The following is an extract from the CLC publication “Recession Watch” available at
Before the recession, more than one in four (27.9%) of claimants exhausted their benefits (29.9% of women and 26.5% of men) and more than one in three (34.3%) older workers exhausted their benefits. Currently, claimants are eligible for between 19 weeks and 50 weeks of benefits depending upon how many hours of work they put in in the 52-week qualifying period before a claim and the regional rate of unemployment. (This includes the temporary five weeks of benefits added to the system in all regions in the 2009 Budget.) In an â€œaverageâ€ region with an unemployment rate of 8% to 9% â€• the same as the average national rate â€• eligibility ranges from 23 to 47 weeks depending upon the number of hours worked in the previous year. More than 1,820 hours or essentially a history of working in a full-time, permanent job are required to get the maximum 47 weeks of benefits. (The 50-week maximum only applies in regions with an unemployment rate above 12%.)
It can be estimated that a new EI claimant today will, on average, qualify for about 38 weeks or nine months of benefits. That is the average of 31 weeks before the recession (2006-07), plus the extra five weeks added in the last Budget, plus the extra two weeks generated on average by a two-percentage-point rise in the national unemployment rate.
We can expect that the total number of new regular claims in 2009 will hit about two million. If the exhaustion rate were to remain the same as in 2006-07, we could eventually see some 500,000-plus exhausted claims in late 2009 and into 2010. It is open to question if the exhaustion rate will remain the same as before the recession. On the one hand, a higher unemployment rate automatically triggers somewhat longer benefit periods, and five weeks have been temporarily added for two years. About 400,000 workers were expected by HRSDC to qualify for the extra five weeks in 2009-10. On the other hand, it will be far harder than in 2006-07 for those on claim to find a new job before their eligibility period comes to an end.
At this point in the recession, jobs are still very hard to find. Between the start of the recession and September 2009, the average duration of a spell of unemployment has risen from 13.6 to 17.0 weeks, and more than one in five unemployed workers in September had been out of work for more than six months, clearly placing those on EI at risk of running out in the very near future if, in fact, they have not already exhausted.
While no direct data are available on the number of exhaustees, the number of EI regular beneficiaries appears to have peaked by the summer of 2009, even though the number of unemployed workers has continued to rise.Â And the gap between the number of unemployed workers and the number of regular EI beneficiaries has greatly increased in communities which were hit hard in the early stages of the recession, such as Windsor.
In response to the reality of many unemployed workers exhausting their benefits, the Conservative government legislated in November to further extend EI benefits by five to 20 extra weeks of benefits on a temporary basis, but only for a small subgroup of claimants. The government estimates that 190,000 workers, so-called â€œlong tenureâ€ workers, will qualify over the short life of the program at a cost of just under $1 billion. The payments will be made over the final months of 2009, 2010, and until the fall of 2011. A â€œguesstimateâ€ is that only about one in five potential exhaustees will qualify for this additional extension. (If there are three million claims in 2009 and the first half of 2010, and the exhaustion rate is 30%, close to one million claims will be exhausted.)
To be eligible for the second round of extended benefits, a worker must have initiated a claim after January 4, 2009, thus excluding the many workers who lost their jobs in late 2008. Eligibility for the extended benefit will be rapidly phased out between June and September of 2010. To qualify, a worker must also have been paying into the system (defined as paying at least 30% of the maximum premium) for at least seven of the past ten years. The maximum additional 20 weeks goes to those who have been paying in even longer, for at least 12 of the past 15 years. Finally, to qualify, a worker must have claimed no more than 35 weeks of regular EI benefits over the last five years. This temporarily re-introduces an element of experience-rating into the EI system.
The target group was, very explicitly, older workers who have made very limited use of the EI system in the past â€• meaning younger workers, many women, workers in high unemployment regions, workers in seasonal industries, and many industrial workers will not qualify. The 35-week cutoff will exclude many industrial workers who have been temporarily laid off to reduce inventories, to allow for retooling of plants and other normal workforce fluctuations in operations. It will also exclude many claimants in provinces which experienced relatively high unemployment rates over the past five years â€• notably Atlantic Canada, Quebec, and rural and northern regions in other provinces â€• as well as the many workers impacted by the manufacturing and forest industry jobs crisis which began well before the Great Recession.
The 35-week cutoff makes an invidious and unsupported distinction between the â€œdeservingâ€ and the â€œundeservingâ€ unemployed based on previous use of the system, ignoring the fact that any EI claim has to be based on an employer layoff as opposed to any choice exercised by a worker. (Workers who quit or are fired from a job are ineligible under the rules which have been in place for the past decade.)
The CLC has long called for an EI program with a single national entrance requirement of 360 hours, and eligibility for up to 50 weeks of benefits based on 60% of the best 12 weeks of earnings in the qualifying period. As detailed in a recent CCPA report by Lars Osberg, â€œCanadaâ€™s Declining Social Safety Net: The Case for EI Reform,â€ our EI program is one of the least generous in the high income countries and excludes many unemployed workers from benefits completely. The â€œstress testingâ€ of the current system has shown that current entrance requirements continue to exclude many workers, and average benefits remain very low.
A major challenge facing Canadians is the prospect of very large numbers of unemployed workers exhausting their EI benefits today and over the coming months. Many will, after using up their financial assets, be forced to turn to provincial social assistance programs. In the United States, the federal government has â€• as is usually the case in periods of very high unemployment â€• temporarily extended benefits by up to 33 weeks in states with very high unemployment rates.
Extending benefits would result in higher EI benefit costs until such time as high unemployment rates begin to decline. However, these benefits are a highly effective form of temporary economic stimulus, flowing directly to the principal victims of the recession and to especially hard-hit communities. The huge surplus accumulated in the EI Account before the recession can and should be drawn upon if it is needed.