EI Claims Surge

The worst news in today’s Employment Insurance (EI) figures is that new benefit claims hit a record high. Rising numbers of unemployed workers and hence EI beneficiaries are an unsurprising result of a deteriorating labour market. However, the increase the number of new EI claims suggests that the pace of deterioration is worsening rather than easing. Despite signs of a nascent recovery of economic output, today’s figures suggest that Canada’s job market will remain grim for some time to come.

Benefit Coverage

This outlook underscores the issue of whether workers unemployed through no fault of their own will have access to EI benefits. The silver lining in today’s release is that, for the first time since the recession began, slightly more than half of unemployed Canadians appear to be receiving EI benefits.

However, in May, seasonal adjustment reduced the official unemployment figure and increased the EI-beneficiary figure. Unadjusted figures (see below) indicate that fewer than half of unemployed Canadians received benefits.

Further layoffs of long-service employees will tend to increase this proportion. But the fact that some workers who had received benefits will soon begin to run out of benefits could have the opposite effect.

EI coverage can and should be increased by reducing the number of work hours needed to qualify for benefits and by extending the weeks of benefits available to those who do qualify. Last week, Statistics Canada released a study of EI coverage. It reports that in 2008, which mostly predates the economic crisis, more than 100,000 workers who would otherwise have been eligible for EI benefits did not receive them because they had not been employed for the number of hours required in their region.

 Employment Insurance Coverage, May 2009 (seasonally-adjusted figures)

Statistics Canada expanded today’s EI release to subdivide beneficiaries by age and gender. This breakdown was based on figures unadjusted for seasonality.

While the release highlighted the fact that more youth are receiving benefits, the proportion is still extremely low. Young workers who recently entered the workforce have the most difficulty accumulating enough hours to qualify for EI benefits. For similar reasons, unemployed women are even less likely than unemployed men to receive benefits.

Employment Insurance Coverage, May 2009 (unadjusted figures)

 UPDATE (July 29): Quoted by The Toronto Star