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EI battle lines drawn: 420 to 360 or fight!

By Kevin Gaudet
web posted May 25, 2009

Voters may soon be called to vote for the fourth time in just five years. Ostensibly, this time it will be thanks to a political battle over an even further loosening of eligibility requirement for Employment Insurance (EI).

It is a far cry from the heady days of threats of war during American-British colonial disputes over territory when cries of "54-40 or Fight!" rang out around America. Today Canadians hear "420 to 360 or Fight!" 

The 1844 battle cry was issued about a boundary dispute over the Pacific Northwest. Even though the US had already agreed to the 49th parallel in more than one treaty, this didn't stop Presidential candidate Polk. This is similar to opposition politicians today ignoring the fact that only three months ago the federal budget already gave them all that their coalition had demanded.

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.

According to the TD Bank, Mr. Ignatieff's policy change will cost at least another $1 billion per year. And his EI reforms are the least expensive on the table. The TD report indicates that only 15 per cent of unemployed EI contributors are unable to access benefits and that those people are twice as likely to be living in the lowest unemployment areas in Canada where getting new work is the easiest.

NDP leader Jack Layton is calling for EI reforms that go even further. He wants Mr. Ignatieff's change to be permanent. In addition, he wants an end to the two-week waiting period required prior to accessing benefits. He also wants benefits increased. Of course, he hasn't yet said how large of an increase he wants. Finally, he is calling for the self-employed to have access to benefits.

Instead of playing politics, the opposition should encourage the Harper government to reform EI to make it a true insurance program. The Harper government started down this road in 2008 by appointing a commissioner to head a new independent EI tribunal, like the current CPP tribunal. As well, they could reduce the job-killing 40 per cent additional premium businesses pay on EI payroll taxes.

Instead of worrying about scoring political points by making it easier for more unemployed people to get quicker access to more EI benefits, politicians should be looking at ways of spurring the economy to create jobs. After all, the best cure for unemployment is a new job. ESR

© 2009, Kevin Gaudet


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