EI system no longer works

The Conservative government says Canadians receiving an income under the Employment Insurance program will be required to lower their standards when looking for work or risk losing their benefits.

The Conservative government says Canadians receiving an income under the Employment Insurance program will be required to lower their standards when looking for work or risk losing their benefits.

It’s a small step, but it should be the start of a major overhaul of a system that often seems to reward seasonal workers in regions with high unemployment, while punishing those who live in low-unemployment areas. As numerous studies have concluded, Canada’s EI system is not only inequitable, it discourages labour mobility and encourages dependency, even while thousands of jobs are unfilled in areas of high unemployment.

Canadians looking for work while collecting EI are currently entitled to turn down jobs that are “unsuitable,” which could be work in a different city or in a different occupation with dramatically lower pay. The federal government intends to redefine the term “suitable” in a way that would require unemployed workers to accept different or lower-paying jobs, although the precise terms haven’t been revealed, which will lead to unnecessary and likely extreme speculation.

It shouldn’t mean that a laid-off engineer would have to take a job on the bottle line in a brewery. If a professional is out of work, presumably he or she would use their unemployment benefits as a stop-gap measure while looking for work in the same field, even if it means relocating.

Nor should it mean a 50-year-old shoe salesman will have to start digging ditches, but the salesman might have to take a different job, even if it pays less.

A 2007 survey by the Canadian Federation of Independent Business found 22 per cent of its members had difficulty hiring someone in the past year because they felt potential employees would rather collect EI benefits. Another 16 per cent said they had workers who asked to be laid off because they wanted to collect EI.

The rates were much higher in places such as Newfoundland and Prince Edward Island, despite the fact economic conditions were strong when the survey was conducted.

EI benefits are easier to obtain, and for longer periods, in regions with high unemployment than in low unemployment areas, thus creating different classes of jobless. The disparity ignores the fact workers and employers pay the same premiums, regardless of the unemployment rate.

The 2008 recession, for example, hit Ontario hard, yet its unemployed workers received fewer benefits and less job-training assistance than other areas of the country where unemployment is chronic. The disparity in the way benefits are paid is another form of transfer payment, except the result is not equalization, but perpetuation of the status quo.

In a normal labour market, the unemployed in an economically challenged region would move to greener pastures elsewhere in the country, but the EI system encourages the unemployed to sit tight, particularly seasonal workers who have grown comfortable with seven months of full time work, followed by a period on EI.

Employment Insurance, which is funded by employers and employees, is sometimes called a pillar of Canada’s social safety network, but its original intent has become distorted over the decades. It was established in the aftermath of the Great Depression when the prevailing attitude was any job was a good job, and unemployment was a badge of shame.

Attitudes to work have changed since then, but no one should expect the system to subsidize their wages in a seasonal industry, or to write cheques for those who don’t want to dirty their hands. EI is a worthy and necessary program, but it needs to be reworked for the 21st century, rather than serve as a political tool that reinforces geographical disparity and soft attitudes about the value of work.

An editorial from the Winnipeg Free Press.

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