Human Resources Committee on Feb. 23rd, 2021

[Dr. Miles Corak]

Thank you for the question, Madam Falk.

The question of work incentives very much influenced the current shape of the EI system we have now. I have, perhaps, two concerns about that.

I think incentives matter when it comes to the impact on geographic mobility. As my colleague just mentioned, maybe in the future that's going to be less important.

The second is the intergenerational disincentives as, perhaps, knowledge of the program or use of the program is passed across generations in families. This is very much wrapped up with the incentives embodied in EI on the demand side of the labour market. We need to pay more attention to how firms interact with EI in order to understand the efficiency and disincentive consequences.

EI has long been a form of regional income distribution and cross-industry distribution, with the extractive and construction industries benefiting a lot more than other industries. I don't think we often recognize that, even within industries, there's always a set of firms that receives subsidies through the program. This may have an impact on the capacity of firms to grow and the efficiency of the economy in the long run. It's unfortunate that we don't pay more attention to the demand side of the labour market.

[Rosemarie Falk, Conservative, Battlefords—Lloydminster, SK]

Thank you.

[The Chair, Liberal, Sean Casey]

Thank you, Mrs. Falk.

Next we will go to Ms. Young, please, for five minutes.

[Kate Young, Liberal, London West, ON]

Thank you very much to our witnesses here today. It's been very interesting.

I want to start by asking Ms. Mahboubi if she could talk about people with disabilities. How would any change in EI reform impact people with disabilities? What are her concerns about wanting a more holistic approach to working with and helping people with disabilities?

[Dr. Parisa Mahboubi]

Thank you.

When we look at the disability issues, definitely individuals with a disability face significant barriers to labour market participation and employment. Often, even if they are employed—although it really depends on the level or severity of their disability—in general, we see that they earn less and their labour force participation is less than others in terms of employment. They face higher unemployment rates.

When we talk about regional variation in terms of unemployment rates, the unemployment rate for different populations is also different. It would be similar in all regions, because all disabled people face barriers to employment. If we have one disabled person in Ontario—for example, in Toronto—and we have another one in a different region with high employment, they both face similar barriers to employment. It will be equally difficult for them to find employment. That's why, again, it's really good to mention that we need to also think about the barriers that different population groups are facing to find employment and how the EI program can support them if they lose their employment.

I have written about the role of social assistance and how it can help attach a disabled person to the labour market. For example, currently some of the social assistance programs we have don't provide great incentives for disabled people to look for employment and to tackle their barriers. Yes, of course, it's going to be difficult for some because the challenges they are facing are significant. It's not something like zero and one—if people can work or cannot. There is some sort of spectrum here. Some people are able to participate.

When we design an EI program, we need to think about those individuals—disabled people, women and women with young children. Different types of individuals may face different barriers to the labour market.

[Kate Young, Liberal, London West, ON]

Thank you very much for that.

Mr. Corak, do you have some comments on how we should look at people with disabilities under the employment insurance program? Could what you're saying help them in any way?

[Dr. Miles Corak]

Madam Young, for the most part, I'll defer to Madam Mahboubi on this. I would just reiterate my suggestion that special benefits might be structured in a much more flexible way to give people agency and control. Sometimes disabilities come and go and we can't anticipate that, and maybe these special accounts will give people that kind of agency.

[Kate Young, Liberal, London West, ON]

Mr. Corak, your work underpins the research of one of our colleagues, a parliamentary colleague, on the economic phenomenon of the Great Gatsby curve.

I hate to ask you a question that you probably only have a minute to answer, but could you summarize what the Great Gatsby curve is?

[Dr. Miles Corak]

Thank you for that.

The bottom line is that we should be worried about inequalities in our society, all sorts of inequalities, because ultimately they shape opportunities. Different types of inequalities shape opportunity in a different way.

The Great Gatsby curve is a relationship across countries in which the most unequal countries are the most class-bound countries, where it's hardest to get ahead in life and privilege is protected.

Canada, for example, is much more socially mobile than the United States, in part because of our health care system, in part because of the high quality of our education system and in part because of an open and efficient labour market that rewards talents, but it doesn't mean we don't have challenges. The Great Gatsby curve stresses the importance of fighting poverty and inequality to allow the next generation to prosper.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Corak and Ms. Young.

[Kate Young, Liberal, London West, ON]

Thank you.

