EI Favours East Coast, Study Finds: Ontario, West ‘left to fend for

Worth A Look, Equalization, Frontier Centre

Canada’s employment insurance system strongly favours the East Coast and Quebec, with unemployed workers in Ontario and Western Canada receiving benefits at less than half the rate of their easternmost counterparts, a study says.

The findings, to be released today by researchers at the University of Toronto’s Mowat Centre for Policy Innovation, suggest that provinces with some of the highest rates of unemployment did not receive their apparent share of EI benefits during the most recent recession. Ontario, for example, had the fourth-highest unemployment rate in 2008-09, but the percentage of unemployed workers that received EI benefits was the lowest of all provinces.

“It’s a fact that EI is not working for large numbers of Canadian workers, particularly those concentrated in urban areas in Ontario and parts of Western Canada,” said Matthew Mendelsohn, executive director of the Mowat Centre.

While some provinces, such as Newfoundland, P.E.I., Nova Scotia, New Brunswick, and Quebec, saw an average of more than 80% of unemployed workers receiving EI benefits in 2009, Ontario and B.C. — which experienced large increases in unemployment — had just 38% and 39%, respectively, of their unemployed workers receiving benefits.

The situation for Canada as a whole wasn’t much better. Only 46% of unemployed Canadians received EI benefits during the recession of 2008-09, compared with 71% and 76% in the recessions of 1981-82 and 1990-91, the study found.

The study also found that while 42% of Canada’s unemployed lived in Ontario, the province received only 25% of training funds available to people on EI. “Many of the unemployed in Ontario and provinces to its west are either left to fend for themselves or forced to shed assets and spend savings in order to access provincial social assistance,” says the study, entitled Help Wanted: How well did the EI program respond during the recent recession?. “EI’s poor performance in Ontario and Western Canada may place added pressures on provincial budgets and provincial taxpayers in those provinces.

“Simply stated, a national social program that does not work for Ontario or the West is not in the national interest.”

EI payouts vary depending on a person’s salary, how long they have been working and the unemployment rate in their “economic region.” The system is designed to make automatic adjustments so that it is easier to qualify for EI benefits in regions with higher unemployment rates or when unemployment rates are increasing.

Mr. Mendelsohn said the startling trends highlighted in the study are the result of a changing labour market in which more people are contract or part-time workers or self-employed and therefore do not qualify for EI benefits. An increasing number of these individuals are new entrants to Canada or new citizens who are disproportionately concentrated in greater Toronto, Vancouver and increasingly in Calgary and Edmonton, he added.

Then there are those who have made contributions to the system but have either exhausted their benefits or not worked enough hours to qualify.

“The support that EI offers is for what could be considered a traditional labour market — someone going to work at the same job every day, collecting a paycheque who then gets help from EI when their employer lays them off temporarily because of an economic slowdown,” Mr. Mendelsohn said.

“But fewer and fewer people have jobs like that. So we have a social policy that was designed for the labour market of the 1950s or 1960s that neither you nor I participate in. The assumptions of the system are not designed for the labour market in which most people live.”

He also noted that while fewer people received EI benefits during the past recession when compared with previous economic downturns, qualifying became easier and benefits lasted longer for those who were eligible.