Published in the Toronto Star on November 8, 2011
By Colin Busby and David Gray
Ontario lost 75,000 full-time jobs last month — by far the biggest loss among the provinces. As many of these laid-off workers now turn to the employment insurance (EI) program for help, can they count on a program adequate for Ontario’s tough times? The evidence says no.
Under the current system, EI benefits are more easily available, and for longer, in regions with high unemployment rates, such as rural New Brunswick and Nova Scotia, than in regions with low ones, such as Ontario’s urban centres. For example, a manufacturing worker who loses his or her job in Oshawa would need to have worked for 630 hours to qualify for between 18 and 42 weeks of benefits, whereas a similar worker in Sydney, N.S., would need to have worked for only 420 hours to qualify for between 32 and 45 weeks of benefits.
Ontario is currently divided into 17 EI regions. Traditionally, Ontario’s urban regions, such as auto-manufacturing centres Windsor and Oshawa, have been treated as low-entitlement regions.
Across Canada the regional unemployment rate and the number of hours worked determines the generosity of EI benefits. Among Canada’s 58 EI regions, for instance, fewer than 60 per cent of job losers in Ottawa would qualify for benefits whereas more than 90 per cent would qualify in Restigouche-Albert, N.B., would qualify. Regions in the Atlantic provinces tend to have a bigger share of workers that qualify, particularly in rural regions, because the regional unemployment rate is considered an indicator that unemployed job-seekers would have a harder time finding work.
But losing a job can cause laid-off workers similar hardship regardless of where they live. And neither workers in high-unemployment, high-entitlement nor low-unemployment, low-entitlement regions benefit in the long run from the system’s current design. In high-unemployment regions, the program encourages long-term EI dependence that results in concentrated pockets of persistent unemployment, trapping workers in patterns of seasonal, part-year labour.
Full-time, full-year workers and their employers located in regions with lower unemployment rates are the primary funding source for the pattern of part-year work in high-unemployment regions. So the bulk of the Canadian labour market, through its EI contributions, redistributes income toward seasonal workers and industries. Variable entrance requirements are the opaque screen through which this redistribution takes place. As a consequence, the EI program leads to under-coverage for some workers in certain areas of the country, weakening EI’s effectiveness as a social safety net.
In light of the massive job losses in 2008 and 2009, the eligibility and entitlement parameters of the system proved to be inadequate for workers in many of Ontario’s regions. This led the government of Canada to offer patchwork solutions: a five-week extension for long-tenured workers’ EI benefits and an expansion of labour adjustment programs. The government’s decision to extend five weeks of EI benefits to long-tenured workers was relief primarily targeted for Ontario’s workers. But this was also an admission that the current EI system is not well-designed to meet the needs of all workers in all regions.
A straightforward EI system would ensure that those who suffer unexpected unemployment, no matter where they live, face limited immediate financial hardship. Regionally based criteria for determining eligibility and the length of the benefit period should be replaced by uniform, countrywide, EI entrance requirements and benefits. This would probably entail shorter qualification periods in some low-unemployment regions, but the uniform entry requirement should not be set at a low level because that would encourage part-year, frequent use of EI benefits in low-unemployment areas.
It’s high time that Ontario’s workers get a fairer shake from the EI program.
Colin Busby is a senior policy analyst with the C.D. Howe Institute and David Gray is a professor with the University of Ottawa. Their paper, Mending Canada’s Employment Insurance Quilt: The Case for Restoring Equity, can be found at www.cdhowe.org
