Beware the EI trap

I listened with great interest last week as a number of Northern New Brunswick politicians made the case for expanding the EI program. They want workers to be able to ‘bank’ hours, work less weeks and receive benefits faster.

What surprises and shocks me about this is the crass politics involved in this process. It seems to me that this is not about fixing the economic problems in rural New Brunswick or even about fairness. It seems to be more about pandering to a new lobby group – the entrenched EI worker. If the politicians don’t get more for this group of workers, they stand to lose their seats.

And it’s no wonder. In many rural New Brunswick communities, seasonal EI workers are upwards of 40% or more of the workforce. This is a captive voter pool. Any increases to the EI program goes right to the bottom line of votes. Imagine cornering the EI vote and capturing 40% of the market. That is a prospect way to tempting for any politician.

However, the economic arguments they continue to use are starting to falter. I have just returned from a rural community in Atlantic Canada where I interviewed 12 business owners. In all cases they stated that the number one problem stifling economic development in their community is the EI system. There is a 20% ‘official’ unemployment rate in the community but these employers can’t find workers. They have to import people from Mexico and Newfoundland to do the work.

You see, the EI system has created two very real and unintended side effects in many rural communities across Canada:

  1. There is now a relatively large class of workers in rural communities that either will not work year round or the economic incentive from moving from a partial work/EI income support model to a year round work model is not attractive enough; and
  2. A large part of the economy has moved underground as a direct result of the EI system. The employers I interviewed said that you could get workers – as long as you paid them under the table so they could continue receiving their EI payments. In addition, many rural (and urban by the way) tradesmen and other workers generate income ‘on the side’ and under the table when they are not in official employment.

So the politicians’ solution is to expand the program further and potentially exacerbate these problems.

Don’t get me wrong. There are tens of thousands of New Brunswickers that count on EI as part of their basic income each year. They feel that this is an ‘entitlement’ and would vote any politician out who messes with it (just as Doug Young). I am not suggesting that we we slash and burn the EI program and then hold our breath and watch the carnage in rural New Brunswick.

But I am suggesting that these politicians need to refocus their efforts on economic development in rural NB. More EI and pogie will only delay needed reforms. More EI and pogie will not provide an incentive for the region’s best and brightest minds to stay here. More EI and pogie is a second best solution – and I believe that most people – even those on the system – would agree with that assessment. Very few people ever get rich (legally) on the government nickel.

The dollar amounts are staggering. Just the changes that are being proposed could represent well into the hundreds of millions – maybe several billion – of new EI benefits each year.

Just what could we do with those kinds of dollars in a new rural economic development program. Michelin put three plants in rural Nova Scotia – they employ some 3,000 workers year round in good paying jobs – for, I believe it was around $90 million in total incentives.

$90 Million! How dare they give corporate handouts to successful companies. Well, since Michelin first set up in Nova Scotia, the Federal government has handed out over $250 billion (with a B, in other words one quarter of a trillion dollars) in EI across Canada- the majority of which has gone to seasonal workers – paying them not to work.

My plan? Michelin style plants all over rural New Brunswick. Spend the money. Ultimately you will save billions in income support payments, have people know the dignity of year round work, clean up the underground economy and provide hope and a future for all of New Brunswick.

Sounds easy, doesn’t it?