Correcting Course : Employment Insurance Needs a Redesign to Counter Recessions and Achieve Equity

As a primary pillar of Canada’s social safety net, Employment Insurance (EI) has proven itself to be slow to react to downturns, weakening its ability to automatically stabilize the economy. It has also gone off track from its original main goal: to provide insurance against unpredictable job losses.EI should be modernized with an eye to making it a more effective counter-cyclical income support tool by making the access criteria more equitable and ensuring that benefit durations respond quickly and effectively to unemployment shocks.During the Great Recession of 2008/09, the oil price collapse in 2014/15, and the most recent pandemic, however, the program has proven itself unable to meet in timely fashion the needs of many workers who face job losses. During the commodities shock, unemployment rates in some regions in Alberta rose sharply, but there was no immediate increase in either benefit duration or ease of access. A similar pitfall emerged in low-unemployment regions at the beginning of the COVID-19 pandemic.Benefit entitlements should be less oriented to indemnifying chronic unemployment and more responsive to covering unemployment caused by cycles or totally unanticipated shocks like the pandemic.The authors make three main policy recommendations: (i) Implement uniform or more universal entrance requirements. (ii) Sharply reduce the number of EI regions. (iii) Improve the responsiveness of the benefit duration formula to labour market downturns and recoveries