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    Position Statement on Welfare/Labour Market Reform

    Last Updated: May 13, 2008

    HUMAN SERVICES COMMITMENT TO WELFARE/LABOUR MARKET REFORM

    The Human Services department is committed to:
    • Supporting Council in advocating for reforms to Ontario’s social assistance system and Canada’s income security system to reduce child poverty and ensure that Peel’s low income residents can gain and maintain sustainable work and have an income above the poverty line.
    • Collaborating with other levels of government, municipalities, and community and business groups to launch innovative new programs and initiatives that assist residents in low income or vulnerable to low income to find meaningful work.
    • Consulting with social assistance clients in planning and development of programs and services that affect them.
    • Ensuring that the Region’s employment support programs are fully accessible to clients of all backgrounds and support the inclusion of newcomers in the social and economic life of the community.
    • Engaging with local businesses and community groups to support improved access to jobs and settlement services for newcomers in Peel.

    BACKGROUND

    • Reforms to the country’s social assistance and income security programs and labour market are needed to ensure Canada’s social and economic, and the financial health of municipalities in Ontario.
    • All individuals who work full time should be able to afford the basics, and our social safety net should provide adequate income to those who temporarily fall on hard times and those who, due to their personal circumstances are unable to work.
    • Economically, reforms are needed to ensure that all working-age adults who can work are contributing to the economy and that there are enough workers to sustain our social programs.
    • Social Assistance funding reforms are also important to municipalities in Ontario. It is currently the only province in Canada that requires municipalities to cost share social assistance through their property tax base. Property taxes should not be used to fund income security programs because property taxes do not grow with the economy like income and sales taxes. They also are regressive because low income households pay a larger share of their income to property taxes than higher income households. This cost sharing arrangement threatens the financial stability of Ontario municipalities, because during the next major recession most of the unemployed would not qualify for Employment Insurance (EI) and fall onto the welfare rolls. The result would be a sharp increase in welfare caseloads.
    • Economic and labour market changes in the last two decades and the changes to Canada’s income security system in the 1990s have left many working age adults vulnerable to low income and poverty. These changes have manifested themselves in the following ways:
      • Permanent full-time employment in Canada has become increasingly precarious in the last two decades, particularly among new immigrants and young males. While there is little evidence that the share of low paying jobs (less than $10/hour) has risen over this period; there is proof of an increase in the share of “non standard” jobs (part-time, contract, temporary agency and self-employed) which offer fewer benefits and less pay.
      • Many working people live below the low income cut-off even when working full-time for a full year – at least 30 per cent of low-wage workers fall into this group. Current minimum wage levels and income security programs are inadequate to meet basic needs.
      • Since 1990, the share of unemployed workers in Canada receiving Employment Insurance (EI) benefits has fallen from roughly 80% to 40% in 2004. In 2005, the share of unemployed workers covered by EI increased to 43%.

    Employment Insurance (EI) Benefits

      • The low rate of EI coverage is quite pronounced in areas of low unemployment like the Toronto Census Metropolitan Area (CMA). As shown in the graph below, only 22 per cent of the unemployed in the Toronto CMA qualified for EI benefits in 2004.

    EI Coverage in Toronto Below Ontario Average

      • Ontario Works (OW), the province’s social assistance system, is filling in the gaps for those who do not qualify for EI. However OW benefits are inadequate (since 1995 they have fallen 46% in real dollars accounting for inflation and the 22% reduction in benefits), and the program makes it difficult to escape poverty and creates a “welfare wall” for many. The “welfare wall” refers to disincentives faced by social assistance recipients who lose cash and non-cash benefits when they exit welfare for low paid jobs which provide earnings that are not enough to cover recipients’ work-related expenses (e.g., payroll deductions, transportation, childcare).
    • While OW caseload dropped rapidly between 1995 and 2000, this was largely due to fewer people qualifying for assistance rather than large numbers leaving welfare for work. Since 2000, Ontario’s caseload has hovered around 200,000 cases.



