Tinkering with EI creates more losers than winners

The prime minister got into a spot of trouble in Alberta last week.

Eager to promote his government’s employment insurance (EI) reforms, Justin Trudeau flew to Calgary where he held a roundtable with unemployed energy workers. Things were going fine until one of the participants asked why jobless workers in Calgary were getting more benefits than their counterparts in Edmonton.

Simple mathematics, Trudeau replied. Calgary’s unemployment rate has increased faster than Edmonton’s. His government applied the same formula to every region in the country, he explained. Workers in regions where the jobless rate had gone up by more than two percentage points in the past year — and stayed up — were eligible for an extra five to 15 weeks of EI benefits.

Calgary and 11 other regions qualified. Edmonton did not. “We are making decisions based on evidence and not on popularity or political convenience,” Trudeau said.

After the meeting, he was interviewed by Global television.

“I think that both people in Edmonton and Saskatchewan (also affected by slumping oil prices) should be pleased that they are not hit as hard as other parts of the country,” he said.

The controversy followed him to Edmonton. Trudeau attempted to modify his message, reminding listeners they would benefit from other EI improvements in his government’s March 22 budget: the one-week reduction in the waiting period to receive EI benefits; the reduction in hours of work for new claimants to qualify for benefits; the increased latitude for worksharing; the accelerated processing of claims.

But that wasn’t what laid-off energy workers wanted to discuss. They challenged the prime minister to explain how they were better off than their peers in Calgary. Edmonton’s unemployment rate is lower, they conceded, but that’s because it is a provincial capital with a large number of civil servants. For Edmontonians tied to the oilpatch, the job outlook is bleak.

Many independent contractors, part-timers, casual employees and temp workers — who make up the fastest-growing segment of the labour force — don’t qualify for EI

Then Saskatchewan Premier Brad Wall jumped into the fray. Two thousand energy workers in his province have lost their jobs.

“Why in the world would they (the federal Liberals) exclude southwestern Saskatchewan, southeastern Saskatchewan,” he asked, “and why then would anyone say: ‘You should be happy about that.’ We’re not happy.”

All Trudeau could do was promise to review the EI program to make sure his changes were helping those hardest hit by the economic downturn.

That is the trouble with using the EI system to alleviate regional problems. Statistics Canada’s 64 “employment insurance regions” don’t match the pockets of joblessness in the land. Imposing a rigid formula to a fluid aggregation of microeconomies is not “evidence-based decision-making.”

The temptation to tinker is strong. Federal governments have been doing it for 40 years. But every quick fix complicates the system, making it less equitable and more opaque. A jobless worker in Cape Breton, for instance, needs 12 weeks of employment to qualify for EI while a similar worker in Thunder Bay needs 18 weeks. Two individuals with identical jobs, laid off the same day by the same employer can receive markedly different EI payments. To anyone but a bureaucrat applying a long list of rules and caveats, this makes no sense.

Moreover, each adjustment, as Trudeau discovered, produces accusations of favouritism and discrimination.

And that’s not even the biggest problem. More than 60 per cent of unemployed workers are ineligible for EI (80 per cent in Toronto). They paid into the fund while they were working but couldn’t accumulate enough hours to qualify for benefits. Precarious workers, independent contractors, part-timers, casual employees and temp workers — who make up the fastest-growing segment of the labour force — fall into this category. How fair is a jobless relief program that shuts out those in the greatest need?

That is where the prime minister would start if he wanted to do the greatest good for out-of-work Canadians. But broadening EI coverage is expensive. Targeting extended benefits to unemployed workers in 12 regions — Calgary, Saskatoon, Sudbury, Whitehorse, Northern British Columbia, Northern Alberta (excluding Edmonton), Southern Alberta, Northern Saskatchewan, Northern Manitoba, Northern Ontario, Newfoundland and Labrador and Nunavut — is cheaper, faster and easier to implement.

The trouble is short-term solutions breed long-term problems. Picking winners and losers foments regional grievances. Telling unemployed workers how lucky they are is not a good idea.

It was an instructive trip. Trudeau took a few lumps and learned a few lessons. Carol Goar’s column appears Monday, Wednesday and Friday.