Treat unemployed workers equally across Canada

Posted on November 16, 2011 in Policy Context

Source: — Authors: – news/commentary/editorials
Published Tuesday, Nov. 15, 2011. Last updated Wednesday, Nov. 16, 2011.

The Mowat Centre is right to advocate consistent standards across the country for employment insurance – both for the time length of benefits and for the way benefits are calculated. But some other recommendations in the think-tank’s report, released this week, would result in a significant overall increase in spending on EI, which would be undesirable, not only while federal fiscal deficits last, but also in the long term.

It had been supposed that local unemployment rates were a good indicator of how long it would take for a person who has been laid off to find a new job. That turns out not to be true. Moreover, the levels of GDP per capita have been converging across Canada, while the EI system has mistakenly continued to treat whole areas of the country as if they were underdeveloped regions, fostering among some people a habit of dependence.

On the other hand, the Mowat Centre’s recommendation to shorten the EI eligibility period for new members of the work force, and for those who had given up are but are re-entering it, would require somewhere from $500-million a year to $1.3-billion (depending on a range of options). And a proposed program called Temporary Unemployment Assistance, which would include loans, would probably cost $1-billion a year.

The very concept of “employment insurance” is paradoxical. One might reasonably think it to be the same thing as wage insurance. But the Mowat Centre proposes wage insurance as a pilot project, a daring departure worth testing. The idea is sound enough; a worker who has held one job for a long time, and has therefore paid a lot more into the program than most, would naturally be entitled to more benefits – and may well need more time to adjust.

Except perhaps as a countercyclical measure during recessions – a matter the Mowat Centre essentially leaves to the Canada Employment Insurance Financing Board – total spending per capita on EI should not increase in real terms. But the authors of the report are right to call for the ending of the economic distortions caused by the hitherto strangely balkanized national program known as employment insurance.

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One Response to “Treat unemployed workers equally across Canada”

  1. Robert says:

    As much as the editor seems to be in agreement with the Mowat Centre’s ideas on creating a unified Canadian wide employment system, they seem loath for it to cost the government any money. Perhaps in this time of economic uncertainty they feel that our government is unable to spend any money on social programs. What the editor seems to be forgetting is that EI has been systematically gutted for decades.

    It mustn’t be forgotten that EI was just one of many social programs whose funding was drastically cut back by the Progressive Conservative and Liberal governments of the 1990s. It was during this time that Unemployment Insurance was given a new name and along with that came new budgetary restrictions. The outcome of all these cutbacks is that only 40% of those paying into EI are now eligible to receive benefits. What this doesn’t mean is that only 40% of those paying into EI are in need of help. Perhaps if past governments had not taken so much out of EI we wouldn’t have a system so in need of more funding.

    Yet, in the end it is how one sees EI, and those who rely on its help, that forms opinions on spending. The editor makes sure to comment on the habit of dependence he believes people can develop for EI. And while seemingly supportive of wage insurance for long time workers, the editor balks at the money needed to shorten the EI eligibility period for new or returning members of the work force. By plainly stating that only during a recession should EI funding increase we see the editors true opinion on our governments responsibility to the unemployed. It is this sort of residual belief about social welfare programs that has allowed them to be dismantled in the first place.

    Just as there is no such thing as deserving and undeserving poor, there is no such thing as the deserving or undeserving unemployed. EI programs have been drastically cut for many years, leaving us with a system in need of a complete overhaul. When the automobile industry was faltering the government stepped up and bailed them out. Is now not the time to bailout employment insurance?


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