Janice MacKinnon on EI

Janice MacKinnon’s op-ed on Employment Insurance (EI) in Monday’s National Post read almost as if it had been written before the economic crisis. There was no mention of mass layoffs or rising unemployment, let alone proposals to enhance EI in response to these trends. Instead, she sees the biggest problem with EI as being the supposed drag on labour mobility created by benefit differences between regions.

The op-ed seems to exaggerate these regional differences and definitely overstates the relevance of labour mobility. It asserts, “Only one in three of the unemployed in Ontario and the Western provinces receive EI, compared to eight in 10 in Quebec and the Atlantic provinces.” These fractions have gained significant currency.

For example, CBC News Tonight’s Harry Forestell put them to Diane Finley, the minister responsible for EI. When she questioned these numbers, he retorted that they had the provenance of a former provincial finance minister.

MacKinnon’s Policy Options article, from which her op-ed was drawn, cites a Caledon Institute commentary as the source of these figures. But that commentary does not itself provide a source for them.

The most recent Statistics Canada figures tell a less dramatic regional story. In June, there were 468,000 recipients of regular EI benefits out of 1,088,000 officially unemployed workers in Ontario and the western provinces. There were 335,000 recipients out of 504,000 unemployed workers in Quebec and the Atlantic provinces.

Therefore, EI coverage was 43% west of the Ottawa Valley versus 66% east of the Ottawa Valley. This disparity is significant, but not nearly as large as the alleged disparity of 33% versus 80%. If the disparity is smaller, then the implied disincentive to labour mobility is also smaller.

In any case, the main brake on inter-provincial labour mobility for most workers east of the Ottawa Valley is not EI, but speaking French rather than English. Furthermore, as I pointed out through the following letter printed in Wednesday’s National Post, labour mobility is not the issue anyway:

No province has a ‘labour shortage’

Re: Follow the Jobs, Janice MacKinnon, Sept. 14

Janice MacKinnon asks, “Why don’t more unemployed Canadians from parts of the country with high jobless levels move to provinces that are experiencing labour shortages?” She blames relatively more accessible Employment Insurance benefits in regions of high unemployment.

This question and answer are based on the false premise that some provinces have “labour shortages.” In fact, full-time employment has decreased and unemployment has increased in every province over the past year. Simply facilitating greater mobility would not help, given the lack of available jobs in all provinces.

The goal of Employment Insurance reform should be to improve benefits for the growing numbers of unemployed workers in every province. Achieving this goal through national standards, as the labour movement has long proposed, would also remove the supposed incentive to stay in high-unemployment regions.

Erin Weir, economist, United Steelworkers, Toronto

MacKinnon’s Policy Options article, unlike her op-ed, does mention the desirability of national EI standards and/or extending the duration of benefits for long-tenured workers. Unfortunately, it also includes some hand-wringing about unidentified “inter-provincial trade barriers.”

8 comments

  • Janice! the Oh gee shucks the New York bond rating agencies made me do it MacKinnon? Remind me again what was the price of potash when she decided to privatize it? What has been the average price since? Stellar business savvy that one.

  • In fairness to MacKinnon, the preceding Conservative government made the (incredibly bad) decision to privatize the Potash Corporation of Saskatchewan and began selling shares. However, she was in the cabinet that sold off the remaining shares.

  • Yah when the price was even lower! She was not merely in the cabinet she was the minister of finance. Safe to say she got punked and her book reads like it. So having finished-off the sale of Sasks natural heritage she was rewarded with a column in the Post. Wow “pragmatic” social democrats do come cheap.

  • As to the labour mobility issue last time I checked labour mobility was higher in the east and lower in central Canada. Quebec does reasonably well compared to Ontario despite the language barrier and Eastern Canadians are the most mobile. And then there is of course the question of why labour should have to be mobile and move to where the jobs are tearing up kin kith and community along the way.

    Marx had something to say about the way in which labour became increasingly commodified under capitalism with the result that all that was solid melted into thin air. Old romantic curmudgeon that he was.

    Family, community, place: bah humbug!

