Bringing coherence to our fragmented EI system

Posted on January 22, 2011 in Debates

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Friday, Jan. 21, 2011.    Roy Romanow and Matthew Mendelsohn, National Post

What follows is the last 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 today.

Canada’s Employment Insurance program is beset with many problems. While the program has evolved substantially since its introduction, its modern iteration has been distorted by partisan politics and ad hoc adjustments designed to put out small, often regional, fires. Most experts agree that the system is broken and needs an overhaul.

If the EI system is to regain the faith of workers and businesses, it needs to be simple, principled and transparent. Workers and employers should know their obligations and entitlements and have a clear understanding of the rationale behind them. This isn’t the case today.

The Mowat Centre is leading a nonpartisan effort to re-design the system. The hope is to present a credible, principled alternative that will enable the federal government to modernize EI so that it works for all Canadians, workers and employers alike. In doing so, we are tackling some big questions, listed below.

Why does the EI system treat Canadians differently based on where they live?

The EI system makes benefits easier to access for longer periods in areas with higher levels of unemployment, responding (in principle) to differing levels of need, as defined by the regional unemployment rate.

This is a worthwhile principle, but in practice most experts argue that it doesn’t make sense.

There is actually little evidence that the local unemployment rate is the best predictor of how difficult it is for any individual to find a job. (Some research, for instance, finds that when the unemployment rate is going up it is harder to find a job, regardless of the actual unemployment rate.) There may be a case for treating workers differently in different regions, but the evidence would need to be compelling to deviate from the principle of equal treatment for all for a basic social entitlement.

Who should qualify for benefits?

Few experts would suggest that the rules for qualification reflect the needs of the modern workforce. New entrants to the labour market must work significantly longer in order to qualify for benefits. Workers who collect benefits on a yearly basis suffer no penalty, while workers who have not collected after decades of contribution receive no additional benefit when they find that they need the program. Temporary Foreign Workers pay into the system but rules basically prevent them from ever collecting. Part-time workers and contract workers — even those working long hours–often cannot qualify if they lose a job

Who should have access to job training?

A portion of the contributions that workers and businesses make to EI fund training for some unemployed workers. The federal government has downloaded responsibility for delivering EI-funded training programs to the provinces, but still continues to define eligibility for these programs through EI.

These restrictions on eligibility may no longer make sense. Many unemployed people now fall outside the EI umbrella. Today’s economy may demand that access to training not be defined by EI eligibility rules, which were crafted for an entirely different purpose: income support, not job training.

If training is a broad economic and social priority, it may make sense to fund training out of general government revenues rather than through EI premiums. This could be part of a national human-capital strategy — or a responsibility transferred to provinces enabling them to design and manage their own training programs to meet their local labour market needs..

How can we improve the co-ordination between EI and other income support programs, like Social Assistance, social housing and tax benefits?

Canada’s broken federal-provincial relations victimize the unemployed. A lack of co-ordination between those making decisions about the federal EI program and provincial social assistance programs creates gaps that are unjustifiable from a labour-market-efficiency and social-justice perspective. A coherent system would be run by one order of government. Other countries have one system. Canada has two parallel systems that are barely on speaking terms.

EI is a foundational piece of our social safety net. For it to retain its legitimacy, it has to be principled, transparent and fair. Business, labour and Canadians generally must see their interests reflected in EI reform.

Canadians have to believe that the government is treating them equitably. Right now, none of these things hold. That isn’t just a problem for our social safety net and our productivity — it’s a problem for our democracy as well.

– Roy Romanow is co-chair of the Advisory Committee of the Mowat Centre EI Task Force. Matthew Mendelsohn is the founding director of the Mowat Centre.

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