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Canadiana, Federal Politics

Mowat Centre report finds current EI system riddled with “systemic inequities”

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Making It Work, the latest report from the Mowat Centre at the University of Toronto, has taken aim at Canada’s system of Employment Insurance (EI), one of the cornerstone’s of Canada’s welfare state system.

Riddled with “systemic inequities” and “regional political considerations,” the EI system as we currently understand it is not so much broken, as some have suggested, but caters to regional labour situations as they existed in the 1970s. The result is a system with uneven standards and payouts that workers, employers, and entire labour fields have gotten remarkably efficient at taking advantage of.

The Globe and Mail points out that the EI program was built for a job market that existed more three decades ago, “when workers spent most of their careers with one employer.” But in today’s Canada, workers are far more transient and likely to change jobs, work part-time, or be self-employed. And with the labour market shifting rapidly away from some traditional manufacturing jobs, especially in population-rich Ontario, many Canadians are needing to take time out of the labour pool in order to undergo massive job skills re-training. And the current system of EI does not make sufficient allowances or provide room for such divergent experiences with labour and unemployment.

It’s a black and white view of labour that is hurting Canadian workers.

The basics of the program are fairly straightforward: when you are working, you pay into the system (1.78 per cent of pretax income up to a maximum of $786.76 a year) regardless of who you are, where you live, or what you do. As the Globe points out, a logger in Nanaimo, B.C. will pay as much as a doctor in Yarmouth, Nova Scotia.

But interestingly, the study found that while Canadians all pay a universal amount into the system, collection rates are far from universal.

Matthew Mendelsohn, director of the Mowat Centre, indicates that EI is the only major federal social program that bases your benefits on where you live, as opposed to the specific conditions of your previous working situation – i.e., how long you worked before being laid off, how much you had paid into the system, and whether your lay off was seasonal.

From the Globe and Mail:

An administrative assistant laid off in Corner Brook, Nfld., who worked as little as 10 weeks will pocket $468 a week for 45 weeks – the maximum – for a total of about $21,000. A comparable worker in Saskatoon would have to have put in about 18 weeks and could earn benefits for only 36 weeks, or a total of $16,848. Someone doing two jobs who loses one of them is likely to get nothing.

The study found that residents of Newfoundland and Labrador, for example, will receive $5 in benefits for every $1 they put into EI while working. Ontarians, meanwhile receive a paltry $0.60 for every $1 they contribute.

“We need a program that treats all Canadians equitably regardless of where they live, just like other signature programs that form the foundation of the Canadian national social safety net,” Mendelsohn writes in a Mowat Centre press release.

The Ottawa Citizen agreed that the system requires a major structural overhaul, especially with regards to how Canadians collect. “This is no accident, of course,” they write about the imbalance between Ontario and Atlantic Canada. “Canada’s EI program quite deliberately favours the Atlantic provinces for political reasons, even though Ontario is actually the province with the highest percentage of low-income people and the longest periods of unemployment.

“It’s discouraging that a federal government dominated by MPs from Ontario could allow this situation to persist,” they add.

The study found that some employers (such as school boards) would lay off secretaries, bus drivers, and janitors for the summer with full intention of hiring them on again when school resumed in the fall. But by laying them off each and every summer they hold their job, it entitles those workers to collect EI benefits when their job has not so much been lost, but suspended as a natural factor of the job situation.

“A lot of companies across the country structure their work life around the parameters of EI,” says Arthur Sweetman, an economics professor and Ontario Research Chair in Health Human Resources at McMaster University. “It’s a way that Canada has chosen to operate and politicians are fully aware that this is happening.

“It’s hard to make the labour market work well because of EI,” Dr. Sweetman told the Globe.

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Article appeared originally in Digital Journal on 11/16/2011.

About awreeves

Editor-in-chief at Alternatives Journal. Author of 'Overrun: Dispatches from the Asian carp Crisis'.


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