More on Mowat and Winners and Losers from EI

Further to my post yesterday on the Mowat report on EI, I looked up the most recent rates of unemployment for the 58 EI regions. In the current regionally differentiated system, which Mowat wants to replace with a single national system, these unemployment rates are those which determine the level of hours needed to qualify for benefits, as well as the duration of benefits.

The major cities in Atlantic Canada – the EI regions of St. John’s (7.0%), Halifax (5.9%) and Fredericton/Moncton/Saint John (6.7%)  – which now contain close to half of the regional labour force – all have unemployment rates below the national average. Meanwhile, in Ontario, EI regional rates of unemployment vary greatly between 5.4% and 12.2%. Three regions – Niagara, Windsor, and Northern Ontario – have unemployment rates of more than 10%.

While most of the high unemployment regions are indeed in Atlantic Canada and Quebec,  the unemployment rate is also very high across the North, including the Territories and the northern regions of BC (11.5%), Alberta (9.0%) , Saskatchewan (16.9%) and, especially, Manitoba (28.5%.) Unemployment is well above the national average everywhere in BC outside Vancouver and Victoria.

I have also confirmed my suspicion that it is the Toronto CMA  which is the big loser from the current EI system rather than the province of Ontario. The latest EI and labour force survey data show that Toronto (the Census Metropolitan Area) contains 19.4% of all unemployed workers in Canada but just 12.8% of all regular EI recipients. Ontario minus the Toronto CMA  contains 23.7% of all unemployed workers, and a nearly proportionate 20.0% of all regular EI recipients.

One implication is that we should be very careful about looking at the impacts of EI in terms of  provincial winners and losers. If one wants to look at the program in those terms, the transfer going on is from generally low unemployment big cities (though Toronto now has an above average unemployment rate of 8.3%)  to higher unemployment smaller cities and rural areas.

There is a strong case for a uniform national entrance requirement to EI, provided it is not achieved by raising the threshold in the higher unemployment regions. However, given the very large variation of unemployment rates within Canada as a whole and within individual provinces, we should be very careful about ditching regional differentiation.  And, as I have argued before, figuring out precisely what is going on in Toronto should be an urgent research priority.

7 comments

  • I agree 150%, the weighting in the equation of any national standards and thresholds needs to be very delicately analyzed, as the larger CMAs, especially Toronto, will overwhelm. Not sure how one can do that given the variation in the incidence and duration of unemployment. It will be tricky and error must be, as you note, on the side of a progressive EI inclusion. As it stands, it is obviously quite exclusive in particular areas. I still fear national standards as a particularly easier tactic in the class war on workers. However the same goes if sustantive progressive measure make it into the fold a much easier climb achiving goals. However given the political winds, potentially the regionally approach will provide the necessary cover for fending off an upcoming neo con attack. (they sure are not here posing solutions).

    And at Lana, I am quite interested in your take on this report. I did some work on the EI programs for seasonal work, and cancelling the fisherworkers programs is quite a stab. It also goes against other seasonal workers like the construction workers which could sson see its legs cut out from under them.

    There is a real stench of the 1% on this report. I like many of the papers written, but it is ironic that not much of the recommendations were adopted into the process. Kind of a wierd process they used!? Lets hire a bunch of academics to tell how how they would reform policy, but then lets ignore much of the more important contributions in the final report. I wonder if any of those authors feel a bit used?

    I know I would.

  • “I wonder if any of those authors feel a bit used?”

    I wonder if any of those authors who have tenure will renounce the report? I thought that was rather the point of academic freedom.

  • Hi all,

    To Paul’s point:

    Fishing benefits have been part of the EI program since 1956. Like the rest of EI they underwent a major reform in the mid-1990s. The changes actually made some sense in terms of how we can better address self-employed workers – based on income rather than hours. Indeed, it could be used as a partial model for how we get more people covered by Employment Insurance (given the growing precariousness of work in our country and in particular in our cities, and especially the shift towards contract and so-called self-employment).

    Not that I think precarious work should be rewarded, but we need to make sure workers are not left totally vulnerable by our labour market.

    The elimination of fishing benefits would have massive implications for the people who work in Canada’s fishing industry and would not just impact on them directly and cause a major restructuring in that industry away from what is predominately a smaller-boat family-run fishery but on fishing communities and the businesses that rely on this industry. The negative spinoff implications are huge.

    We all know the kind of economic stabilizing impact the EI system can play. So small non-fishing businesses that depend on the fishery (not to mention the fish plants) would also be harshly impacted.

    In essence it would result in a massive hurt for rural fishing areas, throwing thousands of families to the wolves.

    Ironically, the report says it wants to do something about EI coverage and its recommendations actually result in less coverage for the workers of Canada.

    And need I point out how easy it is for a central Canadian group to call for the elimination of something (like EI fishing benefits) that the people of central Canada do not use.

    This points to one of the other big problems with this report, it erodes the principles of social insurance.

    The whole point of “social insurance” is that it does not act like an experienced-rated program and when we start pitting one region, or one province off against another, we get closer to making the arguments for the elimination of social insurance – rather than how we address the real challenges in our labour market – the refusal of employers to create good jobs and the government’s continued reward program for those who persistent in the creation of precarious employment.

    Part of the discussion on how to fix our EI program to address today’s labour market, must also include recommendations on how we fix the labour market or at very least use policy measures like EI to encourage the creation of good jobs.

    And to Travis’ point regarding academic pushback, I totally agree. This is necessary.

    More to come I am sure.

