EI and local labour market distortions
My column in the TJ today was on the EI changes and the growing protests. Someone asked me to clarify a few points so here goes.
First, one of the main problems with the EI system particularly in rural and northern NB is that is has a distorting effect on local labour markets. In areas with unemployment of 15%, for example, there is ‘unemployment’ – the number of peopel who are unemployed and then there is ‘unemployment’ – the number of people really available for work.
My point is that if we have a de facto support program for seasonal workers and the EI program basically puts these folks ‘through the motion’ of looking for work each year, it does distort the labour market. The whole impetus for the EI changes came as a result of business people telling government that they can’t find workers to stay in jobs year round even in regions with very high unemployment.
All I am saying is that those folks who are not really actively looking for work and won’t be shouldn’t be showing up as unemployed and actively looking for work.
If you want to have an income support program for seasonal workers – don’t pretend it is unemployment insurance.
Second, I don’t think the government every really made the case that changes were needed. They should have done research and made the case to the public.
I said before and I’ll say it again, any potentially significant public policy changes such as that should go through a process of public input, feedback, research, etc. rather than just imposition.
The point is that the EI changes were supposed to be – on paper – good for people and good for local economies. Now we are being told by opposition parties and opponents that is going to kill rural and northern NB. Which is it? Will it remove labour market distortions and create an environment where businesses want to invest or will it kill rural economies?
The problem is that no one really knows.
I conclude my column with:
With these new changes, we will stumble along by trial and error with local officials making judgement calls about who should be forced to work suitable employment and at what wage level.
For those like me who want to see tangible economic renewal in rural and northern New Brunswick, it looks like we are in for a period of even more uncertainty.
Good luck trying to get businesses to invest in that environment.