Budget 2011 continues inequities in federal support for working Canadians
As promised, Finance Minister Jim Flaherty has re-introduced the pre-election 2011 federal budget with “minor tweaks.” This is bad news for those who care about fairness in the EI system and federal support for working Canadians.
The present approach is at odds with a modern, equitable Canada. Working Canadians with equivalent yearly incomes can receive totally different levels of regular federal support because of differences in their yearly work schedules. A new approach is needed to fix this highly problematic system.
The Best 14 Weeks Pilot Project exacerbates unfairness in federal support of working Canadians. It has been in place since 2005, has been evaluated, and now has been extended—once again—in budget 2011.
Pilot projects are intended for testing EI policy changes in contained areas before nationally applying them. But pilot projects often serve different ends. They are used to enhance EI benefits for specific regions and workers over long periods with little publicity or transparency.
The Best 14 Weeks Pilot Project continues the long-standing, explicit federal tradition of supporting regionally concentrated seasonal workers above other low income workers.
The Best 14 Weeks Pilot Project provides higher weekly EI benefits to many EI recipients in 25 of 58 EI regions. Most of these are high unemployment regions, though there are strange exceptions. For example, thriving St. John’s, Newfoundland benefits while many economically depressed regions in Southern Ontario do not. There is no clear rationale for why this is the case.
But, even if the Best 14 Weeks Pilot Project were applied nationally it would not provide the same support everywhere. The pilot project has been explicitly designed to address one form of economic need: yearly income gaps that come from seasonal work. National application of the pilot project would still create winners and losers in yearly income support.
This is because seasonal work is only one cause of low income in Canada. It is certainly not the most prominent reason for having a low yearly income in the bulk of Ontario. Today there are numerous other causes of low income, including precarious work in Canada’s growing urban centres.
There is no evidence-based rationale for the federal government to prefer one group of low income workers above others.
Hard evidence drives the delivery of most of Canada’s federal income supports. If seniors have low incomes, they receive an income supplement. If parents have low incomes they receive child benefits. There is of course room to discuss of the adequacy of these supports, but, the rationale for why they are delivered in the first place is clear: recipients have low yearly incomes.
Strangely, the federal approach to support for low income workers does not fall in line with this general evidence-based trend in policy design. This is because of the dual roles played by EI.
EI is an insurance system designed largely to protect against unexpected unemployment. But, it has also been designed and continuously tweaked to serve as a yearly support for seasonal workers in high unemployment regions.
As a system of protection against unexpected unemployment, EI is rightfully triggered by job-loss. Only those who are laid off from a job can benefit from EI. But, this ‘job loss trigger’ is inappropriate for a system of regular income support (EI’s current secondary role). It ensures that only low income workers who are laid-off yearly can benefit. This arrangement is biased against the majority of low-income Canadians, many of whom are concentrated in urban centres. The Best 14 Weeks Pilot Project extended in Budget 2011 exacerbates the inequity.
Though the path forward is marred in technical complexity, the first step is clear: to acknowledge the problem.
Low income workers with equivalent yearly wages receive vastly different support from the federal government. This is inconsistent with the general evidence-based federal approach to income support.
The federal government should deliver income support for low income workers in a logical, equitable fashion. This means basing this support on yearly income, not yearly work schedule. It also means that EI should abandon its yearly income support role for seasonal workers and serve as a system of protection against unexpected unemployment applied equitably across Canada.
Such reforms would benefit the majority of low income Canadians, could increase labour market efficiency, and would address concerns around inter-regional fairness. It’s the right way forward for a modern, equitable Canada.
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