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Canada’s shame: EI is stealing from the young

A Youth Employment Services centre in Toronto in this photo from 2009. In 2010, only 48 per cent of 15 to 24 year olds who were laid off, or who quit their jobs for ‘just cause,’ received Employment Insurance benefits.

Kevin Van Paassen/THE GLOBE AND MAIL

Frances Woolley is a professor of economics at Carleton University

This year, all across Canada, students are serving ice cream, painting houses, doing landscaping, working in internships and co-op placements. Every single one of these employees is legally required to pay Employment Insurance premiums. The vast majority will never benefit from their contributions.

In 2010, the most recent year for which data is available, only 48 per cent of 15 to 24 year olds who were laid off, or who quit their jobs for "just cause", received Employment Insurance benefits. People who leave their jobs to return to school, or who get fed up with spending Saturday night working at Tim Horton's, are not even included in these calculations. Going back to school is not "just cause" for quitting, so students are automatically disqualified from EI.

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To put that 48 per cent number into perspective, 90 per cent of men and women between 25 and 69 who were laid off, or quit for just cause, received EI benefits.

The young are disadvantaged, in part, because many are new labour market entrants. An established worker in a high unemployment region of the country can qualify for EI benefits after as little 420 hours of work. A new entrant has to work 910 hours over a 52 week period to qualify for benefits. Since many young workers work part-time, or only part of the year, they do not qualify.

The new entrant rules reflect what I call the "EI as crack cocaine" hypothesis – or, in more bureaucratic language, the idea that "early use of Employment Insurance may induce an individual to become a frequent user". If using EI at a young age causes individuals to become hooked, the best remedy is to stop young people from ever trying EI, by imposing tougher qualification requirements on them.

As a parent, I don't want my children to get hooked on EI. At the same time, however, I don't want them to have to pay into a system that's stacked against them. Here's my solution: refund the premiums. Young workers who are denied EI because they have not worked enough hours should be entitled to a refund of the premiums they have paid into the system.

It might be argued that it doesn't matter; a typical young worker might not pay more than more than $100 or $200 a year into the EI system. But little injustices add up to big injustices. Over years of part-time work, a student can pay hundreds of dollars in EI premiums. Furthermore, EI affects large numbers of people. According to the most recent Employment Insurance Monitoring and Assessment Report, there are two-and-a-half million people under 25 working in the Canadian labour market, and this group has the highest unemployment rate of any demographic in Canada.

Collecting premiums from young workers and then denying them benefits is just not fair.

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About the Author

Frances Woolley is a professor of economics at Carleton University, where she teaches public finance. Professor Woolley is a former Secretary Treasurer of the Canadian Economics Association, and currently co-editor of Review of Economics of the Household. Her research on taxation and the family was awarded the Purvis Prize in 2001 and the John Vanderkamp Award in 1997. More

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