    “If you don’t eat yer meat, you can’t have any pudding! How can you have any pudding if you don’t eat yer meat?!”

    http://en.wikipedia.org/wiki/Another_Brick_in_the_Wall

  • Given historically higher unemployment in the eastern provinces, one would anticipate greater mobility among eastern workers than among western workers. The hypothesis of MacKinnon, the C. D. Howe Institute, etc. is not that EI makes eastern workers less mobile than western workers, but that it makes eastern workers less mobile than they otherwise would be.

    Indeed, this hypothesis gives little regard to kith and kin. In any case, it is of dubious relevance when employment is also contracting in the western provinces.

    On your second-last comment, the Government of Saskatchewan sold PCS shares between 1989 and 1994. MacKinnon was appointed to cabinet in 1991 and as Finance Minister in 1993. You are correct that her tenure in Finance overlapped with the sale of PCS shares.

    Possibly more damning, she was Minister Responsible for the Crown Investments Corporation (the holder of PCS shares) in the closing months of 1992. However, I do not know if any PCS shares were sold off on her watch.

  • Erin wrote:

    Given historically higher unemployment in the eastern provinces, one would anticipate greater mobility among eastern workers than among western workers.The hypothesis of MacKinnon, the C. D. Howe Institute, etc. is not that EI makes eastern workers less mobile than western workers, but that it makes eastern workers less mobile than they otherwise would be.
    ————
    Well they seem to be aping the analysis made in an IMF working paper the “Shocking Aspects of Canadian Labor Markets.”

    Wherein the authors sum:

    “Labor markets within Canada seem to become more flexible as one moves to the west. Migration plays a much more important role in labor market adjustment in the western provinces than the Atlantic ones. Turning to the central provinces of Ontario and Québec, the evidence suggests that Ontario has a significantly more flexible labor market than its neighbor, consistent with microeconomic evidence on migration. Further analysis indicates that migration appears to be the main process through which labor markets adjust over time, with real wage differentials being a minor factor. Finally, the adjustment process appears relatively similar across macroeconomic disturbances. In short, labor adjustment appears very different east and west of the Ottawa river.”

    The problem is that this study (i will have to go confirm if CD Howe, MacKinnon and co use the same metric) constructs their mobility metric using both outward and inward migration and they do not control for age. So as I explained here:

    http://rppe.wordpress.com/2008/05/25/the-shocking-truth-about-an-imf-working-paper-labour-market-mobility-in-canada/

    Sask and BC partly score high because Sask exports lots of senior citizens to BC. Hardly a metric of labour mobility, although a good indicator of mean average temperature during the winter.

    MacKinnon is very proud of her work on privatizing pot ash. Just pick-up a copy of Minding the Public Purse. It is an illuminating tour through the mind of a third-way “social democrat”.

    Just ask Bob Rae:

    “Janice MacKinnon helped make a sea change happen in Canadian politics and this book is a fascinating account of the real world of public life. There are still lessons to be learned, and hard choices to be made. Janice MacKinnon is one of the few social democrats who really ‘gets it.'” Bob Rae

    Of course Rae would be the other one.

  • Excellent work, Travis. Perhaps I was too charitable in my presentation of their labour-mobility argument.

    I have read Minding the Public Purse and disagreed with most of it. But I do not remember it touting potash privatization. The book has a fair bit on selling the Saskatchewan government’s stake in the Bi-Provincial Upgrader and mentions selling its Cameco (uranium) shares.

  • Erin

    “But I do not remember it touting potash privatization.”

    No you are right. The bulk of the privatization of potash was firmly a Devine thing. From her point of view they (the NDP) cleaned up the other mega projects and sold them on at better than fire sale prices. . And she made clear that she really did not think the state ought to be in the resource game. So the criticism of the Devine sale was not because they privatised it but because they got such a lousy price for it.

    By historical commodity price standards both the Devine and NDP governments were guilty of fire selling the crown jewels. That is if we take commodity prices from say 1996 to the present it does not look like the NDP did much better at the buy high sell low game.

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