Regional distribution of benefits highlights inequity in EI system

Photo: Tania Liu/flickr

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At the moment, "a few miles" will cost a worker more than a month in employment insurance benefits in Saskatchewan.

For example, someone living in Langham -- which falls into the Saskatoon EI zone -- must have worked 630 hours in the past year to be eligible for benefits. That person can then receive payments for up to 40 weeks. A "few miles north" in the northern Saskatchewan EI zone, a worker needs 210 fewer work hours over the same period to be eligible for five more weeks -- 45 weeks overall -- in benefits.

Income protection for a changing labour force

"Does this really make sense?" Carleton University Professor and Associate Dean of Economics Frances Woolley quips.

Woolley, who has done extensive research into the country's EI system, believes regional zoning needs to be replaced by a system that better caters to the changing make-up of Canada's labour force.

"If we accept the basic principle that people who struggle to find work should be entitled to more income protection through EI than other people, why use the regional unemployment rate as a proxy of ability to find work -- age, gender, ethnicity, education, occupation, experience, Aboriginal status, mental and physical health all have substantial effects on a person's ability to find and keep a job," she says.

"Indeed, age is used in some other countries as a basis for employment insurance eligibility. However no other country that I am aware of uses a regional zoning system."

Woolley's interview with rabble follows the latest announcement from the federal government to extend the EI benefit period in three regional zones (Edmonton, southern interior B.C., southern Saskatchewan). Eligible EI residents in these zones -- and 12 others already identified in the federal budget in March -- will be able to receive payments for up to 50 weeks in July, extending the maximum benefit period by five weeks. Both the Saskatchewan and Saskatoon EI zones were part of the 12 zones included in budgetary announcements; however, residents must wait until July for the benefit extension period to kick in. It will be retroactive to January last year.

Problems in the current system

Woolley also touches on problems with the use of local unemployment rates in the EI system formula. Eligibility for the system is based on the seasonally adjusted unemployment rate in a zone in the past three months. Because it is a backwards-looking indicator, it can make it more difficult for people to qualify for employment insurance than it should be, she says.

Under the current system, someone who loses their job at the beginning of a recession will be eligible for fewer weeks of employment insurance benefits than someone who loses their job at the end of a recession, even though the first person is likely to be exposed to a period of high unemployment rate for longer. This is because the unemployment rate being used for that first person is based on the labour market conditions prior to the economic downturn, when unemployment would have been lower, Woolley says.

By the time the second person becomes unemployed and applies for EI benefits, the tough job conditions have eased and the economy improved, but because unemployment rates are based on the three previous months, this individual will likely need less work hours to qualify for EI and be eligible for benefits for longer. While there is some scope for adjustment, this exposes a major flaw in the system, Woolley says.

The road to reform

"Regional zoning bugs me, because it strikes me as unfair, but I'm not convinced it's the number one priority for EI reform," she says.

"I would like to see less regional differentiation, better protections for part-time workers, and fewer rewards to firms that lay off workers repeatedly," she says.

Many changes need to be made and a comprehensive national discussion examining the system must take place, she says.

An alternative to what is currently in place could be a system that doesn't have a set "weeks of benefit" limit, and instead gives workers more flexibility in terms of structuring their EI packages, she says.

"It's a big system. There's a lot of money being collected in EI premiums. Right now, there's a window of opportunity, a chance for reform. The road to reform begins with a public debate about what the system can and should be able to achieve."

Next: labour reporter Teuila Fuatai examines what can be done for those falling through gaps in the EI system.

Read all of Teuila Fuatai's special series on employment insurance here.

Teuila Fuatai is a recent transplant to Toronto from Auckland, New Zealand. In New Zealand, she worked as a general news reporter for the New Zealand Herald and APNZ News Service for four years after studying accounting, communication and politics at the University of Otago. She is rabble's labour beat reporter.

Photo: Tania Liu/flickr

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