Still Waiting for Recovery: A Look at the Recession's Impact on Employment Insurance
We know that the recession significantly increased Canada’s poverty levels. But do Canada’s poor now risk being permanently left behind? In this series of blog posts, we’ll explore the economic indicators, updating the research in CPJ’s 2010 report on the recession, Bearing the Brunt. Check back over the next few weeks for new blog posts on each indicator!
When someone loses their job, they need an alternative source of income. Employment Insurance is supposed to be that program for Canadians. Unfortunately, as CPJ’s report Bearing the Brunt showed, EI was totally inadequate in responding to the recession in 2008-2009 – at the recession’s peak, only half of all unemployed Canadians were receiving EI benefits. Since then, things haven’t gotten much better.
The number of regular EI beneficiaries rose from a near historic low of 500,340 to a peak of 829,290 in June 2009, a 65.74% increase. Since then, the number of beneficiaries has declined – with a few peaks and valleys – to 577,300 in May 2011, a 30.39% drop. However, the number of unemployed has declined more slowly, with a 12.81% drop between June 2009 and May 2011. (See Chart One for Unemployment and Regular EI Beneficiaries.) As a result, the rate of EI coverage has plummeted from its recession-high of 53.8% in September 2009 to 42% in May 2011, lower than the pre-recession rate of 44.9% in October 2008.1 (See Chart Two for Beneficiaries/Unemployed Ratio).
While the number of unemployed has been declining in 2011, the number of unemployed not receiving benefits has been increasing, reaching 796,800 in May 2011.2 In 2010, 13.1% of the 913,000 unemployed Canadians who had paid EI contributions did not have enough insurable hours to qualify for benefits. 18.3% did not have a “job separation” that qualified them for benefits (ie. they quit or were fired with cause).3
EI has a significant gender gap – more men than women qualify for benefits. Prior to the recession, 46% of unemployed men received benefits compared to only 39% of unemployed women. During the recession, the number of male beneficiaries increased faster than men’s unemployment, while the number of female beneficiaries increased at the same rate as women’s unemployment. However, men’s coverage is falling. In 2010, women’s EI eligibility remained the same as the previous year, but the proportion of unemployed men who had made EI contributions and had a “valid job separation” fell from 87.3% to 83.6%.4
Employment Insurance by Province
EI determines both access and length of benefits according to the unemployment rate in 58 regions across the country. While the Variable Entrance Rate changes with the local unemployment rate, it responds so slowly that significant imbalances in EI coverage resulted throughout the recession. The provinces that were hit hardest by unemployment, Alberta, British Columbia and Ontario, also had the lowest EI coverage. Meanwhile, the Atlantic provinces, which had comparatively very few job losses, had the highest rates of EI coverage. (See Chart Three for Unemployment Rate by Province and Chart Four for Beneficiaries/Unemployed Ratios by Province.)
Since the recession ended, Ontario, Alberta and British Columbia have seen a bigger drop-off in EI coverage than they have experienced in unemployment. (See Chart Five for the Change in Unemployment Rate and B/U Ratio for Ontario, Alberta and British Columbia.) The Atlantic provinces, on the other hand, have not seen much of a drop-off in EI coverage.5 (See Chart Six for the Change in Unemployment Rate and B/U Ratio for Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick.)
Employment Insurance Benefits
The maximum weekly benefit that anyone can receive from EI is $457 a week. However, many unemployed workers qualify for less. Benefits are set at 50% of insurable earnings, capped at $457. So EI beneficiaries who were earning $914 a week or less ($47,528 annually) see their income halved, while those who were earning more see their income more than halved.
In October 2008, the average weekly benefit received was $327.09. By December 2009, the average weekly benefit rose to $334.30, and by December 2010 it had climbed still further to $350.93.6 The increase was largely due to the loss of well-paid jobs in manufacturing and construction. However, at $18,248.36 annually (and no one but long-tenure workers actually qualifies for 52 weeks of benefits), the average benefits received from EI are a poverty income for most demographics, unless they have another household source of income. At $23,764 a year, even the maximum allowable benefit is a poverty income for households with more than 3 people in a city greater than 30,000 people and 4 or more people in any urban area.
