EI: A Tale of Two Provinces

UPDATE (August 26): Quoted by Canadian Press, Canwest, The Toronto Star and Hamilton Spectator

It was the best of times, it was the worst of times…

It would be welcome news if the number of Canadians receiving Employment Insurance (EI) benefits increased because of a proactive policy decision to expand this program to combat the recession. In fact, the ongoing rise in EI beneficiaries simply reflects the deterioration of Canada’s labour market.

We are still in “the worst of times.” Every month, tens of thousands more Canadians are laid off than can find new jobs.

The better news in today’s release of EI statistics is that new benefit claims declined sharply, albeit from an all-time record high. While hardly “the best of times,” this revelation provides hope that Canada’s labour market is “getting worse more slowly” (to steal a quote from Paul Krugman that he stole from John Kenneth Galbraith.)

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

Alberta

A striking aspect of today’s release was the deluge of EI benefits in Alberta. Between May and June, the number of Albertans receiving EI jumped by almost 10% (approximately double the national increase of 5%.) Over the past year, this number rose by 264% (compared to 73% nationally.) Of course, these staggering percentages reflect not only the huge loss of jobs in Alberta, but also the province’s previously low unemployment rate.

As a result of this legacy, the EI program is still more stringent in Alberta than in many other parts of Canada. More than 600 work hours are needed to qualify in Edmonton, Calgary and southern Alberta. The duration of benefits ranges from 20 to 45 weeks in these regions. Unemployed Albertans would be among the greatest beneficiaries of moving to national EI standards, as the labour movement has long advocated.

That said, Alberta is not getting the shortest end of the stick. It is now easier to collect EI in Edmonton or Calgary than in Regina, Saskatoon or Winnipeg. In these other prairie cities, fully 700 hours are needed to qualify and the duration of benefits ranges from 19 to 41 weeks. Also, a slightly higher percentage of unemployed workers are now receiving benefits in Alberta than in Ontario.

Ontario

As a result, Ontario now has the lowest EI coverage in Canada. This outcome is surprising giving that Ontario had the third-highest provincial unemployment rate in June. (Only Newfoundland and Labrador and Prince Edward Island had higher unemployment rates.) As the regional unemployment rate rises, the qualifying hours shorten and the duration of benefits lengthens.

Self-employment, which is not covered by EI, accounts for a slightly smaller portion of the workforce in Ontario than in the country as a whole. If anything, this fact should improve Ontario’s EI coverage. While proposals to find ways of including the self-employed in EI may be worth considering, they will not solve Ontario’s problem.

Part-time employment, which may not provide enough hours to qualify for EI, is slightly more common in Ontario than in the country as a whole. But this difference is not nearly great enough to fully explain Ontario’s significantly lower EI coverage.

Younger workers and recent immigrants would often be “new entrants” to the workforce and need 910 hours to qualify for benefits. Ontario undoubtedly has proportionally more recent immigrants than the country as a whole.

Ontario currently has proportionally fewer young employees, but that could be because many are already unemployed. On the whole, Ontario’s population is younger than the national average. Therefore, it is possible that a concentration of unemployed immigrants and youth account for (some of) the province’s low EI coverage.  However, this mystery warrants further investigation.

Employment Insurance Coverage, June 2009 (unadjusted figures)