[The Chair, Liberal, Sean Casey]

Ms. Chabot, you may go ahead. You have two and a half minutes.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Thank you, Mr. Corak. I want to make sure I understood what you said about EI special benefits

The system provides regular benefits and special benefits, which include maternity and sickness benefits. Where seasonal work and maternity leave are concerned, EI is tied not to the loss of work, but to a specific condition.

Are you suggesting splitting EI into separate programs, one to deal with the loss of work and another to deal with cases that do not involve the loss of work?

[Dr. Miles Corak]

No, that wouldn't be my view.

Let me perhaps rephrase this. When the 1971 legislation was written, for every dollar that an employee contributed to unemployment insurance, as it was then called, the employer contributed $1.40. The reason was that, for every person who quit, there were 1.4 people who were laid off, so we were trying to tie contribution rates to who caused the separation, the employer or the worker.

Since that time, we've removed quitters from the program, but people are still paying their dollar. What has happened is that special benefits have risen in importance. All I want to do is take that dollar and give people ownership over it and let them use it in the way that's best for them. The program would still function as it is. We would just simplify and reorganize the special benefits side.

It's very good what we've done with special benefits. We never know when a child will fall ill. We never know when an elderly mother or father will fall ill. However, we never know when a teenage child will be diagnosed with schizophrenia. Are you going to start another program for that? We never know all sorts of other contingencies. Because we don't know, just give people agency over the use of their funds.

Obviously I'm also calling for a bit of a return to tripartite financing. In 1971, the federal government was a contributor to the EI fund because there was a collective risk and it should be faced collectively, just like in the pandemic it was a collective risk and the federal government had to step up to pay. Therefore, some of these special benefits need to be funded collectively as well, some fraction of them.

The program stays intact. It's just simplifying and redesigning special benefits.

[The Chair, Liberal, Sean Casey]

Thank you, Mr. Corak and Madam Chabot.

Next we have Ms. Gazan, please, for two and a half minutes.

[Leah Gazan, NDP, Winnipeg Centre, MB]

Thank you, Chair.

Mr. Corak, I really appreciated your discussion around even caring for sick loved ones. Something the NDP has been advocating for years is to increase, because we never know what can happen in life, the EI sickness benefit permanently from 15 weeks to 50 weeks. This idea actually also received support at this committee in a 2016 study on EI, especially for individuals undergoing cancer treatment, for example.

I bring this up as well because we are now in a pandemic. We know that people have gotten very sick during the pandemic. We don't know what that will look like for them, going forward, in terms of healing and being able to return to work. Is this a measure that you would support?

[Dr. Miles Corak]

At the risk of losing some of your time, Madam Gazan, I need a little bit of clarification. I missed exactly what it is you want me to support. Is it a previous proposal?

[Leah Gazan, NDP, Winnipeg Centre, MB]

No, it's to increase the duration of time for an EI sickness benefit from 15 to 50 weeks.

[Dr. Miles Corak]

I can't speak to that specific issue but, as you pointed out, life is full of uncertainties. I mean, even last February we didn't know what was going to be happening in March and April, and look at how our lives have changed. We can't anticipate that. This is why I feel that people should be allowed to build up their funds and use them for however long they want. There's always a risk that these funds will dry up, and we can't leave people just totally in the lurch. You could think of it as sort of like a forced savings account, a TFSA, if you will. You would pay it back later if you had to use more than you had.

What I feel uncomfortable about with your proposal is that we have another rule, with another date, and it will be fixed and things could be different. I'm just looking for a more flexible way to address this important need with the demographic risks. Family risks matter as much as workplace risks sometimes.

[Leah Gazan, NDP, Winnipeg Centre, MB]

I very much agree with you.

Thank you very much.

[The Chair, Liberal, Sean Casey]

Thank you, Ms. Gazan.

Colleagues, we are pretty much bang on the 5:30 eastern hour, so I'll wrap it there.

Ms. Mahboubi and Mr. Corak, this has been a fascinating and illuminating discussion. Thank you so much for your expertise. Thank you for your patience. Thank you for the comprehensive way in which you answered the questions. I think this will help frame the questioning of further witnesses who come before us. It most certainly will help frame our thinking as we delve into this issue. We are very grateful for your expertise this evening.

Colleagues, if there is nothing further to come before the committee, do we have consensus to adjourn?

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Chair, I believe MP Chabot has her hand up.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Mr. Chair, I'd like to say something.

[The Chair, Liberal, Sean Casey]

Go ahead, Ms. Chabot.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

I'll be very quick. I sent my fellow members three routine motions, so I just want to let you know that I plan to move them Thursday.