Yesterday’s EI is failing today’s Canada

NationalPost.com – news
Monday, Jan. 17, 2011.    Matthew Mendelsohn and Josh Hjartarson, National Post

What follows is the first in a five-part series of articles about Employment Insurance from researchers affiliated with the Mowat Centre EI Task Force at the School of Public Policy & Governance at the University of Toronto. The Mowat Centre’s EI Task Force Toronto conference and consultations will be held this Friday.

Employment Insurance in Canada is broken. The Ontario government has said this for two decades. Many groups across the country have joined in this chorus, urging the federal government to fix the program.

But attempts at serious reform, such as Lloyd Axworthy’s Social Security Review in 1994, always come up against the same old story in Canada: regional politics.

It is time for those outside government to identify a new model to help Canada’s unemployed. We can’t wait for the federal government to act. Canadians need to provide it with a path forward–and the necessary national consensus that this path is the right one.

EI is crucial to our sense of common Canadian citizenship. The EI program is a key component of Canada’s social safety net. It is the first line of protection for many Canadians who lose their job. Its effectiveness is critical, especially during recessions.

But there is widespread evidence that the system comes up short. Throughout the 1980s, about three-quarters of unemployed Canadians qualified for EI; in the most recent recession, fewer than half did.

During the most recent recession, only 38% of Ontario’s unemployed were collecting EI. This was the lowest rate in the country — at a time when Ontario’s manufacturing sector was experiencing the brunt of the economic downturn and its unemployment rate was above the national average.

If the EI system is not working properly, there is an increased risk that Canadians who lose their jobs will not receive the support they need and will turn to provincial social assistance programs, which are in many cases only available to people once they’ve exhausted savings, sold assets and fallen into destitution. We can do better.

EI is a crucial policy issue because it is about our social safety net and our economic competitiveness. A good system should find the sweet spot that allows us to take care of our fellow citizens when they need it, while training our workforce for the new economy. It also needs to be affordable, avoiding too heavy of a burden on our workers and employers who pay for the program.

We’re a long way from hitting that mark. The federal government is failing to use this key instrument of social policy to improve our competitiveness and productivity.

The objective of the Mowat Centre EI Task Force is to develop an Ontario proposal for modernizing the EI system — conscious of the national context — that works for individuals and businesses.

We have consulted with numerous Canadians — rural and urban, economists, front line workers helping the unemployed and those with “lived experience” with the program. We have also commissioned research from Canada’s top experts on the program.

Although these individuals come at the issue from different perspectives, the point is the same: The system is broken.

This week, many Canadians who are deeply concerned about the program are gathering in Toronto to discuss the research findings and how the system can be improved.

We know that the solution goes beyond tinkering. The federal government’s reaction to the recession was a series of band-aid fixes that did little to resolve the underlying problems in the system.

None dealt with overall program design. None dealt with the underlying policy architecture.

We can design a better social program for today’s realities, which can handle the increase of part-time and intermittent work, frequent job changes, the mismatch of skills between those without work and companies looking for employees and an increased number of self-employed. The fact is that the traditional labour market of the 1950s no longer exists.

The program’s rules no longer work for today’s labour market. If workers cannot access EI, they are shut out of many training opportunities and forced to low paying jobs. This leads to perverse results, high general unemployment but labour shortages in many skilled professions.

The EI system is also a window into many other social programs, such as maternity, parental and sickness benefits. Those who do not qualify for EI thus have no access to large parts of the Canadian social contract. Is this appropriate?

The consequences of failing to act — of failing to redesign this fundamental piece of Canadian social policy — are serious for Canadians and for the country’s economy.

– Public feedback regarding the Mowat Centre’s EI Task Force is welcomed at Mowatcentre.ca/eiworkbook.pdf.

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