given a longer reach-back period for accumulating hours. The waiting period will be waived and the normal rules for declaring other income will not apply. Employers will be required to expedite records of employment for migrants, and EI work-sharing emergency special measures will be fast-tracked. The government anticipated the need for such measures with the proposed Employment Insurance Disaster Assistance Benefit in its 2019 platform.¹⁰

The AFB will establish a common, pan-Canadian qualifying rule for both regular and special EI benefits—a measure used during the pandemic. This acknowledges that regional unemployment rates should have no bearing on workers’ access to EI. A minimum claim will require a fixed 360 hours (or 12 weeks when to the claimant’s advantage). This is the equivalent of 12 weeks of 30 hours, approximating the average schedule for payroll employees. The current EI matrix assumes 35 hours, which no longer reflects the schedule for the majority of workers employed in the service sector. This is especially true for women and racialized workers in the retail, hotel, and food service sectors, who have work weeks that can average as few as 22.7 hours.¹¹

The AFB will extend the maximum benefit period to 50 weeks in all regions and maintain the additional five weeks for eligible seasonal claimants. One in three workers (34.5 per cent in 2023-24¹²) exhaust their regular EI benefit period 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 2013.¹³ Access to EI regular benefits will require changes in immigration policies covering work permits, especially closed permits that perpetuate the kind of inequities that restrict access to EI (see the Immigration chapter for details on the comprehensive regularization program). Transnational workers already contribute EI premiums.

The AFB will allow new parents to stack 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 before, during, or after a parental leave. The Social Security Tribunal found this limitation to be in breach of the equality provisions of the Charter of Rights and Freedoms.¹⁴ A recent survey found that 15 per cent of new mothers reported a dismissal, layoff, or unrenewed contract during their leave or upon their return.¹⁵ EI’s broad economic and social objectives support the replacement of earnings during parental leave as well as during layoffs. In Canada 75.6 per cent of new parents (outside Quebec) were in the paid work force with insurable earnings; of those, 91.3 per cent reported receiving maternity or parental benefits in 2023.¹⁶

The AFB will increase the current EI benefit rate to 66.6 per cent. There is historical precedent in Canada for replacing two thirds of a claimant’s normal earnings.¹⁷ The current rate of 55 per cent is a historical low. Inadequate benefits also undermine access to EI, deterring some workers from even applying.

The AFB will introduce an EI benefit floor. This will ensure EI is more relevant to the working poor—many of them women, racialized, Indigenous, and 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 weekly, 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 2026 maximum insurable earnings (MIE) to $98,000. This is tagged to Quebec’s MIE in the previous year for the QPIP parental benefit program.¹⁸

The AFB will also set a 2026 maximum benefit rate of $1,037, triggered by the new MIE maximum. Currently, claimants with earnings above the $65,700 MIE receive less than 55 per cent of their normal earnings. The EI Actuarial Report forecasts almost half of all claimants (48.1 per cent) will have earnings above the MIE in 2026. ¹⁹

The AFB will limit sanctions to a three-week disqualification when a claimant’s employer reports an “invalid” job separation. Such claimants are currently denied EI benefits. This impacts workers who leave work to attend training or school, and it affects other workers too—especially vulnerable, low-paid workers who have not filed a complaint about harassment, exploitative conditions, or wrongful dismissal. The program limited the sanction to three weeks beginning in 1971, and then seven to 12 weeks until 1993.²⁰ Several other countries currently apply a shorter disqualification period.²¹

The AFB will establish a panel to recommend alternatives to the requirement for a work separation of seven days without pay and without work to qualify for EI. This rule is punishing for workers with precarious schedules. Workers with temporary help agencies that can manipulate schedules or in firms that fail to provide a record of employment are especially affected. A 2014 EI Monitoring and Assessment Report found that 53.5 per cent of workers in the lowest income quartile were not issued a record of employment for a qualifying interruption of earnings.²²

The AFB will relax current rules for working while on claim. This will ensure that workers are not discouraged from accepting temporary work while laid off from their main jobs. Workers will be allowed to keep the first hundred dollars before triggering an EI clawback. This measure also helps people who are working multiple part-time jobs, especially women and lower-paid workers.

The AFB will discontinue treating separation and vacation payments as earnings for EI purposes, allowing workers to start receiving benefits sooner. This was the approach taken during the COVID-19 pandemic, which also simplified Service Canada’s processing. Almost 20 per cent of regular EI claimants reported separation payments in 2018.²³

The AFB will offer a new “Special Benefits Plus” package with an adjusted premium for self-employed workers. It will include an enhanced training support benefit.

The AFB will restore the EI Part II supplement previously provided as part of provincial/territorial labour market agreement transfers. These bilateral agreements exhibit weak accountability and a lack of strategic focus that will need to be remedied, and they will also need to strengthen roles for labour and business. Funding will prioritize active measures, such as adjustment programming, which is currently threadbare and needing revitalization. Similarly, a new federal commitment to provide EI Part I benefits when workers upgrade, train, or participate in an EI work-sharing while learning program will require provincial/territorial EI Part II allocations that support the delivery of such programs, with priority for public education and regional literacy institutions.

All measures 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 AFB will establish a “government fair share” 20 per cent target contribution to annual EI costs with an initial contribution of 10 per cent plus a pathway for increases. The AFB measures in this chapter amount to just over 10 per cent of overall EI benefits and represent the first step. This re-establishes government as a tripartite contributor, a principle that held for most of the history of Employment Insurance. It also recognizes that the government bears some responsibility for unemployment. The contribution will allow for enhancements and more creative uses of EI, while potentially lightening the premium-load placed 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.

Alternative federal budget 2026: Employment Insurance

Building true Canadian sovereignty

Introduction

Overview

Actions

Alternative federal budget 2026: Health equity

Alternative federal budget 2026: Seniors’ and long-term care

Alternative federal budget 2026: Health equity

Alternative federal budget 2026: Seniors’ and long-term care

Alternative federal budget 2026: Acknowledgements

Budget fédéral alternatif 2026 : Assurance-emploi

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Alternative federal budget 2026: Employment Insurance

Building true Canadian sovereignty

Introduction

Overview

Actions

article contents

We’re fighting for change and your donation helps!

Contact Us