In its 65 years of operation, employment insurance has spawned almost as many problems as it has solved. Tucked into the Constitution after the horrors of the Great Depression, it is a vital safety net for the jobless. But, as federal politicians have expanded its mandate and mined its vote-getting potential, it has also drifted sadly out of touch with today’s labour markets.
The latest examples are three apparently worthy pilot projects in high-unemployment areas. The first, which comes into force this Sunday, will calculate benefits based on the 14 weeks of highest insurable earnings during the last 52 weeks, instead of average weekly earnings over the last 26 weeks of work. That way, Ottawa reasons, claimants might accept several weeks of lesser pay before they file a claim.
The other two take effect on Dec. 11 in 23 regions where unemployment exceeds 10 per cent. One would increase the allowable earnings of EI recipients. The other would lower entrance requirements from 910 hours of work to 840 hours for newcomers to the labour market or those returning after a long absence. It would ensure that those recipients have access to counselling and training. The problem is that such projects may inadvertently encourage claimants’ attachment to regular EI use instead of work. Ottawa itself admits this possibility, noting that it is using pilot projects so that it can watch for troubling signals of “increased reliance” or “unanticipated behavioural responses.”
At a time of pressing labour-market shortages, politicians are right to worry. Perhaps the program itself is too unwieldy to cope with every expectation. Earlier this month, despite Quebec’s objections, the Supreme Court of Canada ruled that it was within Ottawa’s jurisdiction to offer maternity and parental benefits through EI. In effect, EI has become a handy way for Ottawa to spend its way into voters’ hearts. Politicians have also displayed a distressing tendency to tinker with EI benefits whenever an election looms. Although Ottawa first announced those three pilot projects last February, it seems highly convenient that they should commence over the next three months, in areas such as central Quebec and northern Manitoba where the Liberals are always on the lookout for votes.
More important, the entire system may need an overhaul. The Atlantic Institute for Market Studies warned last year that EI is enabling recipients to drift between seasonal jobs when it should be penalizing frequent claimants and their employers and putting the savings into educational vouchers to retrain workers. Worse, EI is seemingly out of step with the work force. The self-employed, who are ineligible for benefits, now constitute more than 15 per cent of total employment; fewer than 50 per cent of the unemployed are now receiving benefits, partly because many immigrants haven’t managed to accrue the required work experience. The situation demands major thoughtful change, instead of small projects that may only create more problems.
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