October 14, 2021 – There is no easy solution to the challenge of including gig workers or self-employed workers in Canada’s Employment Insurance (EI) system, according to a new report released by the C.D. Howe Institute.
In “Should ‘gig’ Workers be Covered by the EI regime? The Challenges and Pitfalls,” author David Gray casts an evaluative lens on the case – especially as ‘gig workers’ have become a fixture in the modern workforce.
Federal Budget 2021 proposed forthcoming consultations on long-term reforms to EI and allocated funding to the federal Employment and Social Development Canada department to examine the issue of providing employment insurance to gig workers who are not entitled to it under the current regime.
The precarious situation of gig workers has been highlighted by the imminent ending of temporary income support programs such as the Canadian Emergency Response Benefit (CERB) and the Canadian Recovery Benefit (CRB).
In his research, Gray considers two alternative approaches (i) integrating gig workers into the standard, regular-benefit EI regime along the lines of the Special Benefits for Self-employed Workers program, which involves voluntary participation, and (ii) the creation of a special, separate regime for gig workers. Ultimately, he determines that both options are economically unfeasible.
“It’s impractical and trying to carve out a special mandate would be very ineffectual,” says Gray. “If the regime is voluntary, the form of resistance will be a zero take-up rate. If it’s involuntary, the form of resistance will likely be fewer gig positions available as well as tax evasion as positions go underground. Further, the second approach would be costly, create inequalities and long-term dependence.”
Examining other policy responses to the challenge, Gray identifies three that merit consideration: First, for gig workers who seek to transition to more stable employment, it is possible to obtain retraining benefits and employment assistance through existing provincial workforce development agreements; second, a Temporary Unemployment Assistance (TUA) provision (which does not exist at this time) would provide income assistance for the unemployed who cannot access EI and should not be required to turn to social assistance; and third, changes to the labour code to transform these gig employment relationships and the status of its workers such that they become dependent workers rather than independent contractors.
“Finally, it is likely that the status quo of the self-insurance option might be suitable for some gig workers. For those who prefer the flexibility and have adequate skill sets, the costs of potential interventions might outweigh the hoped-for benefits, and thus the laissez-faire option should not be excluded for all gig workers,” writes Gray.
“When pandemic-related public health restrictions are loosened such that those sectors adversely affected can resume normal employment levels, not all gig workers will desire EI coverage. Furthermore, a broader recovery in the labour market should be accompanied by vacancies for more standard positions to which some of the current group of gig workers could aspire.”
For more information contact: David Gray, Professor of Economics, University of Ottawa; Lauren Malyk, Communications Officer, 416-865-1904 Ext. 0247, lmalyk@cdhowe.org
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review