Atlantic Canada hurt by Liberal reversal of their own EI policies

By making benefits too easy to access, a cycle of unemployment is created that discourages the pursuit of education

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John WilliamsonAtlantic Canada’s struggling economy has been dealt another blow by the federal government’s decision to make employment insurance (EI) easier to access.

Unemployed workers in provinces hit hardest by the energy sector downturn have received the most attention in the EI reforms. Few will argue with extending regular benefits by five weeks to out-of-work recipients in areas where unemployment has increased by more than two percentage points, or providing additional coverage to long-tenured workers who have previously collected few, if any, benefits.

Changes to EI in Atlantic Canada, meanwhile, have mostly been considered through the lens of Prime Minister Justin Trudeau’s campaign commitment to loosen rules by repealing Conservative reforms. But unexpectedly, the government is also undoing important changes made by the last Liberal government by loosening national EI eligibility requirements for workers entering or re-entering the labour market. These rules were set by the government of Jean Chrétien, not Stephen Harper.

Weakening both sets of reforms hurt Atlantic Canada.

The Conservative policies being undone are the requirements on frequent and repeat EI claimants to accept work at slightly less pay, and to consider marginally longer commutes to work. These changes were put in place to reverse a growing shortage of workers in regions of high unemployment. The result will be that some unemployed workers choose to overlook certain job openings, opting to stay longer on EI.

But the reversal of the Liberals’ own, longer-standing EI reforms will have an even more pernicious impact. Here’s why: for a young person entering the workforce and for those re-entering the workforce as of July 2016, the number of hours required to qualify for EI will drop significantly from 910 – that is, 24 weeks or nearly six months of full-time work – to between 420 to 700, depending on the area in question. In Atlantic Canada, the threshold to qualify will range from 420 to 665 hours.

This means young workers in many parts of rural Atlantic Canada will qualify for six months of EI benefits after working only 10 or 11 weeks. That’s less than half the time currently required to qualify for benefits.

Canada has gone down this road before. By relaxing eligibility requirements, the government is repeating mistakes made in the 1970s and 1980s that saw some workers get stuck in the EI trap – a trap even more difficult to escape in Atlantic Canada, where benefits last longer than in the rest of the country. In contrast, workers in southern Manitoba need approximately 18 weeks of work to qualify for EI – almost two months longer than in many parts of Atlantic Canada – and even then will only collect benefits for three-and-a-half months, not six months.

Reducing the work requirement to qualify for EI from 24 weeks to as few as 10 weeks could once again entice young Atlantic Canadians away from school and the workforce.

This is exactly what the Liberal government found happening in the 1990s. “Studies show that people who become reliant on UI (unemployment insurance) early in their working lives quickly begin to factor it into their annual work pattern. It can lead to a cycle of regular income supplementation,” concluded a government of Canada study in 1995, when the program was still called UI. “The incentive to mix spells of work with UI has been powerful enough to encourage some young people to quit school before they have acquired the basic skills needed to achieve more stable employment in today’s world of work.”

That problem was corrected by Chrétien’s government. New entrants and re-entrants required at least 30 per cent more hours of work to qualify for benefits.

By repealing these sensible changes, the Trudeau government is making it easier and more rewarding to go without a job for longer. Is this really what we need in Atlantic Canada?

The vast majority of Atlantic Canadian workers get up every morning, go to work and pay into EI like other Canadians. Most will rarely, if ever, need to collect it. But if Ottawa makes it easier and more rewarding to forgo work by collecting EI benefits, some – regardless of where they live – will accept that bargain.

Atlantic Canada cannot prosper if Ottawa thinks a 52-week economy can be run on 10 or 11 weeks of work to secure EI benefits for six months. We need policies that strengthen our economy, not blindly follow past practice.

John Williamson is a former Member of Parliament and past National Director of the Canadian Taxpayers Federation.

John is a Troy Media Thought Leader. Why aren’t you?

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Atlantic Canada

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

John Williamson

John Williamson has over 20 years of experience in public policy research. He was the Member of Parliament for New Brunswick Southwest until 2015. Prior to his election to the House of Commons in 2011, Mr. Williamson worked as the Director of Communications in the Office of the Prime Minister.

In 2016, Williamson launched Canadians for Affordable Energy to promote the benefits of energy affordability. He was National Director of the Canadian Taxpayers Federation (CTF) from January 2004 to September 2008. He is a Senior Fellow with the Fraser Institute.

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