Fixing EI: Getting beyond regionalism

Posted on January 22, 2011 in Debates

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NationalPost.com – article
Thursday, Jan. 20, 2011.    Jon Medow, Special to the National Post

What follows is the fourth 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.

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Debate over what’s wrong with Canada’s EI system often drips with regional animosities. The East is frequently painted as a bloated, slothful sponge for the resources of the hardworking provinces west of Quebec. It’s time to get beyond that perception and down to the real business of EI reform.

Although the EI system does represent a real transfer of wealth between provinces, solutions to EI’s problems will not be found in a simple reversal of regional redistribution. The cure for what ails the program is much more complex. The country needs a new system that reflects the shifts in labour market patterns that have taken place in every Canadian province. This does not necessarily require more money.

In 2007, workers in only three provinces (Newfoundland and Labrador, Prince Edward Island, and New Brunswick) collected more in regular EI benefits than they and their employers contributed to the system. Cumulatively, these three provinces contain only 4.1% of Canada’s workers. While that number is insignificant in a national context, the reasons behind the region’s higher receipts are indicative of the system’s failure to serve Canada more broadly.

The federal government publishes some EI statistics by industry, and these are quite telling. Workers in only one industrial group — agriculture, forestry, fishing, and hunting –pulled out more than double their industry’s contributions to regular EI benefits. These

industries are predominantly rural. It is likely no coincidence that Newfoundland and Labrador, Prince Edward Island, and New Brunswick — the only three provinces that take out more than they put into regular EI benefits — also happen to be Canada’s three most rural provinces.

Why do EI payments flow predominately to rural industries and, as a result, rural areas?

EI eligibility is based on hours, with fewer hours needed to qualify in places with high unemployment. Workers

in agriculture, forestry, fishing and hunting generally work an extraordinarily high number of hours per week for a concentrated period each year. These industries are often active in high unemployment regions where EI qualification is easier. The lower threshold for qualification plus intensely concentrated periods of work makes for high EI eligibility. By contrast, EI does a poor job providing income security to individuals in part-time and contract work increasingly seen in Canada’s cities.

Take the example of a worker who has two part-time jobs and works at each for 15 hours a week. Such a worker likely would never become eligible for EI. To become eligible, he or she would have to work for a very long period of time and would also have to be laid off from both jobs simultaneously. If not, the worker would not be counted as unemployed.

People new to the work force, many of whom are new Canadians living in cities such as Toronto and Vancouver, have a much harder time qualifying for benefits. Temporary foreign workers, who pay into the system, are almost never able to collect benefits. The self-employed and many contract workers have no access to EI benefits if they become unemployed. These elements of the program contribute to EI’s inter-regional redistribution of wealth.

A new EI system therefore would respond to labour-market changes that have occurred throughout Canada, which include labour shortages being filled through immigration and temporary foreign workers, and the decline of stable, full-time, single-employer jobs for many Canadians.

None of this necessarily requires more money. It requires a redesigned system.

Regional politicking is a favourite pastime in Canada. Too often this leads to inertia in public policy. Inaction becomes the safest, default option. The main challenge for accessing benefits is not about differences in EI eligibility rules between different provinces. It is about people who are being left behind entirely.

– Jon Medow is a policy associate at the Mowat Centre.

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