    Lana

  • Isn’t the fishing benefits an example of “government’s continued reward program for those who persistent in the creation of precarious employment.” and the fishing industry an example of “the refusal of employers to create good jobs”?

    People value cultures, even when it is not their own, and don’t like to see them destroyed, even when its relevance is disappearing. The culture of the rural Newfoundland fishing village is a culture which is losing its relevance. Perhaps it is worth spending money to preserve it, but we should admit that is why we are doing it.

  • If you are going to use a notion of seasonality as a sign of precariousness, then you better include the construction sector. I did a fairly large research project on EI benefits and which industries were the main users and benefactors of the EI program to enable their corporate practices, and the construction industry in Canada overwhelms all industries. So I think Darwin you should be pointing fingers at the cultural practices of small construction companies in the urban centers as those whose culture is losing relevance.

    In fact you could argue that if the contruction industry had a shorter season in Ontario and other large urban centers than potentially the EI program might actually have a lot different threshold requirements.

  • I support the reform of both the construction industry and the fishing industry.

    Unlike the construction industry, reforming the fishing industry “would result in a massive hurt for rural fishing areas”. Much will need to be done to ease the blow.

  • Here’s an excellent media release from the Ontario Federation of Labour on the subject of the Mowat Centre’s EI report:

    FOR IMMEDIATE RELEASE

    OFL Rejects Mowat Centre Pay Day Loan Scheme for Unemployed Workers

    Toronto—Ontario Federation of Labour President Sid Ryan has rejected the latest report from the Mowat Centre Employment Insurance (EI) Task Force. “I was dumb-founded to see that the report has focused on little more than a Pay Day Loan scheme for unemployed workers in precarious and non-standard work, instead of modernizing EI to meet their needs,” said Sid Ryan.

    Ryan was referring to a key Task Force recommendation that proposes a new temporary unemployment assistance (TUA) program funded by a “jobseeker’s loan” with repayment contingent upon future income. According to the report, workers “could rely on TUA until other work is secured or use TUA to smooth income over periods of lower earnings.”

    “This is nothing short of a Pay Day Loan scheme for workers facing tough times,” said Ryan. “It downloads the cost of unemployment supports to workers who can ill-afford additional debt payments, even if they get a new job.” Currently, EI is funded by both worker and employer contributions; the Mowat Centre’s TUA proposal would eliminate the employer contribution.

    According to Ryan, the report falsely implies that less than half of those who contribute to EI are eligible for benefits. In fact, the low rates of benefits going to the unemployed include those who are not eligible and those who are eligible but who run out of benefits before finding work.

    One in three eligible workers exhaust EI, a situation that worsened with the 2008-10 recession.

    “Too many EI recipients exhaust their benefits before finding another job,” said Ryan. “That’s why the OFL calls for an extension of benefits to at least 50 weeks for workers in all regions. And this is a modest proposal; in the US workers can get up to 99 weeks of benefits.”

    “Yet the Mowat Centre rejects extending benefit duration as ‘a disincentive to find work’ and instead suggests those who have been supporting themselves on already modest EI benefits should turn to a Pay Day Loan scheme when they run out of EI—it’s outrageous.”

    According to Ryan, workers who paid EI contributions but did not receive benefits tend to be those in part-time, irregular employment—the very jobs associated with low wages. “Putting such workers at risk of incurring additional ‘jobseekers’ debt will only undermine their economic circumstances— even if they get a decent job down the road.”

    The solution, says Ryan, is to reduce the entrance requirement to a single national rate of 360 hours to better reflect the reality of today’s labour market, where non-standard workers comprise more than one-third of the workforce. At present, EI requires a range between 420 to 700 hours to qualify.

    “The current threshold for EI is based on the equivalent of a full-year, 35-hour work week,” said Ryan. “Even a child can see that someone working fewer than 35 hours, or who doesn’t have full year work, will take longer to qualify for EI.”

    Ryan notes that Statistics Canada data show that 70 percent of the hourly-paid workforce employed in services average about 30 hours a week. He also notes there has been a dramatic increase in the number of workers forced into part-time work as a result of the current economic climate.

    “Still, the Task Force flatly rejects reducing the entrance requirement,” said Ryan. “Clearly the Mowat Centre vision is quite consciously pushing part-time and precariously employed people into the private TUA debt scheme,” said Ryan.

    “In fact, there is nothing in the Mowat Centre vision that would result in more people accessing EI,” said Ryan. “And a number of their own proposals would actually reduce already low EI recipient rates, from removing self-employed fishers to raising the qualifying hours and reducing benefits durations in many of the 58 EI regions. They suggest a 560 hour requirement would be ‘cost neutral’
    in lieu of the current 420 to 700 hour range.”

    “Even when it comes to the self-employed, the Task Force wants to eliminate the one EI program that successfully covers a portion of them, in favour of their privatized Pay Day Loan scheme,” said Ryan. “It is clear that this report has nothing to do with improving EI for workers, but it has everything to do with reducing costs to the benefit of employers—and at the expense of workers.”

    “Those people embracing this document should re-read it,” said Ryan.

    “Taken as a package, these recommendations would result in reduced EI eligibility, a greater reliance on a privatized temporary unemployment insurance (TUA) program, reduced EI premiums to the disproportionate benefit of employers, fewer financial resources for meeting the needs of unemployed people, compromised services, and balkanized, weakened national infrastructure for income maintenance and employment supports,” said Ryan.

    “This is a very dangerous set of recommendations for one of Canada’s most important social insurance programs.”
    -30-
    For more information contact:
    Sid Ryan, President 416-209-0066
    Pam Frache, Research and Education Director, 416-578-3472

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