Lost in the debate over Employment Insurance changes were some very astute observations made by Elizabeth May, leader of the Green Party: “Most of the forest industries in this country would not be able to have a trained work force that could pick up when they’re ready to come to work, if their employees didn’t find work that was so compelling that they weren’t available,” she said.
“It’s a structural reality of the seasonal industries in this country. If you don’t like it, you can have a conversation about the fact that forestry, fisheries, tourism, mining in some parts of the country are seasonal and that very large corporations benefit from this system…”
Ms. May is absolutely correct in identifying the EI system as a de facto subsidy to seasonal industries. Without the current set of EI rules, seasonal employers would have to further compensate employees for the fact that they will be hiring these people for a limited amount of time. Wages are pushed down by having seasonal EI, as it creates a larger pool of workers willing to take this work, a point made by a Centre for the Study of Living Standards (CSLS) research report. Instead the bill is largely footed by non-seasonal employers and employees.
Let’s have the conversation the Green leader is asking for. The current state of affairs cannot be defended on grounds of either efficiency or equity; as Ms. May has pointed out, some of the largest beneficiaries of seasonal EI are “very large corporations.” You could make the argument that the current state of affairs is necessary, as many communities rely on seasonal industries to survive. However, that is a bit of a chicken-and-egg problem: Would these communities be so heavily invested in seasonal industries had the Canadian government not been subsidizing seasonal production for decades?
Seasonal employers should be the ones compensating employees for the inconvenience of seasonal employment. They can do this directly through increased wages or severance, or we can do it through EI by having seasonal employers pay much higher rates of EI. But as the CSLS report concludes, “Long-term income support for the seasonally unemployed is not, in the long run, in the best interest of the beneficiaries, high unemployment regions, and the country.”
While the changes the Conservatives have made do not completely eliminate the current inefficiencies and inequities, they are a step in the right direction.
Mike Moffatt is an Assistant Professor in the Business, Economics and Public Policy (BEPP) group at the Richard Ivey School of Business - Western University. Mike also does private sector consulting for the chemical industry and can be found on Twitter at https://twitter.com/#!/MikePMoffattReport Typo/Error