The true employment picture
Hamilton Spectator
Sat 12 Aug 2006
Page: A20

Section: Business
Byline: Steve Arnold
Column: Steve Arnold

Source: The Hamilton Spectator

While Alberta employers are desperate for workers,
Canada's unemployment insurance system pays people to be idle in Quebec and
Newfoundland.

For conservative analysts like Yvan Guillemette, of the C.D. Howe Institute, that's
a terrible misuse of badly needed muscle and talent.

In a recent study entitled Misplaced Talent: The Rising Dispersion of
Unemployment Rates in Canada, Guillemette argues for changes to the insurance
system to push unemployed workers into migrating across their provinces and
across the country in pursuit of jobs.

Statistically speaking, the analyst makes an interesting point. June's
employment numbers show the labour force participation rate at a near-record
63.1 per cent, and the unemployment rate at a 32-year low of 6.1 per cent. The
national figures, however, hide a growing regional disparity -- while the
unemployment rate in south-central Manitoba stood at an impressive 2.2 per cent
in March, unemployment in northwestern Ontario stood at 8.3 per cent. In
Quebec's Gaspe region, the rate remained a discouraging 22.7 per cent.

"In a well-functioning labour market, we would expect to see limited
variation among regions as people move to where the jobs are," he concludes.

What's gumming up the works of that well-functioning economic engine, he
argues, is an employment insurance system that's more generous to people in high
unemployment regions, thus taking away any incentive to follow the work as it
moves across the country.

"We shouldn't be paying more or higher benefits to people just because
they're in a high unemployment area," Guillemette said in an interview.
"Employment Insurance was supposed to be just that, insurance in case of an
unforeseen event, but some people are using it as an income supplement."

In his study, Guillemette argues the decision to move in search of employment
is shaped by several factors, including job opportunities and potential
earnings, differences in the cost of living and quality of life as well as other
financial and psychological costs. Having some areas where EI benefits are high
and eligibility requirements low, "give the unemployed some reason to stay put
rather than move to areas where employment possibilities are better."

Guillemette argues all of that comes at a cost to the country, including
higher benefits paid by working Canadians who don't make EI claims and lost
productivity from idle workers.

"Despite good recent economic performance and a generally healthy labour
market, there is evidence that Canada could be doing even better if talent moved
more fluidly between and within regions. The EI program hinders such fluidity by
... discouraging the recurrently unemployed from seeking more stable employment
elsewhere," he wrote.

"Regionally neutral eligibility and benefit rules would remove this labour
market distortion and help promote a more efficient Canadian labour market."

For Don Fraser, president of the Hamilton and District Labour Council, the
situation's not as clean as Guillemette's statistics make it seem.

"It's easier said than done to just pull up and move when you could be
unemployed for a couple of months in the new area, with no incentive to move,"
he said. "If you're unemployed, how do you pay for the move?" There's also the
chance of a lower standard of living in a high demand area where housing costs
are soaring as well as the potential of a spouse having to give up a job.

Rather than focusing only on what the employment insurance system pays,
Fraser argues more could be accomplished with skills training programs.

"What they need in Alberta are skilled tradesmen, and that takes in-depth
training," he said. "Classes in resume writing and searching for a job on the
Internet are fine, but people have to have something to put on those resumes."

[email-masked]

905-526-3496

© 2006 Torstar Corporation

Edition: Final
Story Type: Column
Length: 610
words