Home > Auto Industry, CAW > The Story of EI and the Auto Industry.

The Story of EI and the Auto Industry.

December 16th, 2008

The last few weeks a couple of things have happened. One is that the Parliamentary opposition, including the Michael Ignatieff led Liberals, have screamed for stimulus, in large part to the auto industry. Another is the Supreme Court ruled that the Liberal run Government of Canada of the 2002, 2003 and 2005 illegally rolled Employment Insurance surpluses into general revenues.

The two stories are connected.

Many years ago the unions negotiated a benefit called Supplementary Unemployment Benefit (SUB). It is, in essence, a guaranteed income supplement, that promises the company will top up EI funds to 85% of the workers wage. Back when it was negotiated it meant a small weekly stipend for the company during lean times and they could maintain their work force for good times.

As an example, the first time I wound up on temporary lay-off, EI (or UIC as it was then called) sent me a cheque for something in the $400’s, SUB for less than $100 ($85 I think).

In the 90’s Jean Chrétien’s Liberal government revamped the Unemployment system, making it more expensive, harder to access and with a decrease in benefits. As an example, somebody who collects EI two years in a row must repay 15% the second, and every subsequent year. When announcing the changes to EI, Finance Minister Paul Martin talked about companies using EI to supplement their workforce.

The result is predictable and generally what was desired. If I get laid off now, the EI cheque is still in the $400’s, the SUB cheque for an amount greater than the EI cheque. Furthermore, it didn’t take long for the unions to argue that the 15% claw-back meant the employees were making less than 85%, and the companies began reimbursing it.

The result is that for the auto companies to temporarily lay-off their work force for re-tooling or inventory adjustment, it now costs them somewhere in the neighbourhood, and probably in excess of, 50% of the employees wage.

I don’t present this as evidence for or against the SUB plans. They are a reality in the automotive industry and the companies themselves used the plans to supplement their labour costs when cyclical demand for their product was low. Paul Martin balanced the budget in part by illegally using the Employment Insurance fund as a tax revenue, and he did so partly on the back of the auto companies, who every party now seems to agree need a bailout. When the companies you built policy on ten years ago can get an all party consensus that they need bailed-out a decade on, your legacy takes a hit.

When Stephen Harper sits down to sort out the EI mess that Paul Martin & The Supremes have just handed him, and Jack Layton calls him to ask what he’s doing about the auto jobs, he should look at the changes made to EI that affect the auto companies and consider undoing them.

Auto Industry, CAW

  1. Ontario Girl
    December 16th, 2008 at 21:16 | #1

    Since the MSM are not reporting this story, all covered up, I hope to see you print this in all the newspapers that will print it?

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