    Ontario Works: Total Caseloads

    • Statistics as of December 2007 show that Ontario’s OW recipients are spending a significant period of time on assistance (an average of 20 months). Only 13% of those individuals have work earnings. In comparison, in the Region of Peel, the average length of time individuals spend on assistance is only 15 months. The percentage of those on OW with earnings is 11%. The Region of Peel invests in resources and programming to support the movement from OW to work.
    • The MISWAA report recommended the Ontario government making the following welfare reforms:
      • Transfer responsibility for all OW benefit costs and all ODSP costs from municipalities to the Province.
      • Provide prescription drug and dental benefits to low-income workers to reduce the impediments to leaving social assistance.
      • Raise social assistance asset limits to allow savings for contingencies and help support the transition to work.
      • Allow recipients of the Ontarians Disability Support Program (ODSP) who work to keep drug and dental benefits for up to two years.
      • OW recipients who have multiple barriers to work and do not qualify for ODSP should receive special supports to encourage participation in community activities and longer-term capacity building.
    • The Ontario Government has already has taken preliminary steps to implement some of the MISWAA report recommendations. These include:
      • Extending health benefits for up to six months for people exiting social assistance for employment or until employer health benefits are available. Benefits could be extended for up to one year in exceptional cases.
      • Asset changes, such as allowing Ontario Works recipients to keep a vehicle worth up to $10,000 to help them get to and from a job. They also include no longer treating grants, bursaries or registered education savings plan (RESP) funds obtained to cover education costs as income and/or assets in Ontario Works or the Ontario Disability Support Program.
      • Providing ongoing health-related benefits to recipients who leave ODSP for employment until they receive employer health coverage.
      •  Will have increased social assistance rates by 7% over 2006 and 2007.
    • The MISWAA report recommended the federal government implement the following reforms to the income security system:
      • Reform EI to address the significant decline in coverage
      • Introduce a new national refundable tax credit and working income supplement to support low-income Canadians of working age

        The federal government in the 2007 Budget announced the creation of a Working Income Tax Benefit (WITB) that would provide up to $1,000 a year to a low income single parent or couple with work earnings.

    • The MISWAA report also made recommendations directed to both the federal and provincial governments:
      • Implement a seamless and integrated child benefit platform that pays child benefits to all low-income parents with children, including those receiving social assistance.
      • Improve training and employment supports for social assistance recipients and all low-income workers.

        The Ontario government in the 2007 Budget announced the creation of an Ontario Child Benefit which provides similar benefits to all children under 18 in low income families, whether their parents work or receive social assistance. The OCB began with a one-time payment of up to $250 per child under 18 years of age in July 2007, will rise to a maximum of $1,100 per child once the program is fully implemented in July 2011.

    • The creation of an integrated child benefit complements a proposal from the Association of Municipalities of Ontario (AMO) to create an Ontario child supplement and transform social assistance into an employment focused program for working adults.
    • To assist low income working families and individuals, the MISWAA report also recommended to the Ontario government increases to the minimum wage and improved enforcement of employment standards. The Task Force specifically recommended:
      • Establishing an independent body, with representation from employers and labour, to recommend periodic increases to the minimum wage and monitor employment and economic impacts.
      • Strengthening the enforcement of employment standards to protect the rights of workers under the law.
    • With respect to these recommended labour market changes and employment standards, the Ontario government has done the following:
      • Increased the minimum wage since 2003. The minimum wage has risen by 28%, from $6.85 per hour in 2003 to its current rate of $8.75. These increases followed a nine-year period, from 1995 through 2003, during which the minimum wage in Ontario was frozen. In the 2007 Ontario Budget, the government proposes to increase the hourly minimum wage to $10.25 by 2010.
      • Provided $3.6 million in new funding through the 2007 Budget to address the backlog of Employment Standards Act complaints.
    • Immigration is key to the future success of Canada’s labour market as newcomers are expected to account for all net labour force growth by 2011 (2002 HRDC). However, the Canadian labour market has not adequately integrated newcomers. They earn significantly less (30% to 40%) than their Canadian counterparts despite comparable levels of education. More than half of newcomers do not find work in their field of study. The result is increased poverty rates among newcomers. Between 1980 and 2000, low income rates among new immigrants rose from 25% to 36%. This is in contrast with rates for Canadian born residents which fell from 17% to 14%.
    • The Governments of Canada and Ontario have signed labour market agreements over the last few years have provided the province an opportunity to transform OW into an employment focused program.
    • The Labour Market Development Agreement (LMDA) contributes $525 million annually in EI funding to Ontario to manage EI related training and job placement programs.
    • The federal government and Ontario signed a labour market agreement to enhance the quality and size of Ontario’s labour force. Under the Canada-Ontario LMA, the federal government is providing Ontario $1.2 billion over the next six years (2008-09 to 2013-14). The agreement came into effect on April 1, 2008. The new investments are aimed unemployed individuals who are not eligible for training assistance under Employment Insurance (EI).

