Employment Insurance and the Recovery

While the Canadian economy has begun to recover from the “Great Recession” in terms of the level of GDP and overall job growth, unemployment and under-employment still remain well above pre-recession levels. The national unemployment rate in June 2010 was 7.9%, well up from 6.0% two years earlier. The number of unemployed workers was, at 1,475,000, still more than 300,000 higher than before the recession, and over 300,000 workers ― mainly adult men ― had been out of work for six months or longer.

Notwithstanding the continuing weak state of the job market, special Employment Insurance income support and training measures which were an important part of the government’s response to the Great Recession have or are about to come to an end. These include an extra five weeks of EI benefits for all regular beneficiaries to a 50-week regional maximum and a further extension of regular benefits for some so-called long-tenure workers, both of which measures expire effective September 11. Access to special EI training benefits ended in May 2010, and three important EI pilot projects will expire later this year.

While there are many reasons to be critical of key gaps in Canada’s Employment Insurance program, there can be no doubt that it has helped hundreds of thousands of unemployed workers and many hard-hit communities weather the economic crisis. The number of regular EI beneficiaries peaked at 829,000 in mid-2009, and remained at 667,000 in April 2010. Taking into account that many workers move on and off EI even in a recession, likely well over 1.5 million Canadians will have used the program at some time in each of 2010 and 2011. Some $17 billion in regular EI benefits will be paid out in each of 2009-2010 and 2010-2011, even though the average benefit paid is well under $400 per week.

Modest income support from EI helped working families deal with a severe loss of income following involuntary layoffs, supported active job searches, and helped high unemployment communities survive. Special measures in support of work-sharing under EI covering almost 200,000 workers helped prevent many layoffs, and some unemployed workers have benefited from special measures to provide income support for retraining.

Even at the peak of the recession, just over one-half of all unemployed workers qualified for regular EI benefits. Those most likely to qualify were male workers who had lost reasonably steady jobs. Most women and younger workers fell through the cracks. Still, the fact that the EI system is easier to access when unemployment is high, combined with the special extension of benefits and other measures, made a significant difference.

Now is not the time to scale back the special measures. Many workers will soon or have already exhausted benefits. Between April 2009 and April 2010, the number of regular EI beneficiaries fell by 55,000 even though the total number of unemployed workers actually increased. The proportion of unemployed workers collecting benefits – the so called B/U rate -  has fallen from a recession peak of 51% to just 45%. Many unemployed workers have been cut off benefits in communities which have yet to see a significant increase in jobs.

The Canadian Labour Congress, the CAW, several Provincial Federations of Labour and many others have called on the federal government to continue benefit extensions, flexibility for work-sharing arrangements, and use of regular EI benefits to support retraining of unemployed workers. EI will continue to be a major issue when the Budget debate begins in September.

(There was a good piece by Laurell Ritchie of the CAW in the Globe yesterday on this issue.)

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