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(Ryan Remiorz/Ryan Remiorz/The Canadian Press)
(Ryan Remiorz/Ryan Remiorz/The Canadian Press)

Pressure rises to tackle EI inequality Add to ...

New entrants to the labour market (who have never worked in Canada or have not worked in the past two years) face the highest bar - 910 hours, or nearly six months of full-time work. That compares with a normal entry level of 420 to 700 hours.

"It's kind of scandalous," said Matthew Mendelsohn, the Mowat Centre's director and a former top Ontario government bureaucrat. "Our economy is not creating a whole lot of full-time jobs for low-skilled people right now. So you pay into the system, working 20 hours a week at Tim Hortons, and you'll never get your 910 hours."

It's a similar trap for those who cobble together two or more jobs to make ends meet, like many of those laid off at Sterling Trucks. They might have plenty of hours to qualify for EI, but if they lose one of those jobs, they're out of luck, because they're technically still working.

"I would call them survivor jobs," said Mr. Johnston, who said that many workers are making as little as a third of what they did at Sterling Trucks. "They're not putting butter on their toast."

The regional variations in eligibility and benefits often bear little relation to how difficult it is to find a job. They are simply the consequence of a system that doles out benefits unevenly, based on the unemployment rate where people live.

"It's a postal code lottery," said Prof. Banting, who is among the economists commissioned by the Mowat Centre to look at EI. "No one is happy with the system."

For purposes of EI, Ottawa divides the country into 58 zones. The higher the unemployment rate in your zone, the more you can collect and the fewer hours you need to qualify.

"EI has become a redistribution system, but not in any targeted way," argued Queen's University economist Robin Broadway, another of Mowat's researchers. "Redistribution occurs between industries and regions, but it has little to do with actual need."

The zone system has long favoured areas with chronic employment and a tradition of seasonal work, such as Atlantic Canada and rural Quebec. In some areas, seasonal workers can work as few as 12 weeks and then collect 45 weeks of benefits.

"The system is designed and wholly fashioned for seasonal workers," complained David Gray, a labour economist and University of Ottawa professor. "That's the carousel effect. You can get on and off EI in perpetuity."

The result is that the EI regime encourages repeat users, and ultimately dependence, Prof. Gray added.

Ontario will always be discriminated against as long as the rules of eligibility remain rooted in local unemployment rates and not a single national standard. "It's never going to favour Ontario's labour market," he said.

One consequence of this regional bias is that provinces, such as Ontario, wind up shouldering a heavier burden for social assistance because more of their unemployed end up on welfare instead of EI.

Other experts, however, argue that creating a common national standard would introduce a new form of bias, by treating all laid-off workers the same, regardless of often wildly different local economic conditions.

It's a "good thing" that it's easier to qualify for EI in areas where the unemployment rate is high, said Lars Osberg, a labour economist at Dalhousie University.

The biggest problem, he said, isn't uneven regional coverage, but the relatively weak insurance coverage the system provides all Canadians. Canada's EI benefits rank among the least generous among developed countries, along with the United States.

Another quirk of Canada's EI regime is that over the years Ottawa has turned it into a platform to dole out billions in unrelated benefits, including funds for training, maternity and paternity leave, and compassionate leave. So the more than half of Canadian workers who can't get EI are also arbitrarily excluded from these extra benefits, including various retraining programs.

Ottawa has also come under flak for how it manages EI premiums, keeping them high even when payouts are low during boom times, and then raising rates when the economy is weak. Ottawa froze EI premiums in 2010, and recently scaled back a planned increase for 2011. But it's likely to want to play catch-up in 2012 and beyond.

McMaster University economist Arthur Sweetman says Ottawa should have a system to ensure that EI premiums, which are paid by employers and employees, aren't a disincentive to hiring.

"They're going to raise premiums just as we come out of recession, and that's going to make the economy more difficult," he said. "We need stable premiums until we're firmly in a boom."

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