      The Canada-Ontario Labour Market Agreement (LMA) stems from the federal government’s 2007 budget announcement to create a Labour Market Program. The federal government will invest $500 million annually over the next six fiscal years which is being allocated to provinces and territories on a per capita basis.

      The Canada-Ontario LMA compliments the LMDA signed in November 2005 and replaces the Canada-Ontario Labour Market Partnership agreement that was signed at the same time as the LMDA, but was never implemented by the Harper government.

    • Other public investments that play an important role in supporting employment of low-income adults include child care subsidies and social housing.

    REGIONAL POSITION AND PRIORITIES

    The Region of Peel through its Council has:

    • Invited the federal government to use Peel to pilot new collaborative approaches to the streamlining of skills development including industry-specific agreements, enhanced language training and targeted job training programs in collaboration with community agencies and businesses in Peel.
    • In May 2003, called for the creation of a provincial child benefit that is supported by the AMO and the Ontario Municipal Social Services Association (OMSSA). The AMO proposal would see child benefits no longer delivered through the welfare system (Ontario Works) but through a supplement to all low income parents, not just those on assistance. Moreover, the proposal would see Ontario Works transformed into a labour market adjustment and income support program for working age adults.
    • Called on the province in June 2005 to end municipal cost sharing of social services.
    • Urged the province in November 2005 to proceed with implementation of the AMO Ontario Child Benefit proposal.
    • In June 2006, endorsed the recommendations in the MISWAA report dealing with OW and ODSP reforms provided that the Ontario government, take on full responsibility for all OW benefit costs and all ODSP costs from Ontario municipalities. In the same resolution, Council approved the MISWAA recommendations directed to the federal government.
    REGIONíS ASSISTANCE TO RESIDENTS TO FIND MEANINGFUL WORK
    • The Region is collaborating with municipal associations such as OMSSA and AMO to advocate for social assistance and income security reforms with the federal and provincial government.
    • The Region is directly engaged in supports for families and individuals most affected by low income and poverty. They include:
    • Since 2000, Regional Council has made a substantial investment in the Families First program. It is a program developed by the Region of Peel to provide employment and health services to sole support parents receiving Ontario Works assistance, and recreation and childcare for their children. Research shows that Families First families experience permanent benefits such as less reliance on the healthcare system and less dependence on social assistance. It is hoped that Families First will ultimately be adopted by the Province as a best practice.

    KEY MESSAGES

    • Employment is becoming more precarious in Canada and a full time job does not guarantee that individuals and families have an adequate market income.
    • Employment Insurance (EI) is covering a diminishing share of unemployed workers today, forcing many of them on the welfare rolls.
    • Only 11% of Ontario Works (OW) recipients have any work earnings. Changes to the social assistance and income security system are needed to eliminate the disincentives in moving from assistance to work.
    • The creation of an integrated child benefit delivered outside of OW will help reduce child poverty by ensuring that low income parents have adequate income supports.
    • Creating an integrated child benefit allows for the transformation of OW into a labour market program for working adults that will help them find sustainable employment.
    • Persons with disabilities who want to work and receive ODSP face disincentives as they make the transition to work. One large disincentive is the loss of drug and dental benefits. The Ontario government needs to address this barrier.
    • The Canada-Ontario Labour Market Development agreement and the newly created Labour Market Program allows all three levels of government to design locally tailored labour market adjustment programs that will help all unemployed persons whether on EI or social assistance to find sustainable employment. Federal and provincial collaboration on the design and delivery of the new labour market program over the next year is essential to achieve this end.
    • The Region of Peel has advocated for reforms to social assistance and income security in Canada to reduce child poverty and ensure that low income residents can fully participate in the country’s society and economy.
    • The Region of Peel with funding from the province or federal government has numerous programs and initiatives already in place to help low income residents find meaningful work. Programs range from Jobs Now, which provides pre and post employment services, to Families First, which helps lone parents address barriers to employment like mental and physical health.
    • The Region has invited the federal government to use Peel to pilot new collaborative approaches that support improved access to jobs and settlement services for newcomers in Peel in collaboration with community agencies and businesses. With the recent signing of the labour market agreements, the Region is ready to collaborate with the Ontario and federal governments to meet this end.
    • To achieve maximum effectiveness, the Canada-Ontario Labour Market Agreements must be aligned with the Canada-Ontario Immigration Agreement given that labour market attachment is a key indicator of successful integration for newcomers.
    • Comprehensive service models such as Families First and Open the Doors to better Futures need to be implemented as sustained programs in Peel and elsewhere.




    Revised: Wednesday May 17 2017

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