An employee who loses her job in Saskatoon can collect Employment Insurance benefits for 14 weeks while she looks for new work, assuming she has worked for at least 20 weeks. But if the exact same person lost her job in Cape Breton, she would receive more than double the benefits – 30 weeks of EI payments – after just 12 weeks of work. Why?
This system was designed decades ago to recognize regional differences in employment rates, and it assumes those in areas of higher unemployment need more time to find a new job than those in low-unemployment areas, such as Saskatoon. While that may be true on average, people are not averages. Each person who has lost a job has a unique problem, regardless of their geographic location. Yet the system, designed as an insurance plan against job loss, is actually punishing anyone who finds themselves jobless in an area of low unemployment. If it sounds counterproductive, that's because it is.
A new report from the Montreal-based Institute for Research on Public Policy argues it is time to rethink Canada's highly inequitable EI system, which sets fixed insurance premium rates across the country yet provides dramatically differing benefits, depending on where people live. Imagine if your car insurer said that, since you have all the characteristics of a safe driver and you're never been in an accident, you'll receive a lower payout in the event of a fender-bender – while still paying the same high premiums. The report says no other major industrial country links EI eligibility to regional unemployment rates in this way.
The IRPP is calling on Ottawa to abolish the unwieldy system that divides Canada into 62 EI regions. It says Canada needs one national standard for EI eligibility, and it's right. It also recommends providing better access to EI benefits for part-time workers, who make up a growing proportion of the labour force. This is not the first time that the more dubious aspects of EI have left academics or think-tankers scratching their heads. A 2011 report from the University of Toronto's Mowat Centre argued no one designing a new system from scratch would recreate Canada's model.
EI was last significantly overhauled in 1996, and nearly 20 years later, it's in need of a serious rethink. This isn't going to happen during a federal election: No party will risk losing regional votes by suggesting it needs reform. But after the dust clears in October, whoever forms government must launch an in-depth review of a deeply flawed, indispensable program.