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You may have to work more for less EI in Ontario

Posted by on Nov 20, 2011 in Insurance, Moneyville | 0 comments

By Sheryl Smolkin

Read this article and comments at Moneyville.ca 

I have always had mixed feelings about the fact that eligibility for employment insurance and duration of payments is linked to regional unemployment rates.

While it may be reasonable to make people work longer and give them benefits for a shorter period if it is easier to get a job where they live, the logic breaks down at the individual level.

Whether you are out of work in Toronto or Windsor or Northern Ontario, it’s tough. And if you haven’t worked enough hours in the last year to qualify for EI or you don’t have a new job before your benefits run out, hearing that the “average” unemployed person in your community is back to work in fewer weeks isn’t going to put money in your pocket or a smile on your face.

The EI program characteristics for the period October 9/11 to November 5/11  illustrate the significant differences in how benefits are administered in various parts of the country.

Where unemployment is 13.1 per cent or more (i.e. Newfoundland and Labrador) applicants only have to work 420 hours to qualify for up to 45 weeks of benefits. However, if unemployment is 6 per cent or less (i.e. Ottawa, Calgary, Regina) 700 hours of work are required to collect a maximum of 36 weeks of payments.

Even within Ontario there are significant differences. For example, in Toronto where the unemployment rate is 7.9 per cent, a resident is only eligible for a maximum of 40 weeks of EI if he worked 630 hours in the previous year. In contrast, a resident of northern Ontario (12.3 per cent unemployment) only has to work 455 hours to claim up to 45 weeks of benefits.

These anomalies were analyzed in a recent report by Ottawa University economics professor David Gray and C.D. Howe senior policy analyst Colin Busby. Research cited in the report reveals that Canada is the only OECD country where regional differentiation forms an integral part of the employment insurance regime.

The authors note that although variable EI qualification requirements are intended to deliver generous benefits to seasonal workers, benefits are extended to all workers in the region regardless of the type of job for which they are searching.

They also suggest this has led to the creation and preservation of pockets of high, chronic unemployment in labour markets dominated by seasonal unemployment, because the program deters people from moving to seek out better opportunities.

But one of the biggest problems identified is that the current regional system has not been nimble enough to accommodate shifts from “have” to “have not” areas in the 2008/09 downturn.

“The last recession made the inequity of the current regime glaringly obvious, with the unemployed in Ontario’s hard-hit manufacturing sector facing longer qualifying times and getting skimpier benefits than laid off workers in other regions,” says Gray. “Reform is overdue.”

As a result, the report advocates simplification of the EI program with nation-wide standards for the number of hours of work needed to qualify for benefits, and for how long benefits should be received, with both linked to the rate of growth or decline in national unemployment.

This would likely entail shorter qualification periods in some low-employment regions but the uniform entry requirement would probably not be set at the lowest current level of 420 hours currently applicable to regions with 13.1 percent or more unemployment.

It makes sense to me.

After all, EI is a national program. Eligibility for and duration of maternity, parental and sickness benefits are identical across the country, so let’s be consistent. The federal government should also legislate uniform access and identical benefit levels for all unemployed Canadians.

The report of the Employment Insurance Task Force of the Mowat Centre at the University of Toronto issued this month agrees with me.

What do you think?

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