We’ll call them Joe and Phil.
Joe, 56, has worked for the same auto manufacturer for 30 years. He mentors younger workers like Phil, 24, a recent hire, as they work side-by-side on the dayshift.
According to a new University of British Columbia study, when the economy tanks and layoffs occur, long-time workers like Joe find it dramatically more difficult to find other jobs than newer employees. And despite decades of Employment Insurance (EI) contributions, these workers may not be getting the support they need, the study suggests.
“People in the same job for long periods suffer much more when they lose their job than others,” says UBC economics professor Craig Riddell, author of the study and a member of Canada’s Expert Panel on Older Workers, a government panel of labour experts dedicated to improving support and conditions for older workers.
The study sheds new light on long-term workers, who are among the hardest hit by unemployment, and highlights a startling lack of national data on long-term job displacement and its consequences – information that other Western nations routinely collect and which could significantly enhance Canada’s ability to create better unemployment policies.
Compared to workers who frequently flex their job-hunting skills, the financial and emotional toll of unemployment is significantly worse for those who’ve held a job for long periods, Riddell says. Their numbers have skyrocketed during the recent recession – most coming from Canada’s manufacturing, forestry, fishing, pulp and paper sectors, he adds.
Financially, long-tenure workers face a double-hit, Riddell says. Compared to other unemployed groups, they take as much as 35 per cent longer to find new work. But the greatest earning losses are actually after they find another job, he says.
“When these folks lose their jobs, they are looking at pay cuts by as much as 30 per cent when they find new work,” says Riddell, who leads Canadian Labour Market and Skills Research Network (CLSRN), a network of researchers dedicated to improving our understanding of the Canadian labour market.
Why? According to Riddell, these workers typically have accrued premium wages through seniority. “When they find themselves back in the competitive labour market, most just can’t find employment at a comparable salary with the qualifications they have,” he says, noting most end up in entry- or medium-level positions in other industries.
For someone supporting a mortgage and a family, this gloomy financial portrait can take a significant emotional toll. According to Riddell, long-tenure workers who lose their jobs face a greater risk for stress, depression, divorce, suicide and overall life-expectancy.
Riddell says these impacts suggest a need for targeted increases in EI benefits for long-tenure workers. In fact, he argues that the issue is significantly more pressing than the question that has preoccupied Canada’s federal political leaders during the recent election: harmonizing EI’s regional qualifications.
In the eyes of EI, someone who has paid into EI for 30 years is essentially treated the same as someone who only has one year of unemployment under their belts, Riddell says. EI currently only looks at someone’s last 12 months of service.
“Imagine that our car insurance paid the same amount for fender benders as for vehicles that are totaled,” he says. “That’s what this is tantamount to for long-tenure workers: they are totaled.”
In addition to enhancing the duration or amount of EI benefits for displaced long-tenure workers, Riddell’s study makes a number of other recommendations. One is a call for Canada to consider a national wage insurance program. Recognizing that this group’s biggest earnings hit is post-unemployment – when they are forced to take lower-paying jobs – wage insurance would offer salary top-ups to individuals who paid into the system in good times. Doing so would reduce the earnings loss and encourage displaced workers to become employed faster than they would otherwise be willing to, Riddell says.
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