Blueprint for a modern EI system
TheStar.com – opinion/editorialopinion
Published On Thu Nov 17 2011. By Carol Goar, Editorial Board
As hundreds of thousands of Canadians know from bitter experience, employment insurance isn’t there for most workers who lose their jobs.
It used to be. In 1981, the vast majority of the unemployed (86 per cent) got income support. Last year, fewer than half (46 per cent) did.
Those excluded from the system include workers who juggle two or three part-time jobs, sign up with a temporary agency, string together short-term contracts, can’t find a job in more than a year, or opt for self-employment.
Even among those eligible for EI benefits, coverage varies widely across the country. In Ontario, for example, fewer than 40 per cent of the jobless receive EI payments. In Newfoundland, almost 100 per cent do.
Opposition MPs, provincial premiers, academics, policy analysts and a few business leaders have been urging Ottawa to fix Canada’s outdated, inequitable EI system for more than a decade.
In 2008-09, when almost half a million Canadians lost their jobs, they increased the pressure. The government responded with ad hoc tinkering: a temporary extension of benefits for some workers, a premium freeze and a job-sharing arrangement. When conditions improved, it reverted to the status quo.
Disillusioned, most reform advocates fell silent. The Mowat Centre for Policy Innovation at the University of Toronto grew more determined. Eighteen months ago, it launched a task to redesign a modern, equitable, affordable EI system and hand the blueprint to the government.
This week, it released the plan.
It is comprehensive, well-researched and forward-looking. It provides credible cost estimates for each of its proposals. It does not blow the bank.
It would be impossible to do justice to its 122-page report, Making It Work, in a newspaper column. Here is a brief glimpse of its principal recommendations:
• Treat all unemployed workers equally. Canada is no longer a land of eternal “have not” provinces (as Newfoundland and Saskatchewan were once seen) or fail-proof economic engines (as Ontario was once regarded).
The fairest way to handle today’s shifting economic fortunes, the Mowat Centre says, is to set a pan-Canadian eligibility standard and apply the same benefit rules nationwide.
Cost: It would depend on where the bar was set and how generous the benefits were. The report sets out an array of options ranging from a $2.6 billion cut in the EI budget to a $3 billion increase.
• Create a temporary benefit for workers who don’t qualify for EI coverage. Faced with unemployment, they could apply to the government for a low-cost loan, repayable when they found work.
Cost: $900 million.
• Test the feasibility of wage insurance for longtime employees of dying industries. This would ease their adjustment to lower-wage employment.
Cost: it would depend on who is covered and how long the payouts last.
• Take job training out of EI entirely. The Mowat Centre argues that it is wrong to use a rainy-day fund paid for by workers and employers to fulfill a government responsibility — and equally wrong to deny training to people who aren’t covered by EI.
Cost: The EI system would save $1.95 billion, but government expenditures would rise by an equal or larger amount.
Bottom line: The mid-cost model chosen by the Mowat Centre would add $2.9 billion to federal outlays, but save the EI system approximately $500 million, allowing a reduction in premiums.
Michael Mendelson, director of the centre, believes the political climate is ripe for an overhaul. Prime Minister Stephen Harper with his newly won majority isn’t beholden to the Atlantic provinces or rural Quebec. The current EI system excludes more voters than it serves. And a payroll tax cut would be welcome.
Regrettably, this analysis is out of sync with the government’s mindset. It sees nothing wrong with the existing program. It is loath to make life comfortable for the unemployed. Austerity is its watchword.
The Mowat Centre has performed a valuable public service. It has shown how Canada’s Depression-era EI system can be brought into the digital age. But it shouldn’t expect thanks — or much action — in Ottawa.
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