I have been thinking a lot in recent weeks about the changes to the Employment Insurance program and the potential impacts on local labour markets and communities across Atlantic Canada.
Opponents of the changes suggest they will lead to a large exodus of population -- particularly from rural communities and small towns. Human Resources Minister Diane Finley said there was no intent to force people to move, but opponents say the EI changes will be the straw that breaks the camel’s back.
Supporters of EI reform say the program is too costly for the taxpayer and that the program as currently designed has led to highly inefficient regional labour markets.
There is some truth to both concerns. In rural and small town Atlantic Canada, there are roughly 35 persons collecting Employment Insurance per 100 persons earning employment income compared to less than 16 per 100 across the country as a whole.
Seasonal industries in Atlantic Canada drive much of the higher EI usage. The fishing and fish processing industry, forestry, tourism and related industries tend to be quite seasonal in nature.
Like U.S. President Barack Obama’s “all of the above” strategy for energy development, I think we need an “all of the above” strategy for reducing EI dependence. Some people can be retrained and moved into year round career opportunities. Others may be able to tie two different seasonal jobs together. We may also want to grandfather some older workers at the current benefit level for the last few years of their time in the work force.
As more Canadians transition into year round work, the temporary foreign worker program might also become a key part of the long term solution to staffing our important seasonal industries. Already a number of firms in the agriculture and fishing sectors are bringing in temporary workers.
Without the EI program to sustain the work force, some lower-value seasonal industries might end up withering away. But agriculture, fishing, forestry and tourism will not disappear.
Government created the EI dependency problem in the first place and should take responsibility for coming up with an intelligent response.
When rural industries started to decline, government used Employment Insurance as a Band-Aid rather than thinking through long term solutions to structural economic change. Today, government is also a large user of the EI program – laying off thousands of public sector workers during the time of the year they are not needed.
I have seen firsthand how EI can distort the local labour market. There are companies in Atlantic Canada that can’t fill year round trucking jobs while hundreds of truckers go on EI each year. There are opportunities for snow plow drivers in the winter but many of the heavy equipment operators in the summer are not ‘available’ because they collect EI during the winter.
Many of the tourism jobs that in the past would have been filled by student workers are filled by adults who collect EI during the winter months.
We can achieve the goal of reducing EI dependence, but it will take far more than just tightening the screws on people who rely on the program as an important source of income each year. This approach will work for some people, who will move into year-round work. Others may end up on the provincially funded social assistance programs -- and that shouldn’t be viewed as a positive outcome by anyone.
If Atlantic Canada witnesses a large-scale out-migration of people -- and ultimately a substantial loss of business investment and activity -- we may end up with a problem far worse than the one we are trying to fix.
David Campbell is an economic development consultant and columnist based in Moncton, New Brunswick. He also authors a blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.