Monday, June 4, 2012

EI reforms designed to cheapen labour

I was on Alberta PrimeTime Friday night chatting about proposed changes to Employment Insurance (EI). You can try to view the segment here (EDIT: the video now works). 

The gist of the proposed changes are that EI claimants will be required to take jobs at lower wages than they used to make or they will have their benefits cut off. Over time, the wage cut required will increase from 10% to 30%. EI claimants will also be required to accept commutes of up to an hour or they will have their benefits cut off. 

An important rationale for the changes is that there’s a skill shortage.  However, forcing unemployed workers to take low-wage jobs won’t make those workers more skilled. It just makes workers cheaper. And I think that is the actual policy goal of these reforms,

Cheapening labour by putting more workers in the workforce is evident in other federal policy changes. For example, pushing back old age security eligibility keeps poor seniors in the workforce longer. Shortening the processing time on temporary foreign worker applications means employers can bring in foreign labour more quickly and easily (and now pay them up to 15% less than the going rate). Legislating an end to work stoppages undermines the ability of unions to defend things like decent pay and pension plans. All of these changes are a significant boon to employers at the expense of workers.

There is some suggestion that some EI claimants are habitual users of the EI system. This is likely true (particularly in regions with seasonal economies) but is often framed as a moral failing of the claimants, rather than a function of no jobs being available. While I think it can be fun to cast aspersions on the work ethic of others (e.g., jet-setting executives driving their organizations into bankruptcy, cough, cough), but the government’s own evidence suggests the level of EI fraud in low.

The Minister stated the new rules will cause less than 1% of recipients will lose benefits. If the EI fraud rate is only 1%, then why make major changes that negatively affect all EI claimants? I think the answer is that EI fraud is just a smoke-screen—the purpose of this policy is to cheapen labour by pressuring claimants to take low wage jobs.

It is important to remember that workers on EI didn’t quit their jobs—their employer laid them off. And the maximum benefit under the program is $485 a week (not the $435 a week I mentioned in the news clip—my memory tends to go when I get pissed off)—nearly $150 less than in 1996. The average benefit is actually about $350 a week. This is hardly an inducement to stay on EI if you have any other options.

And, for most EI claimants, they haven’t any other option. There are nearly six unemployed Canadians for every job vacancy. If the government wants people off EI, maybe employers and the government should create some jobs, instead of beating up on the unemployed?

One of the more interesting stats I heard on the show (that I’m still trying to run down) is that there are 30,000 open jobs in Alberta. This kind of stat is often used to invoke the bogey-man of the labour shortage (which, in turn, legitimizes all manner of other public policy change—typically favouring employers). Yet, in April 2012, there were about 111,000 unemployed Albertans (4.9%). So it sounds like there is a jobs shortage, not a labour shortage… .

Something we didn’t get into on Alberta PrimeTime was that the federal government is also scrapping its current appeal system. The existing system sees 1000 referees and umpires handle about 26,000 EI appeals a year. These will all now be funneled to a 74-member multipurpose appeal tribunal dealing with EI, CPP and OAS.

Under the current system, appeals were heard within 30 days and decided within a week. Workers could simply tell their story to people in their community. The new quasi-judicial system of appeal is bound to be slower and will make it harder for claimants to represent themselves.

This is going to drive people onto welfare, thereby downloading costs from the federal government to provincial governments. It will also drive people to food banks and in the streets.

-- Bob Barnetson

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