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Justin Trudeau’s Liberals set hopes high when they promised to reform Canada’s employment insurance program. The March federal budget introduced several changes to the system, but a recent announcement specifically targeting parts of the country deemed to be the worst employment regions reignited debate around the entire program — with provincial leaders raising doubts over why some areas were included in the extended EI changes and others left out.
Unequal working regions
Under the employment insurance program, Canada is divided into 66 economic regions.
Unemployment rates calculated for each of the regions are used to determine how long individuals are eligible to receive EI benefits for, as well as how many hours of work they need in order to qualify for assistance. This method, which uses unemployment rates calculated by Statistics Canada, is designed to give jobless Canadians living in places where it is most difficult to get work better access to assistance.
For example, Newfoundland and Labrador has two EI economic regions: one encompassing St. John’s and the other encompassing the rest of the province. The jobless rate for St John’s is currently 7.1 per cent, compared to 18.4 per cent outside the capital region.
St. John’s residents must accumulate 630 hours of insured employment to be eligible for EI benefits, while those living elsewhere in the province only need 420 hours. St. John’s residents are also entitled to five weeks’ fewer EI payments than their counterparts, who can receive benefits for a maximum of 45 weeks if required.
The quick-fix
The federal government’s budgetary announcements included extending the amount of EI payments in 12 economic regions identified as worst hit by the crash in oil prices in the past year. The government said the regions were selected because over an 11-month period ending in February, local unemployment had increased by at least two percentage points compared to levels a year earlier. During that time, the unemployment rate also failed to show any signs of recovery, it stated.
The regions are: Newfoundland and Labrador, Sudbury, Northern Ontario, Northern Manitoba, Saskatoon, Northern Saskatchewan, Calgary, Northern Alberta, Southern Alberta, Northern British Columbia, Whitehorse and Nunavut. Under the changes, eligible residents are able to access five more weeks of EI payments, bringing the overall payment period to 50 weeks. Long-tenured workers are also able to apply for up to 70 weeks of EI payments, up from 50.
Missing out by a fraction
At the time, the federal government’s announcement was criticized as being unfair for regions that failed to meet the new criteria, despite significant increases in the number of unemployed locals. Alberta premier Rachel Notley and her Saskatchewan counterpart Brad Wall both told media they had asked Trudeau to reconsider the exclusion of parts of their provinces — namely Edmonton in Alberta and the southern region in Saskatchewan — in the extended EI benefit scheme. Communities in those regions were still reeling from the oil price slump and need help, Notley and Wall said.
Figures from Statistics Canada and research into the government method used to identify the 12 worst-hit regions appear to support the pair’s points.
In January/February this year, southern Saskatchewan’s unemployment rate was 7.4 per cent, up from 6.3 per cent the same time last year, with overall data for the year showing the monthly unemployment rates ranging from 5.5 per cent to 7.1 per cent. Edmonton also showed a similar growth in its unemployment rate. At the beginning of this year, the local unemployment rate was 6.3 per cent, up from 5.1 per cent the same time last year.
And while the release of new unemployment figures at the end of last month prompted federal labour minister Mary Ann Mihychuk to confirm that Edmonton and southern Saskatchewan were close to qualifying for extended EI benefits, as well as the B.C. interior region and Yukon, a lack of clarity over the qualification process and her failure to say definitively when any extra benefits would made available in these regions caused frustration.
“Any decision about looking at expanding will have to be reviewed by Treasury Board, by Finance, and the decision would have to be made by government as a whole” Mihychuk told The Globe and Mail.
Calculation issues
Trudeau rebuffed criticism from Atlantic and Western provinces when his government announced its EI extension plans by saying its decision had been based on “cold, hard mathematics.” Economists and politicians reacted to this by calling on Ottawa to release more information on the formula it had used to identify the dozen regions.
“This arbitrary cutoff that they’ve imposed has left us with the situation where Edmonton actually has higher unemployment than some of the regions that were included elsewhere,” Alberta labour minister Christina Gray told CBC following the budgetary announcements.
Statistics Canada figures show the Edmonton unemployment rate at the time (March/April) was 6.8 per cent, higher than the 6.3 per cent unemployment rate in Saskatoon — one of the 12 hard-hit economic regions identified in the budget. Meanwhile, University of Calgary economist Trevor Tombe also analysed how the latest May/June unemployment rates could widen the net of extended payments to more regions.
Speaking to The Globe and Mail, Tombe focused on Edmonton, choosing to backtrack further into 2014 to when the region had an economic rate around 4.8 per cent for his comparison. Edmonton’s current unemployment rate is 6.9 per cent.
“Edmonton should now qualify,” he said. “Southern Saskatchewan is right on the border of what I would consider qualifying. But if they are excluded, then so too, should Whitehorse,” he said. Tombe, who tried to replicate Ottawa’s formula, said more clarity was needed on the time period Ottawa was using in its calculations, as well as what it quantified as a lack of improvement in a region’s unemployment rate.
For example, Whitehorse — one of the 12 regions now eligible for extended EI benefit payments — had an unemployment rate of six per cent in January/February, only 1.7 percentage points higher than its rate a year earlier. While the region’s rate did peak at 8.2 per cent in July/August, it has obviously shown improvement in the latter part of the year, Tombe pointed out.
The next step
The federal government must address this confusion around unequal access to EI payments in different regions if its promised overhaul of the system is to succeed. Tombe’s brief analysis has already identified apparent gaps in its regional selection process for extended EI benefits, and the uneven distribution of extended EI payments to oil-dependent has drawn criticism from opposition MPs and provincial leaders.
Next: rabble.ca labour reporter Teuila Fuatai looks at whether the regional EI system is a sustainable and fair option for Canada’s future.
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.
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