OTTAWA: The federal government is looking at slashing a whopping $2 billion from unemployment insurance. ‘That’s $400 million more than the 10% cut to the $16 billion fund dictated in Finance Minister Paul Martin’s February budget.

And it comes on the heels of a massive $5.5 billion cut to Ul imposed by Martin in his first budget in the spring ‘of 1994.

“There has been a genuine shift in the balance of the equation in six months,” explained one senior government official.

 

“The altitude of everybody even those with misgiving is this is what the country wants. Let’s do it ,and get behind Paul (Martin).”

Liberal insiders are buoyed by the phenomenal support that newly elected Progressive Conservative Premier Mike Harris has had with his approach to slashing Ontario’s deficit.

This makes them believe the country is receptive to even more belt cinching in Martin’ said to cut Canada $40 billion deficit further than to a planned $25 billion by 1997 3% (of GDP) target,” a top insider said.

The $2 billion cut will come out of the benefits of the 712,000 jobless ‘Canadians who now draw on the program. Of that, $800 million will be plowed back into what are being termed “reemployment measures” to be run from Ax worthy’s department.

Currently, only half of Canada’s 1.4 million jobless are receiving unemployment insurance, a drop of 40.9% from July, 1992, when the peak was reached with 1.2 million Canadians receiving UI benefits or 75% of an estimated 1.6 million then jobless Canadians Ax worthy is set to introduce more unemployment insurance changes in Parliament this fall. The changes would require people to work longer to qualify for unemployment insurance, shorten the maximum duration of payouts from 50 to 40 weeks and penalize those who have been frequent users by basing benefits on average earnings over a fixed period of time.

The reform is also expected to employ a graduated penalty for frequent users, which would reduce their benefits in direct proportion to the number of weeks they’ve compiled in recent years. That is, the more UI benefits they’ ve drawn in recent years, the less their benefits will be. ‘The S800 million so called Human Resources Investment Fund, which Axworthy has managed to salvage for “reemployment measures,” will be used to establish a wide range of programs and services, from teaching basic skills such as literacy to direct subsidization of low paid workers.

Sources say the current 39 programs offered through Canada Employment Center will be reduced to fewer than 10 programs.

Of those, the two programs which will receive the most attention will be targeted wage subsidies to provide direct work experience and coming supplements to directly subsidize the earnings of low paid workers.

“The money will be funneled into the programs that work the best,” an official said.

 

Article extracted from this publication >>  August 4, 1995