The angst over an assault on seasonal industries has been overblown since towns with a high percentage of seasonal work would be almost totally unaffected by the new rules.

HALIFAX, N.S.—The most damning indictment of the proposed changes to EI that I have heard to date was uttered in defence of them. According to one commentator, the angst over an assault on seasonal industries was overblown since towns with a high percentage of seasonal work would be almost totally unaffected by the new rules.

The search intensity rules and the one-hour commute would quickly see seasonal workers exhaust the “local labour market” and simply return to old habits. With no changes to regionally differentiated benefits, no experience rating for employee or employer premiums, and no introduction of one-time travel or moving grants, there remains little incentive to change ingrained habits and, for many, no capacity to change even if they wanted to.

Indeed, as far as transformational change goes, this experiment with backdoor experience rating is pretty tepid. That said, several very good things are included in this and other recent changes to EI. Partial experience rating, even through the back door of differential benefits, is a step forward.

Allowing part-time work and more of it while on EI is also a good way to encourage ongoing connection to the labour force. The national job bank, direct job notification, and changes to the rules about what the unemployed are expected to do in terms of job searching are all welcome and needed positive steps.

The good that has been done is, in this case, overwhelmed by the good that could has been done and wasn’t. 

Let’s start first by recognizing that Employment Insurance remains a program that is almost entirely not about insurance. There are three types of unemployment: frictional, structural and cyclical. An “insurance” program would deal exclusively with the first, frictional, which is the ebb and flow of business operations and human interaction, people getting laid off and rehired with no grand pattern or economic calamity to blame. 

Your habits, your skills, and your industry all would be predictors about the frequency of your need for aid. The rules, and the benefits, in such an insurance system could be national in scope and application and they would apply on both sides of the ledger—to employers and employees alike. A retail clerk, restaurant server or high steel walker (and their employers) would be treated the same, regardless of where they lived—but would be differentiated based on how they behaved. Like building your house in a flood plain, actuaries would be more than capable, and more than happy, to assess your risk and provide you with a rate. The rate could also be adjusted to fit what level of benefit you wanted and what type of deductible you might be prepared to accept. Incentives would exist not only for employees but employers to reduce EI usage and to string together complimentary seasonal jobs inside a single entity or across entities (as the federal job sharing program did through the recent recession).

For structural unemployment, that connected to industries that are out of date or uncompetitive (like steel plants or paper mills in Cape Breton, or auto plants in southern Ontario, or fish plants in Newfoundland), the solution isn’t insurance so much as it is retraining and relocation assistance. But, is that assistance best held back until after the death throes are complete (as is done now) or should we not make training and relocation available before people are unemployed. It is generally clear, if not to us than often to the people in the sector itself, that things are not well. Why wait until the pink slips are issued before offering (or allowing people to get) help?

For cyclical unemployment, that tied to the ebb and flow of the global economy and tied not to industry or entity competitiveness but to global economic weakness, the solution is short to medium term assistance to bridge the downturn and keep the economic asset viable for the future (Keynesian economics at its best). But recall Keynes advocated government, writ large, intervention, not intervention funded by private persons. If we consider intervention in the face of recession a societal necessity than we should fund such intercessions in the way that Keynes advocated, public spending and public debt, and not through increased private premiums post-recession to “recoup” our losses. When it comes time to pay the piper, we all benefited from keeping people working during the downturn, so we all should pick up the tab once it is over.

This “who benefits and who pays” analysis should also be applied to programs that we have decided are in the best interests of society but that have little or nothing to do with employment: parental leave and support while caring for sick relatives for example. These programs too, being for the greater good of society as a whole, should be funded through general revenues and not through premiums on employers and employees.  Every program funded through premiums is a drag on job creation, only those directly tied to the risk of working or being temporarily out of work should be funded through premiums.

This would reduce the overall cost of the EI program, reduce the required premiums and make offering and taking a job more attractive, and affordable, to both sides. Making work more attractive than not working is, after all, the stated goal of these recent changes. So, let’s get at it!

Charles Cirtwill is president of the Atlantic Institute for Market Studies, an independent economic and social policy think tank based in Atlantic Canada.