Canada’s EI regional lottery
TheStar.com – opinion/editorialopinion
Published On Tue Apr 19 2011. Joshua Hjartarson and Vuk Radmilovic
Canada’s employment insurance program is a postal code lottery — your winnings (if any) largely depend on your address. In this respect, the program is unique internationally.
A recent study done for the Mowat Centre Employment Insurance Task Force compares Canada with 17 OECD countries. It is only in Canada that your region plays an integral part of the EI regime. Simply put, where one lives has a direct and profound effect on the three most important questions a recently unemployed person may ask.
Question 1: Can I access the system? Canada is the only country to consider the rate of local unemployment in deciding who qualifies for help and who doesn’t.
Elsewhere, how long you have been at the job before being laid off and age are considered, but not your region.
Question 2: How much do I get each week? Canada is also the only country to factor region into how much laid-off workers get from the program. While most EI beneficiaries receive 55 per cent, a cryptic set of regulations push some workers’ benefits both above and below that standard, again based on where one lives.
Question 3: How long will my benefits last? Again, region is a key factor in Canada. Depending on where you live, a worker needs to have between 420 and 1,640 hours of employment in order to collect 32 weeks of benefits.
The United States is the only other country studied that sometimes uses the regional unemployment rate in determining how long one gets benefits. It has programs that extend benefits in states hard hit by recessions, but these are exceptional programs and not permanent features of the system. In the decades prior to the most recent recession, these programs were used sparingly.
Other countries prioritize age and employment history in determining benefits. Region is not a factor in benefit duration.
So, Canada is unique. We are the only country where regional differentiation is an integral part of the overall architecture of the national program to support the unemployed. So what? Why should we care?
The rationale for Canada’s regionally differentiated EI program is that the local unemployment rate is the key determinant of how hard it is to find a new job. Many economists dispute this. International experience suggests these economists are onto something.
The local unemployment rate is certainly one determinant of how hard it is to find work. But other economic trends and one’s personal qualifications and experience appear to matter far more. If the unemployment rate is going up at the beginning of an economic downturn, it is hard to find a job regardless of what the unemployment rate is. How easy it is to find a job is more heavily influenced by the unemployment rate for people with the same skills in the same sector rather than the overall rate.
Meanwhile, the system produces striking inequities across provinces. During the recent recession, less than 40 per cent of the unemployed in Ontario and Alberta accessed benefits. In Newfoundland and New Brunswick, over 97 per cent of the unemployed collected benefits.
Instances of blatant unfairness regularly occurred even within provinces. Workers laid off from the same plant, with identical work histories and job prospects, received different benefits solely on the basis of how far away from the plant they live.
Regional differentiation also creates Byzantine complexity with workers struggling to figure out just how much they are entitled to claim, and how and why some get more than others. This complexity threatens the legitimacy of the system.
So we should care because one of the key components of our social safety net is providing significant differences in benefits to similarly situated workers without any defensible principle.
Uniqueness can sometimes be a source of pride. In the design of social policy, it can mean you are an innovator and example to others. Canada’s EI system is unique but not an example to emulate. As a foundational component of the national social contract, EI falls short in providing a principled, equitable and transparent system of support for unemployed Canadians — all of which are crucial to the legitimacy of the program in a complex federation like Canada.
Joshua Hjartarson is policy director at the Mowat Centre and Vuk Radmilovic is a PhD candidate in the department of political science, University of Toronto.
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