Monday, May 25, 2009

EI Reform Or Political Posturing?

Imagine what would happen to a private insurance company if it allowed anyone to collect the benefits just 9 weeks after purchasing the policy, regardless of the circumstances? A public insurance company doesn't need to worry about being fiscally solvent. It has the opposition party politicians to lobby for more funds and it has Canadian taxpayers to foot the bill.
The opposition coalition threatened to topple the Harper government before Christmas if it did not, amongst other things, make changes to EI. The Harper government acceded to their demands; extending eligibility by five weeks for two years. These changes cost $3 billion. Despite this, the opposition coalition is again demanding increased EI payments and threatening an election if it doesn't get its way.

Liberal leader Michael Ignatieff is the one leading the charge for a possible election. He has said that the Harper government must work with him on temporarily reducing the number of hours Canadians must work before they are eligible to access EI. Eligibility now depends on local unemployment rates, ranging from a high of 700 hours where unemployment is low, to 420 hours where it is high. Mr. Ignatieff wants to see it lowered to 360 everywhere in Canada.

This would be a mere 45 days of full-time work and only eight days less than the current minimum. He may have a good point in making eligibility the same across the country under the current rules. However, adopting the lowest standard is needlessly costly for the sake of scoring political points.

Mr. Ignatieff has so far been silent on the issue of how this increased cost would be paid: increased EI payroll taxes, more borrowing or cuts to other areas of spending.
I understand the logic behind having lower eligibility requirement in the areas where the unemployment is way in the double digits. I understand that it might make sense to reduce eligibility requirements for those in the high-unemployment regions, to make it easier for them to last through the recession.

I could understand the proposal to lower the number work hours, required to collect the benefits, nationwide - so it would be 360 hours, instead of 420, in the high-unemployed areas and 640 hours, instead of 700 - where the unemployment is low. But lowering it to 360 hours, no matter what is the unemployment rate in the area? Allowing anyone who's been on the job for mere 9 weeks to collect EI benefits for the rest of the year, even if there are lots of jobs still available? That looks like nothing but vote buying to me.

And another thing: we used to have higher unemployment during the "dot-com boom" ten years ago, than we have now during a recession. And guess what political party was in power back then. Do you recall any of them saying anything about the need for EI reform? I don't.

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