The Mowat Centre is right to advocate consistent standards across the country for employment insurance – both for the time length of benefits and for the way benefits are calculated. But some other recommendations in the think-tank’s report, released this week, would result in a significant overall increase in spending on EI, which would be undesirable, not only while federal fiscal deficits last, but also in the long term.
It had been supposed that local unemployment rates were a good indicator of how long it would take for a person who has been laid off to find a new job. That turns out not to be true. Moreover, the levels of GDP per capita have been converging across Canada, while the EI system has mistakenly continued to treat whole areas of the country as if they were underdeveloped regions, fostering among some people a habit of dependence.
On the other hand, the Mowat Centre’s recommendation to shorten the EI eligibility period for new members of the work force, and for those who had given up are but are re-entering it, would require somewhere from $500-million a year to $1.3-billion (depending on a range of options). And a proposed program called Temporary Unemployment Assistance, which would include loans, would probably cost $1-billion a year.
The very concept of “employment insurance” is paradoxical. One might reasonably think it to be the same thing as wage insurance. But the Mowat Centre proposes wage insurance as a pilot project, a daring departure worth testing. The idea is sound enough; a worker who has held one job for a long time, and has therefore paid a lot more into the program than most, would naturally be entitled to more benefits – and may well need more time to adjust.
Except perhaps as a countercyclical measure during recessions – a matter the Mowat Centre essentially leaves to the Canada Employment Insurance Financing Board – total spending per capita on EI should not increase in real terms. But the authors of the report are right to call for the ending of the economic distortions caused by the hitherto strangely balkanized national program known as employment insurance.