The federal employment insurance program plays favourites among Canada's regions and sustains costly, long-lasting pockets of high unemployment, according to the authors of a new report from the C.D. Howe Institute.
The EI program should be simplified, with nationwide standards for the number of hours of work needed to qualify for benefits, and for how long benefits should be received, said senior policy analyst Colin Busby and professor David Gray in Mending Canada's Employment Insurance Quilt: The Case for Restoring Equity.
"The last recession made the inequity of the current regime glaringly obvious," said Gray, a professor of economics at the University of Ottawa. "With the unemployed in Ontario's hard-hit manufacturing sector facing longer qualifying times and getting skimpier benefits than laid-off workers in other regions, reform is overdue."
Laid-off workers in regions with high unemployment rates have easier access to long-lasting EI benefits than laid-off workers in regions with low unemployment rates. One main consequence is the creation and preservation of pockets of high, chronic unemployment in labour markets dominated by seasonal employment, the authors said.
The program slows or stops the adjustment process and deters people from moving to better opportunities, hindering cross-country convergence of wages and unemployment rates, according to the authors.
The EI program should be simplified to better address unemployed workers' needs, the authors said.
Reform should aim at a more dynamic, flexible and buoyant labour market. This means ending regional criteria for eligibility and the length of the benefit period and replacing those criteria with uniform, countrywide standards. This would strengthen all communities over time and leave Canada's regions less susceptible to the harms that inevitably follow from global economic shocks, according to the report.
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