TD on EI

TD Economics  have provided a useful study on possible reforms to our inadequate EI system which has left tens of thousands of unemployed workers out in the cold,  and indaequate benefits to those who do qualify.

http://www.td.com/economics/special/gb0409_EI.pdf

The focus of this report is on those excluded from the system by the variable entrance requirement or VER – the unemployment rate in the local region determines how many hours must be worked in the qualifying period to claim benefits, as well as the duration of benefits. At the low unemployment end, it takes as many as 700 hours  to get in.

TD are not as critical as many, but they reckon that the VER in low unemployment regions serves to lower the B/U rate (the proportion of  the unemployed collecting benefits) from about 50% to about 40% by shutting out those without enough hours  (while failing to add that the B/U rate  is also pushed down by the fact that many unemployed workers exhaust benefits due to low benefit durations in the lower unemployment regions.) They add that those excluded are most likely to be low paid, short tenure workers who are most vulnerable to layoff in a recession, and they note that the unemployment rate is a very bad indicator of prospects for finding a new job quickly, especially in a period of economic downturn.

TD’s preferred option is to “flatten” rather than standardize access, by reducing the entrance requirement to 560 hours in regions with less than 10% unemployment.  They woudl also standardize the weeks of benefits to the higher level.  In tandem, they estimate this would cost $500 Million per year at expected unemployment rates for 2009 and 2010. The CLC has, by contrast, called for a uniform entrance requirment in all regions of 360 hours, which TD costs at $1 Billion per year. These are both quite modest amounts in the context of a large and growing program.

TD unfortunately fail to examine the case for extending benefits beyond the additional 5 weeks in all regions  implemented by the last Budget, on a temporary basis. With the average period of eligibility now being some 30 weeks for each claim which begins, we will soon see a big increase in the numbers of EI exhaustees, particularly in regions which entered the recession with low unemployment rates.

Still, it’s a good day when the labour movement and bank economists  are agreed that the current EI system is shutting out far too many unemployed workers.

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