Do the unemployed deserve our help?

After a summer of battling over employment insurance reform, the Conservative government announced yesterday that they intend to extend the length of EI benefits for unemployed workers who had held long-term jobs before joining the ranks of the unemployed.

It is not clear precisely what the criteria will be, only that benefits will be based on the number of years that workers paid premiums, with only a limited number of previous EI claims allowed in recent years. The extension will be between 5 and 20 weeks.

The Liberals have already said this move is not enough to prevent them from voting against the government in a confidence motion on Friday. The New Democratic Party, on the other hand, is giving the proposal serious consideration.

Aside from the political implications of this move, what are the policy consequences?

Well, to start with, as Armine Yalnizyan outlines in an excellent post on the Progressive Economics blog, insofar as this EI reform is a step forward, it is a very, very tiny step forward. Yalnizyan calculates that 350,000 unemployed Canadians do not see their needs addressed by this move, compared to the 190,000 unemployed workers the government claims will be helped. These are not great odds.

Secondly, this move does nothing to address the deeper transformation of the Canadian workforce. Before the recession began, 1 out of 3 jobs was already precarious work – temporary, part-time, contract or self-employed, with low pay, no benefits and zero security. These are people who receive little-to-no protection from EI, despite the fact that they will need to change jobs frequently. This problem will be compounded by an increase in part-time and self-employment resulting from the recession. Already this past August, there were 100,000 more Canadians who were self-employed compared to August 2008. How will the system address the needs of this growing, vulnerable population?

This vulnerability is even reflected in many of Canada’s more traditional industries. Auto manufacturing, forestry, agriculture and even energy all experience seasonal variations that result in workers temporarily being laid off, then brought back to work. Even in a city like Windsor, where many of the unemployed were longtime employees in the auto industry, there are few who have no recent EI claims because of these types of layoffs. Yet this reform paints these workers undeserving of additional assistance.

And this relates to a deeper, more problematic issue. Diane Finley, Minister of Human Resources and Skills Development, described this reform as “fair and responsible.” In contrast, the government has labeled the proposal for a flat entry rate for all unemployed workers as irresponsible. How did leaving nearly half of unemployed workers to fend for themselves become fair and responsible?

One of the value questions deeply tied up with employment insurance is the issue of moral hazard. Those who believe in moral hazard argue that if EI is too comfortable compared to work, people will choose not to work. (For more on the validity of this argument, check out this blog post.) But even from this perspective, stringent EI regulations that prevent misuse will occasionally hurt people who do deserve help.

It seems to me that is really what is at stake here. The government believes that relaxing the terms of EI to protect more of the unemployed would be irresponsible because people who do not “deserve” EI – because they were previously unemployed and receiving EI, because they change jobs frequently, because they’re not looking hard enough for work or retraining for other fields – would receive additional benefits.

However, by limiting access to those who paid premiums for many years without ever needing to rely on EI, the government is limiting help to those it deems “deserving.”

The irony is that many of those deemed “undeserving” are those who need our help the most. They are the ones we should be focusing on the most.