Our old friend C.D. takes on EI

The C.D. Howe Institute is the latest think tank to take on the problems with the EI program and concludes, as have many others, that it is contributing to high unemployment mostly in the Atl. Provinces.

There are a couple of points here.

1. This is a well thought out, academic review of EI with regression analyses and a laid out case. Folks that are pushing for the EI program and unwilling to change should not dismiss these guys. They do have the ear of policy makers. I know that Harper actually enriched the EI program when he came in but eventually after many of these papers, somebody’s going to try and ‘tackle’ it.

2. I can’t figure out why these Phds – Fraser, C.D. Howe, the Centre for Labour Market Studies and all the others that have castigated the EI program always come to the same conclusion: the EI program provides disincentives for labour mobility. They always conclude – check it out if you don’t believe me – that the EI program stands in the way of a natural labour mobility – puts a ‘disincentive’ in place for workers to move where the jobs are in Canada.

Not one of them actually comes to an alternate conclusion (mine, coincidentally) that the EI program is inhibiting economic growth within the very communities in which it is most utilized and that the issue is not to encourage more mobility but to try and better understand why these communities have no capacity to attract more business investment. All this brilliance and no one seems to waver from the tired old mantra of moving Atl. Canadians – as fast as we can – to Fort McMurray.

There is a deeper public policy issue here beyond removing barriers to labour mobility. I like labour mobility. In a well functioning economic environment where each region of the country has its strengths and weaknesses, labour would be highly mobile. Blue collar might move to Fort McMurray but computer programmers might be moving to Bathurst to get in on the (fictitious) growing animation cluster. Marine biologists move to Victoria but accountants move to Halifax. Crane operators move to Calgary but longshoremen move to Melford. Whatever.

But this lopsided economic reality that forces these Atl. Canadian communities to use what little political power they have to try and hang on for dear life is the heart of the problem. Not EI. That’s a symptom. Not a cause. There is some secondary causality there but the primary issue is a lack of good public policy that has left large swathes of Atl. Canada with almost no capacity or value proposition to attract business investment.

Wouldn’t it be neat if Fraser, CD, MEI, etc. turned their brilliance to try and fix that problem. Heck, why not AIMS and APEC? But that’s too hard and intractable. It’s far easier for politicians to prop up with scraps and for think tanks to take the intellectually easy way out.

And the wheels on the bus go round and round.

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0 Responses to Our old friend C.D. takes on EI

  1. atlanticaparty says:

    We just linked to your blog in our new blog Avalon.


  2. Anonymous says:

    Here I come again… Why do NBers have to always worry about losing people to the West? Wouldn’t the best solution be to strengthen the cities? (i.e. Moncton, Fredericton and Saint John – I REFUSE to call anything else a city). While the C.D. Howe study surely refers to large numbers of job vacancies in the West, its central point is that the EI program creates a disincentive to relocate.

    I am convinced that, if given the choice, NBers would prefer to move from, say, the Acadian Peninsula to Moncton if the jobs were there. By keeping things the way they are, we are simply obstructing the efficient distribution of the factors of production throughout the economy (and we all know what this causes to budgets and the macroeconomy as a whole).

    As for the “lack” of work on what should be done from the perspective of economic development, there is plenty of studies recommending investments in Canadian cities and productivity improvement, to name just two issues that are undoubtedly related to the EI problem.

  3. richard says:

    “i.e. Moncton, Fredericton and Saint John – I REFUSE to call anything else a city)”

    “..if the jobs were there”

    ..but they’d ALL be towns in ON. And the jobs aren’t ‘there’; at least not high-paying jobs.

    Its fine to talk about incentives to relocate to NB’s ‘cities’ (or disincentives to remain in rural NB), but what do those who move to the cities do for a living? Available jobs either pay low wages or require skill sets that few EI recepients have. What’s needed is a strategy to bring high-paying jobs to NB, regardless of whether they are urban or rural jobs. That will attract migrants, ex-pats, and our school graduates.

    Yes there are planty of studies recommending renewal of urban infrastructure, but that really is not NB’s problem. NB’s problem is that there is no rational plan to bring high-paying jobs to NB.

    EI might provide a disincentive to relocate, but I expect it is a damn small disincentive. In any event, for political reasons, there are not going to be any major changes to EI. Rather than complain about EI, it would be more productive to focus on something that might be more likely to help NB grow.

  4. nbt says:

    Think tanks release info, just like task forces and government sponsored studies. In all three cases, they have someone with a certain ideology behind the writing. I would hope they do anyway.

    What we need is someone with a set, not to mention, some leadership skills and vision to move on the ideas offered up by these ladies and gents.

    That is all.

    Actually, it would be nice for a change if someone in the premier’s office, or even the premier himself, had the skill set down before they entered the frey (i.e. business or leadership experience, a writing portfolio, etc). Then we wouldn’t need all the high priced consultants to baby the leaders once they get in (offering them the same old local advice).

  5. Anonymous says:

    Sorry but when EI was at its greatest ,NB boomed.After doug young,that was the end of NB.
    No support between jobs or seasonal work and the good hard working NBer’s left.I was one of many,so I know.
    You want good workers ,when you have need for them you either have good EI or do without.You all are assbackwards in your thinking.Toronto thinking in a province with very little to access.
    Also remember most NB workers have no pension or anyway to built up a nest egg,in NB.
    Thats why A friend ,who left the seasonal for the FORT,has in 1 1/2 hears got 25 thousands already in his RRSP,s
    You want to tell us we getting less EI support,you do the work,we leaving.Simple economics.
    All this while we read about the government workers and huge companies with outrageous payoffs for people who are useless.
    Read the sick leave plans for St John workers.
    So save your dreaming.

  6. Anonymous says:

    Ontario envy of Atlantic Canada causes mcguinty to increase Dole!!

    Oct 29, 2008 04:30 AM

    Carol Goar

    The move would be provocative. It would be parochial. It could spark a serious federal-provincial clash.

    But maybe Premier Dalton McGuinty needs to cause a little trouble in Ottawa, says economist Hugh Mackenzie. Asking for a fair deal for Ontario hasn’t done much good.

    So here is Mackenzie’s idea: McGuinty should serve notice to the Prime Minister that Ontario intends to opt out of the Employment Insurance system and set up its own program.

    That would get Stephen Harper’s attention. Ontarians pay 38 per cent of the premiums in the $17-billion-a-year EI fund. They get 29 per cent of the benefits.

    Without Ontario’s large and unbalanced contribution, the federal government would have difficulty maintaining the program.

    What’s more, its departure might prompt other provinces, such as Alberta, which pays 11 per cent of the freight and gets 7 per cent back in benefits, to withdraw.

    On the positive side, Ontario would be able to provide its workers with much better coverage than Ottawa is doing.