Employment Insurance logic needs to be fixed
September 12, 2020
Employment Insurance logic has to align its goals with the recipient, writes Peter Watson.
Today a story.
But first a common business principal.
Anytime you have a business relationship it is to your advantage that all parties are hoping for the same outcome.
For example, if you work for a company a bonus could be linked to the profitability of the company. The result hopefully will be the employee and the company trying to do the same thing and make a profit.
Now for the story. It has to do with Employment Insurance (EI).
I had a conversation with a young man who was working in cottage country. He told me about his options for the coming winter.
He had been offered a job working locally on the night shift. To me that sounded like a good option because he could learn and potentially this would open up new career opportunities.
But there was one problem.
His other option was to collect EI during the winter. You see, EI benefits and pay from his job potential where about equal.
Then he said something that sums up an underlying problem. Because the night shift job and EI resulted in about the same money, he decided rather than work, he would take the EI because he preferred to go ice fishing.
The reaction of many might be that he is lazy and just taking advantage of the system. Maybe that is true.
The other way to interpret this is the government has developed a program that is flawed. What the government wanted was for this young man to find employment to be financially self-sufficient.
He wanted EI payments so he could not work.
We have a problem.
Now the big question: Who do you blame for this outcome? The government or the young man?
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com