Vol. 15 No.4 (April 2005), pp.322-324

FROM UI TO EI:  WAGING WAR ON THE WELFARE STATE, by Georges Campeau (translated by Richard Howard).  Vancouver:  University of British Columbia Press, 2004.  256pp.  Cloth.  CDN$103.93 / US$85.00 / £56.50.   ISBN:  0-7748-1122-6.

Reviewed by Jerold Waltman, Department of Political Science, Baylor University.  Email:  Jerold_Waltman@baylor.edu .

Unemployment insurance (UI) was first developed by European trade unions.  Members would pay into a fund while working.  Then, those who suffered spells of unemployment could draw benefits until they again found work.  Later, governments set up public systems funded by compulsory levies and administered by government officials, one of the most comprehensive of which was that adopted by the United Kingdom in 1911.  The United States created its system in 1935, and Canada theirs in 1940.  During the debates leading up to these latter enactments, Keynesian notions of seeking methods to cushion a decline in purchasing during the early days of a recession were wedded to the desirability of easing the burden of unemployment on the individual worker.  Georges Campeau, an attorney representing claimants for unemployment benefits turned law professor, has written a detailed and thorough history of the adoption and development of Canada’s UI system.

When any government decides to establish a system of UI, a host of technical problems must be addressed, along with a deep policy question.  Among the former are how long one must work before being eligible for benefits, how the benefits will be calculated, how long benefits will last, whether dismissal for cause disqualifies a claimant, whether “voluntary” unemployment voids eligibility, who is to pay the levies (employees or employers), whether government should contribute to the fund from general tax revenues, whether job exchanges are to be attached to the administrative structure, whether declining a job (and what type of job) can lead to termination of benefits, who shall make the eligibility determinations, and how appeal mechanisms will be ordered.  More fundamentally, though, there are two differing, and incompatible, philosophies underlying any UI system.  On the one hand, there is the “insurance” (or actuarial) approach that takes its cues from private insurance.  In this view, with its analogy to private insurance, maintaining the integrity of the fund is of paramount concern.  On the other, the “welfare” model sees UI as a way to redistribute moneys from the prosperous to the less fortunate.  Making the benefits adequate and keeping eligibility broad are therefore the major issues that need to be addressed.

The role of bias, or more genteelly perspective, in the writing of history has two dimensions.  There is, first, the degree of fusion between the bias and the narrative.  This can take one of four forms.  The first is the invariably dull and arid attempt to be totally objective.  The second involves acknowledging [*323] one’s bias but keeping the focus mostly on the analysis.  A third is working from the perspective and letting it consciously interact with and inform the analysis.  The final form is exemplified when the bias overwhelms the analysis.  The third, which is often where the most interesting historical work lies, is on display a good bit in this book; however, Campeau too often puts one foot over the line with the fourth category.  The second dimension is the intellectual defensibility of the bias.  More on this momentarily.

Campeau does an excellent job of tracing the politics of the pioneering British act and the development of agitation for UI in Canada.  His portrayal of the depression in Canada and the subsequent politics leading up to the 1940 act are also admirable.  He gives due attention to how the struggle between advocates of the insurance and welfare models played out, and the compromises that resulted.  Additionally, he ably and clearly analyzes the constitutional issue (whether UI was a federal or provincial responsibility), a matter non-Canadians could find confusing.  Finally, he sets out the details of the early court decisions that gave life to the act in a readable and commendable fashion.

Canada’s UI system remained basically intact until 1971, when a major reform was enacted.  Spurred on by economic good times and a growing welfare consciousness, Parliament extended the generosity of the system on several fronts.  More workers were brought into the system; benefits were increased and periods of eligibility were lengthened; demands to re-enter the workforce were loosened.  Simultaneously, the government took more responsibility for managing the macro-economy to create full employment.  Taken together, these policies represented an effort to use the UI system to mildly redistribute income while simultaneously providing an income floor under the unemployed.  In other words, UI moved decidedly closer to the welfare model.  To Campeau, this represents the system as it should be.

Later chapter titles belie what is to come: “The System Hijacked” and “Onward to EI.”  He discusses the flowering of neoliberal ideology and the implications it carries for UI.  Two limited sets of “reforms” were enacted in 1990 and 1993, but the real marker was the Employment Insurance Act of 1996.  This law consciously moved the entire UI system toward what are called “active” labor market policies.  This approach involves adopting policies that actively encourage people to get a job, any job, and keep it.  It also makes the responsibility for finding a job rest more squarely on the individual.  At the same time, it reduces the government’s commitment to job creation, preferring to look to the unregulated market to perform its alleged magic.  A variety of changes were ushered in in 1996 to accomplish these goals.  This re-emphasis on market solutions to unemployment was accompanied by a tightening of administrative procedures to attack fraud and abuse.  All these initiatives are spelled out in detail.

Evaluating these policies in an even-handed manner would be difficult in the best of circumstances.  Campeau, though, makes no such attempt.  He is at his shrillest in these chapters, castigating the backers of such policies as “actuarial ideologues.”  He notes acidly that the result has been that more and more [*324] people have had to resort to welfare.  But he does not acknowledge that under his preferred model the distinction between welfare payments and UI benefits is blurred if not invisible.  Furthermore, he simply refuses to believe that there are any cases of fraud; but, if there were, it was not the fault of the perpetrators.  For example, the new law contained a provision that if you are a repeat offender for fraud within a five year period, you have to repay your benefits and your qualifying working hours are increased from 420 to 840.  According to Campeau, “These were outrageous penalties for offences that in so many cases stemmed from the survival instinct.  As in the glory days of classical liberalism, pauperization and repression went hand in hand” (p.155).

Without question, some of the new policies were indeed unduly punitive, but some were legitimate.  By painting with too broad a brush, by lumping all the changes together and attributing them to little more than vindictiveness, Campeau tends to erode his credibility.  What he wants is a return to 1971.

The world of work has changed in Canada as in other advanced industrial societies.  Formerly, we had a largely full-time, male breadwinner workforce and unemployment was most often suffered by blue collar workers in heavy industries when the economy went into recession.  UI was designed with these factors in mind.  Today, the work world is radically different—a concentration of service industries, two-earner households, many part-time workers, a good bit of “voluntary” unemployment, white collar layoffs, and so forth.  The policies of the previous era need redesigning to account for these altered realities.  Neoliberalism, no matter how dressed up, though, has an ugly face when it comes to the unemployed and the less well off generally.  However, those who, like Campeau, oppose it by merely reciting the old shibboleths and arguing for a return to more of yesterday’s policies unintentionally play into the hands of the neoliberals.  What is required is to begin anew with the rationales behind policies like UI and then develop updated versions of them.

For the wealth of information it ably presents, this book merits attention by those interested in either Canadian politics or the welfare state.  However, it will not be a serious contribution to the debate over the future of the welfare state.

A final note:  The translation from the French was laudably smooth and clear.  The only exception was an annoyingly repetitive use of “lawmaker” when “government” or “state” would have served equally well.

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© Copyright 2005 by the author, Jerold Waltman.