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Three reasons why employment insurance is broken

Does employment insurance really help those it’s intended to, or is the system in need of an overhaul? “If someone asks me what the problem is with EI, I say how long do you have?” said Matthew Mendelsohn, the founding director of the Mowat Centre for Policy Innovation.

He was joined on BNN by Armine Yalnizyan, a senior economist at the Canadian Centre for Policy Alternatives, and Arthur Sweetman, an economics professor at McMaster University to get the bottom this highly contentious issue.

Here’s a list of the top three problems our panelists have with the EI system.

#1. Since it’s a federally mandated program, all Canadians are treated equally.

“It’s certainly a stop gap between jobs for some, for others, it’s a regular subsidy that they receive. In fact, a high percentage of EI claimants are high frequency users,” said Sweetman.

One of the reasons the EI program was initially created was to redistribute wealth from Ontario’s industrial base to seasonal workers in Atlantic Canada and Quebec. Despite the staggering decline of Ontario’s manufacturing sector, the system continues to work on this principal.

“It’s more challenging to qualify in some places like the Greater Toronto Area and Vancouver than it is in other places. For someone unemployed in small town New Brunswick, the unemployment insurance system works not so badly. Some may disagree, but it covers most of those unemployed for long periods of time. If you lose your job in Vancouver, it doesn’t cover you for very long,” said Mendelsohn.

#2. When the number of people receiving EI decreases it DOES NOT mean employment is increasing.

“Over the last year we saw unemployment recipients drop while the number of unemployed increased. Over the last year we have lost four times as many unemployment insurance recipients as we have the number of unemployed,” said Yalnizyah.

She notes that only 37.5 percent of unemployed individuals actually access any benefits at all.

“Often the number of claimants is going down because they’ve exhausted their benefits, even when unemployment is going up,” said Mendelsohn.

#3. The EI system was designed for the modern labour economy.

“It was designed for a traditional labour market. Like the 1950s or 1960s employer-employee relationship. Now there are so many contract workers, there are seasonable workers, temporary work, and part-time workers. The system was not designed for these things,” said Mendelsohn.

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