Research group suggests EI model that helps Atlantic workers save for retirement
AIMS says current system encourages reliance on short-term seasonal work
A new report from an Atlantic research group suggests Canada should adopt a new model for employment insurance, one that would provide more incentives for people to return to work as soon as they can.
Marco Navarro-Genie, president of the Atlantic Institute for Market Studies, says employment insurance is no longer what it was meant to be — a mitigation system for people who had lost their jobs.
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The report, An Alternative to Employment Insurance, describes what the EI system has become over time and how it differs from region to region.
"The net result is that the system in Canada largely is creating dependence on short term seasonal work; it is discouraging labour mobility … it is providing disincentives to employment," said Navarro-Genie.
Compulsory EI savings
Navarro-Genie said the report recommends that the federal government consider adopting the system used in Chile.
The south American country uses a model of compulsory EI savings accounts under which individual contributors open saving accounts in which money is deposited by themselves, their employers and employees and sometimes the state.
"These saving accounts become essentially an individually run program that are then administered by a centrally run organization, a private administrator," said Navarro-Genie.
Navarro-Genie said the result of having the private savings accounts is that people who are unemployed are often more eager to find work in order to avoid dipping into the savings accounts.
"The greater incentives of the savings accounts is at the end of a certain period people can choose to stop making contributions to it … or they can continue to make contributions to it because at the end when they retire they are able to seize the entire account and the proceedings from it."
Keep own money
Navarro-Genie said the government in Chile does not have control of the funds, nor can they can be seized for any kind of debt repayment.
Navarro-Genie said this type of program would also be good for Atlantic Canadians because a previous study has shown that residents of the four provinces are not saving enough for retirement or have access to pensions.
"This would be a way for people to essentially contribute also to their pensions or they can do whatever with it," he said.
While Navarro-Genie said he's aware of the sensitivities surrounding any suggested changes to the EI program, he said people should look at the pros and cons of it.
"They will see that this is more likely to help Atlantic Canadians," he said.
With files from Information Morning Moncton