A response to the Editorial by Allen/Paquet
Higher unemployment as a consequence? Allen/Paquet suggest that unemployment rates will increase if eligibility requirements are reduced, based on the 70s experience.
Combining a recession with easing of eligibility requirements will certainly increase the take-up of EI. But in this case, increased participation in EI is the goal, not what is to be avoided.
The challenge with any insurance system is how to maintain the purity of the “insurance” principle, e.g. the availability of the insurance must not influence behavior so as to increase the demand for the insurance, just because it exists. So household fire insurance should not make people careless in cleaning their chimneys; auto insurance should not make people less careful on the road. Employment insurance should not make people less deliberate and persistent in their pursuit and maintenance of gainful employment.
The EI system has other features that discourage over-use of its monthly stipend. Once an individual is on EI, the amount of financial assistance is limited, proof of job search must be provided, and individuals are offered a wide range of supports for successful return to the workplace.
A reasonable assumption is that most individuals in the workforce in this recession would rather be working than sitting at home on EI, particularly those who are newly unemployed. In this economy, if individuals are satisfied with relying on EI without pro-active job search, training or career change, then competition for jobs will be reduced by that number who are content on EI. On a side note, staying on EI, for some individuals, can also generate indirect benefits to individuals and to communities such as enhanced care for children and families, more volunteer time, better health and less stress (in certain circumstances only).
For the most part, Canadians are honest users of the EI system. Reducing the number of weeks to qualify in a time of unusual economic recession indicates the system is responsive when jobs are more difficult to secure. This is like fire insurance providing higher compensation when the prices to replace housing escalate; or auto insurance waiving administrative requirements when a widespread hail storm damages all vehicles in an area. By adjusting EI in response to the current economy, the negative impact of the recession is reduced on individuals, families and communities, and economic recovery is expedited. Should signs indicate that individuals are habitually working for short periods then collecting EI for long periods, other courses of action are available to the EI system.
Aligning benefit periods across Canada
Allen/Paquet describe the proposal to align EI benefit periods across Canada as “moronic egalitarianism.” They support regional differences in benefit periods, based on EI regional unemployment statistics – individuals living in regions with the highest unemployment statistics qualify for the longest benefit periods.