The September 09 issue featured an editorial by Don R. Allen and Gilles Paquet on proposed changes to employment insurance (EI). They argued against reducing the number of weeks of work needed to qualify for EI, and against standardizing benefit periods across Canada.

In this article, I argue that reducing the number of weeks to qualify for EI was an appropriate change linked to the Economic Action Plan and severity of the recession, and that standardizing EI benefit periods across Canada would fit with labour mobility, transparency and fairness goals.

Ironically, in the end, I agree with Allen/Paquet that these types of changes are tinkering – the net impact at the micro (individual) and macro (economic and social infrastructure) levels is likely negligible. Addressing bigger questions would yield better returns.

Reducing the number of weeks to qualify

Allen/Paquet: “To do so (e.g. reduce the number of weeks) in reaction to the normal ups and downs of the Canadian economy would be criminally irresponsible and could only lead over time to negative impacts on the labour market, to higher unemployment rates, and to a reduction in economic growth.”

In their argument against reducing the number of weeks, Allen/Paquet referenced the experience of the early 70s, when only eight weeks of work were required to qualify for EI in some regions. The result was the observed over-use of the EI system by the“eight-weekers,” and ultimately the 1997 political fall-out when EI changes made the eight-weeker group ineligible.

Fait accompli. The reduction in number of weeks needed to qualify for EI was actually implemented with other enhancements to EI as part of the Economic Action Plan. The third report on the Economic Action Plan describes this change as a key response to higher unemployment levels:

“In Kitchener, ON, where the unemployment rate rose to 9.9 per cent in August 2009 from 5.4 per cent in October 2008, the number of working hours required to receive EI fell by 140 – from 700 to 560 hours…As of September 2009, 38 of 58 regions have a lower eligibility requirement and higher duration of benefits than they did in October 2008. Eligibility requirements and benefit duration change in line with changes in local labour market conditions.”

Economic stimulus. Whereas Allen/Paquet argue that changes should not be made to EI “in reaction to the normal ups and downs of the Canadian economy,” the current recession is beyond normal. The federal government stepped in fairly aggressively to manage the economic crisis, in synch with other countries. Reducing the number of weeks, in this situation, has generated benefits:

• providing more EI support to people who cannot find work, even those who have worked for shorter periods, keeps the economy moving to a greater extent than if no EI funds were available for those individuals;

• demonstrating that the EI system can be flexible and responsive in difficult times maintains the confidence of Canadians in their EI safety net;

• Reduced eligibility requirements reduce the pressure on provincial social assistance programs, enabling some individuals to be on EI rather than on social assistance. This is beneficial for provincial treasuries, and for individuals.