5. Regional Differentiation
EI currently divides Canada into 58 “economic regions.” The rules that determine the availability of EI benefits differ in each region. These differences are based on how each region’s unemployment rate (averaged over the last three months) compares with the national unemployment rate. Individuals living in regions with higher unemployment rates can qualify for EI benefits faster and receive them for longer periods of time.
The system is intended to respond to need. Meaning, those who face greater barriers to finding a new job should receive greater support. At present, regional unemployment rate is the only factor used to determine how hard it is for someone to get a job.
The regional unemployment rate compared to national unemployment rate may not tell the whole story about how hard it is to find a new job. For example, some experts think short-term change in unemployment rate says more about how hard it is to find a job (that is, when unemployment is going up, it is hard to find a job regardless of what the rate is).
Others think that there are so many factors that determine how hard it is to find a new job that all workers should simply be treated equally and entitled to the same benefits.
Scenario: Regional differentiation does not capture differing need within regions
Laura and Josh were both recently laid-off. Both worked and live in the tech-intensive Kitchener-Waterloo region which has an unemployment rate about the same as the national rate. Both Josh and Laura had equivalent salaries, and worked well above the threshold of hours necessary to receive maximum EI benefits. Each received the maximum available benefits in their region.
However, Laura and Josh’s prospects for re-employment differ drastically. Prior to losing her job, Laura worked in the tech sector. Though the firm she worked for did lay-off some workers, there are potential positions suitable for her in the region. Josh, by contrast, worked in the traditional manufacturing sector, which is in decline in Kitchener-Waterloo.
While Laura can reasonably expect to find another position in her field, Josh is now looking to low-skilled service jobs and faces a potentially substantial decline in income after finding a new job. These two individuals will receive the same level of financial support from EI (based on the regional unemployment rate) though their employment prospects are dissimilar. If Josh lived in a region with higher unemployment or in a small community, he could have received support for a longer period.
Scenario: Regional differentiation produces unfairness between workers in different regions
Jacques and Ronald were each recently laid-off. Each worked for 500 hours prior to being laid-off. Jaques lives in Northern Ontario and Ronald lives in Western Nova Scotia. In Northern Ontario, it takes 455 hours of work prior to a lay-off to qualify for EI. In Western Nova Scotia, it takes 525 hours of work prior to a lay-off to qualify for EI.
Ronald did not qualify for EI in Western Nova Scotia and Jacques did qualify for EI in Northern Ontario, despite the fact that they had identical work histories. Jacques received EI while Ronald did not because of a difference of two percentage points in the unemployment rates where they live and work: the unemployment rate in Northern Ontario was 12.8 per cent and the unemployment rate in Western Nova Scotia was 10.8 per cent.