Human Resources Committee on March 9th, 2016

[Dr. David Gray]

For one thing, there is the equity issue that was raised, not so much during our session but during the previous session. A number of members of this committee brought up what I thought to be very valid anecdotes of totally inequitable situations.

Most economists are opposed to regionally based benefits, because they discourage regional geographic labour mobility and undermine the efficiency of the labour market. I think that sometimes the benefits should be modulated, should be sometimes modified according to the adjustment costs of an individual worker.

Sometimes we should have variable entry requirements and variable durations, but usually not based on a region. In Europe it's the age of the worker that leads to extended benefits. It could be longer benefits for people who are disadvantaged, for one reason or another. Then, I mentioned longer durations during recessions. Most labour economists are very opposed to the regionally based criterion, particularly when based on the unemployment rate as opposed to how easy it is to find work.

[The Chair, Liberal, Bryan May]

Thank you.

Ramesh Sangha.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

Thank you for coming today and for making your submission here.

In November 2011, Mr. Gray, you co-authored a policy paper for the C.D. Howe Institute with Mr. Busby. It was regarding EI.

Mr. Busby, do you still concur with that policy paper? Has your position remained the same as of today?

[Colin Busby]

It's a good question. I think for the most part yes.

The paper focused on variable entrance requirements and discussed in great detail the variable entrance requirements and the challenges in variable entrance requirements as a macroeconomic tool, but also as a tool continuing and supporting what we see as persistent pockets of high unemployment in some areas of the country.

I think there's probably some broad consensus on a harmonized rate, but you can do all the econometrics studies you want and I don't think you'll ever come to a reasonably good conclusion as to what it should be, because there's always going to be some kind of worker who will be affected in a negative way as a consequence of it. What's nice about the 360-hour proposal is that it refers to part-time workers. It would be a nice thing to capture part-time workers, but if we go that low, then the problem is that you get an extreme risk of creating a large level of dependency and encouragement of seasonal work.

There will, then, be winners and losers. I think it speaks to the challenges of having a national program in a country with so many different regional economies and with so many different regional needs. It really speaks to the impossibility of having one set of rules to fit everyone's needs. I think that's probably what you'll find in the end.

The idea of perhaps setting the provincial base line and having provinces top up or tag on to provincial benefits is one that has occurred to me since then as being perhaps a solution around the fact that you're never going to get a one-size-fits-all program coming out of Ottawa for all the different economies in Canada.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

I can understand that you are not ready to accept 360 hours because that is less than.... Can you suggest what the number of hours should be? Do you have something in mind?

[Colin Busby]

Again, it's a challenge. Where would your baseline be? I think you have to determine a baseline and it's not going to be 700 hours and it's probably not even going to be 420 hours. Then I think you have to question who's going to be affected and why.

If things like seasonal unemployment and income redistribution to different parts of the country are things we want to encourage, then you ought to be thinking about how to do those things outside the EI program perhaps and through different mechanisms. Because EI will not be an effective tool at appropriately accomplishing all these objectives.

It's going to be a program that helps people who lose their jobs and provides appropriate income support to them, but it's not going to be that and the regional distribution tool and a seasonal support worker tool, and a good tool for part-time workers or people in non-standard forms of employment, which are increasingly more common. It can't be everything and I think it tries to be too much and that's probably my biggest problem with EI as a program.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

Going back to the C.D. Howe Institute's paper, which was published, what can you do to address the fact that a higher proportion of women do not have valid job separation?

[Dr. David Gray]

That means they're deemed to have either quit their jobs voluntarily or been fired for just cause. Is that rate higher for women than it is for men?

[Ramesh Sangha, Liberal, Brampton Centre, ON]

It could be that due to her circumstances, if a woman is not able to put in the hours a man could.

[Dr. David Gray]

Are we talking about accumulating the required number of insurable hours or are we talking about having the motive or the reason for separation deemed to be invalid by the administrators of the program? Those are two separate issues.

[Ramesh Sangha, Liberal, Brampton Centre, ON]

You want to complete the hours but—

[Dr. David Gray]

Yes, that's getting insurable hours.

[Colin Busby]

The association I've seen with insurable hours is due to the fact that there's a greater prevalence of women in part-time work and part-time full-year work, which generally leads to much lower rates of accumulating a sufficient amount of hours worked. The current program favours part-year workers, but not part-time, full-year workers.

The degree of difference is that full-time, full-year workers with a valid job separation in this country, almost no matter where you live, qualify for regular EI benefits at a rate of about 90% to 95%. Those are the data. There's no editorial.... However, the numbers for part-time workers usually drops to somewhere around 60% to 65%, so there's a big gap there and it's due to the fact that there are just so many different forms of employment and we try to do a lot and it's hard to meet them all.

[The Chair, Liberal, Bryan May]

Thank you, Mr. Busby, Dr. Gray, and Mr. Kelly.

This time went by very quickly and I want to thank the earlier panel as well as this panel for preparing as quickly as you have to be here today and for answering our questions. I again apologize for cutting things a little short.

Dr. Gray, do you have a final question?

[Dr. David Gray]

I can answer questions in French, if some members prefer.

[The Chair, Liberal, Bryan May]

I will not be asking questions in French, but I know some of my colleagues are more than capable of doing that.

Monsieur Deltell.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Gray, if I understand you correctly, you are saying, “until the next time”.

[Dr. David Gray]

I am not René Lévesque, but I will be quite happy to answer your questions next time.

[The Chair, Liberal, Bryan May]

Thank you.

I want to wrap up by saying thank you to Mr. Busby for pointing out the elephant in the room, which is that it's going to be incredibly difficult to create a one-size-fits-all solution. I agree 100% on a number of fronts, and not just EI. It is incredibly challenging and there is always going to be gaps if that is the lens that we try to take. My hope is that whatever process is undertaken that we try not to do that. I really liked your idea about having other potential mechanisms in place to fill those gaps, so thank you very much for that.

Again, thank you to all the panellists and thank you to the committee and thank you to my faithful stand-in clerk. Julie was not well today, so thank you to Mike for stepping in, to the analysts, to the lovely translators, and to our tech people who made it possible for Mr. Kelly to attend today.

Thank you all and have a wonderful evening.