Exhaustion of Employment Insurance Benefits
Unfortunately, Statistics Canada does not publish data on exhaustion of EI benefits so it is difficult to know precisely how many Canadians ran out of EI benefits without being able to find new work. However, HRSDC’s EI Monitoring and Assessment Report 2010 reveals some interesting details that suggest fears of half a million Canadians exhausting their benefits without finding new work were justified.
The federal government’s Economic Action Plan offered two extensions to EI benefits: 5 additional weeks of benefits to all EI recipients with an active claim as of March 1, 2009 or new claim up to September 11, 2010 and up to 20 extra weeks of benefits for long-tenured workers unemployed between January 4, 2009 and September 11, 2010. (Both have been extended for workers in “high unemployment regions” through this fall.) Because of this, the average entitlement to regular benefits has jumped considerably, from 31.8 weeks in the 2007-08 fiscal year to 36.5 weeks in 2008-09 and 42.8 weeks in 2009-10. However, despite the increase in entitlement, 27.9% of claimants in 2007-08 and 27% of claimants in 2008-09 still exhausted their benefits.
HRSDC reports that as of March 31, 2010, 613,290 EI recipients whose claim had ended had received the 5 week extension in benefits and 54,900 long-tenured workers whose claim had ended received additional weeks. Of the regular EI recipients who received 5 additional weeks, 76.2% (467,590) received the full five weeks available, indicating that they did not find new work before running out of benefits. Of the long-tenured workers, 76.2% (41,860) received all additional available weeks. In other words, only 158,740 people were prevented from exhausting their benefits due to the Economic Action Plan, while 509,450 people exhausted their EI benefits after the EI extension programs were introduced and before March 31, 2010.7
So estimates by Andrew Jackson and Sylvain Schetagne of the Canadian Labour Congress that as many as 500,000 Canadians would exhaust their benefits in late 2009 and early 2010 appear to have been entirely accurate.8 And this does not include those whose claims ended before 2009 or after March 2010.
Those who have exhausted their claim without finding new work will either need to rely on savings and credit or turn to social assistance. In Quebec, which is the only province which releases such statistics, 979 new admissions to social assistance in December 2010 were because of EI benefits ending, 13.3% of all new admissions. This compares to 1,065 in December 2009 (13.9%). Another 1,271 new admissions (17.2%) were the unemployed who did not qualify for EI benefits and 517 new recipients (7%) had applied because their EI benefits were insufficient. In December 2009, 1,315 new recipients did not qualify for EI and 602 received insufficient benefits. All together, then, nearly 2 in 5 social assistance recipients in Quebec are receiving benefits because of shortcomings in the federal EI program.9
- 1. Statistics Canada, CANSIM Tables 276-0001 and 282-0087.
- 2. Ibid.
- 3. Statistics Canada, Employment Insurance Coverage Survey in “The Daily,” June 27, 2011, http://www.statcan.gc.ca/daily-quotidien/110627/dq110627a-eng.htm.
- 4. Ibid.
- 5. Statistics Canada, Labour Force Survey data in “The Daily,” January 8, 2010 and July 8, 2011, http://www.statcan.gc.ca/dai-quo/index-eng.htm, and Statistics Canada, CANSIM Tables 276-0001 and 282-0087.
- 6. Canadian Economic Observer, Table 5.3-1, “Miscellaneous labour statistics,” July 2011 and October 2010 issues, http://www.statcan.gc.ca/pub/11-010-x/2010010/t024-eng.htm.
- 7. Human Resources and Skills Development Canada, “Chapter 5-I-2, Adequacy of Benefits,” EI Monitoring and Assessment Report 2010, March 2011, http://www.hrsdc.gc.ca/eng/employment/ei/reports/eimar_2010/Chapter5_1_2....
- 8. Andrew Jackson and Sylvain Schetagne, “Is EI Working for Canada’s Unemployed? Analyzing the Great Recession,” Alternative Federal Budget Technical Paper, Canadian Centre for Policy Alternatives, January 2010, http://www.policyalternatives.ca/sites/default/files/uploads/publication..., p 5.
- 9. Ministère de l’Emploi et de la Solidarité sociale du Québec, “Rapport statistique sur la clientèle, Décembre 2009,” et “Rapport statistique sur la clientèle, Décembre 2010.”
Chandra Pasma is a former CPJ Public Justice Policy Analyst.
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