Critics of EI cuts are fighting wrong battle

As reported by the Yukon News earlier this month, the federal government is changing how employment insurance benefits will be calculated for the territory's unemployed residents.

As reported by the Yukon News earlier this month, the federal government is changing how employment insurance benefits will be calculated for the territory’s unemployed residents.

No longer will Yukoner’s benefit from the most generous entitlement to EI in Canada. In fact, residents of Whitehorse will now have the least generous entitlement to EI. About a half of all EI claimants in Whitehorse will be affected and will receive about $4,700 less per year than they had previously received.

These changes have spurred criticism from anti-poverty groups and others. I can certainly appreciate that these critics are concerned about the needs of the less well-off, and I share their concerns about the inadequate supports for poor families in the Yukon. However, I think that the criticisms of these specific changes are misguided.

To understand the changes, one needs to have a basic understanding of how entitlement to EI is calculated. The unemployment rate in a particular region determines how long people must work to receive EI and how long they can collect benefits.

At one extreme we have regions of high unemployment where a person qualifies for EI after working only 420 hours and can receive EI payments for between 32 and 45 weeks. On the opposite end of the spectrum we have regions of low unemployment where a worker will not even qualify for EI until they have worked 700 hours and will only receive benefits coverage for between 14 and 36 weeks.

In principle, this system makes sense. Employment insurance is an “insurance” program and was not meant to be a long-term social welfare program. It is intended to be a bridge between jobs. If a worker lives in a region where jobs are plentiful a worker is less likely to be laid off after a short period of time, and in the event that they are laid off it should not take as long to find a new job. In regions of high unemployment, layoffs are more frequent and new jobs are scarce so the benefits are more generous.

This is how the system has worked everywhere, except for the territories. Here, the federal government had until recently arbitrarily “deemed” the unemployment rate of the territories to be 25 per cent, so that residents would be entitled to the most generous set of rules for employment insurance, as if we were in a region of high unemployment.

This system was great for workers in the territories. But the reality is that we don’t have high unemployment, particularly here in Yukon’s capital.

Whitehorse boasts one of the lowest unemployment rates in all of Canada, and the communities fare much better than many other places in Canada. The Yukon Bureau of Statistics pegs unemployment in the broader Yukon at only 3.8 per cent as of September 2014. For EI purposes, the Government of Canada’s website indicates that unemployment is only 4.5 per cent in Whitehorse and 7.3 per cent outside of Whitehorse.

As a result the federal government has finally decided that the Yukon should be treated like just about everywhere else in Canada.

In my view, the changes made by Ottawa actually make a lot of sense. The problems that we face – particularly in the territorial capital – do not relate to unemployment. Yes, the Yukon faces unique economic challenges, but with a billion dollars in transfer payments driving our economy a lack of jobs is not one of them.

There is no principled reason why Yukoner’s should benefit from the most generous EI entitlement in the country and receive EI for 36 weeks (or about seven to eight months) after only working 10.5 weeks.

I do, however, share the underlying concerns of those who have criticized Ottawa’s move. Certainly there should be a broader discussion about the needs of the poor and the failure on the part of all levels of government to take those needs seriously.

We live in a territory that receives a billion dollars a year from Ottawa, yet is inexplicably lacking in basic supports for those in need. We have an overfilled emergency shelter and insufficient affordable housing. We have a food bank that from time to time finds itself in crisis and appeals to the public for help. These are not problems that a well-funded jurisdiction in the developed world should have.

It is appalling and perplexing that these needs go unmet when we apparently have the money to pay consultants in Ontario $20,000 to confirm things we already know – like that the Yukon is cold (as Keith Halliday noted in this paper the other week).

It is fair of critics to notice that our spending priorities are seriously askew and acknowledge the moral failing of those who make policy. But the changes to EI entitlement are the wrong battle to fight.

It behooves us as Canadians to recognize that there are others places in Canada where that EI money is more desperately needed. We should be grateful that we operate in a healthy job market, accept these changes gracefully and focus our efforts tackling the real problems facing our territory.

Kyle Carruthers is born and raised Yukoner who lives and practises law in Whitehorse.