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(Moe Doiron/The Globe and Mail)
(Moe Doiron/The Globe and Mail)


What good is denying Employment Insurance if users turn to welfare? Add to ...

When the federal government announced it was considering changes to Employment Insurance, I was among those calling for reform to the program. It seemed to me the program was hurting the economy – particularly in rural areas of Atlantic Canada – because many businesses that need year round workers could not find a stable, year-round work force. There were many stories of companies trying to adapt to the reality on the ground while others threw up their hands and decided to expand elsewhere.

That is the argument for a hard-line approach to EI and work. If there is a job for which you are reasonably qualified, and if that job is within a reasonable commute from your home, you will have to take it or you will lose your EI benefits.

But what if family circumstances, literacy and skills levels or other impediments lead a significant number of people to open door number three – moving to the social assistance system?

There is some evidence that suggests the EI program in Atlantic Canada is, in fact, acting as an income-support system that keeps a segment of the population working at least some of the time, which allows them to live above the poverty line.

According to Statistics Canada, out of every 1,000 people that filed taxes in 2010, the number collecting Employment Insurance at some point during the year was as follows:

Canada (152.1);

Newfoundland and Labrador (355.9);

Prince Edward Island (314.8);

Nova Scotia (210.3);

New Brunswick (263.4);

Quebec (198.2);

Ontario (129.0);

Manitoba (121.5);

Saskatchewan (107.0);

Alberta (110.0);

British Columbia (131.4)

At the same time, out of every 1,000 tax filers, the number receiving social assistance at some point during the year was as follows:

Canada (59.8)

Newfoundland and Labrador (61.7)

Prince Edward Island (38.4)

Nova Scotia (43.9)

New Brunswick (52.0)

Quebec (58.4)

Ontario (63.0)

Manitoba (44.0)

Saskatchewan (71.5)

Alberta (83.1)

British Columbia (39.5)

You can see that, with the exception of Newfoundland and Labrador, those provinces with a higher usage of EI also had a lower usage of social assistance. The converse is also true. Alberta and Saskatchewan had the lowest use of EI but the highest use of social assistance.

In addition, it is worth pointing out that the percentage of the population living below the low income cutoff in 2010 was lower in Atlantic Canada than the country as a whole.

This data and my theory, of course, will only throw fuel on the fire for those who are outraged at the unfairness of the EI program. Will they be equally outraged if Atlantic Canada witnesses a large spike in the number of people on social assistance?

I have never been comfortable with the fiction that seasonal users of EI have always been available for work. But if an outcome of the EI reforms is to push a large segment of the population out of work altogether and onto the social assistance rolls what have we really accomplished?

The truth is that we need a smarter debate on this.

We don’t get much help from politicians. Those in opposition see this as red meat – so don’t expect any thoughtful or intelligent policy thinking on that front. You can, however, expect them to be first in line to speak at anti-reform protests.

If they had asked me, I would have said EI reform should be focused on low hanging fruit first (i.e. truckers, cracking down on outright fraud like the man who works two fishing seasons – one as himself and one as his wife so they both get maximum EI, etc.).

This would be followed by a Phase 2, where we do a deep analysis of which industries are being kept afloat by EI and think about those seasonally supported activities we could live without (i.e. Christmas tree wreath making?). Finally, I would have recommended a serious national discussion about the role of seasonal industries and whether or not there should even be an income support program for these businesses.

Ultimately, the long term focus needs to be on economic development. We need more ambitious entrepreneurs in our rural regions and they need reliable labour markets. Some of Canada’s most successful companies historically came out of rural communities – many of them from Atlantic Canada.

If the ultimate goal of EI reform helps us achieve that goal, I’ll be first in line singing the government’s praises.

David Campbell is the President of Jupia Consultants Inc., an economic development consulting firm based in Moncton. He is a Research Fellow with the Canadian Institute for Research on Public Policy and Public Administration at the Université de Moncton. He is also a columnist and authors a blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.

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