Another EI Absurdity

Well under one half of Canada’s 1.5 million unemployed workers are collecting EI benefits today, even though the national unemployment rate is still almost 8%. Special EI measures introduced as part of the 2009 Budget, notably an extra 5 weeks of benefits for all claimants,  expired this fall, long before a real labour market recovery has taken place.

The additional five weeks of EI provided as part of the Government Economic Action Plan benefited 900,000 workers and helped tempoarily boost the B/U rate – EI beneficiaries as a percentage of the unemployed – to a high of 51% at the low point of the downturn in the Summer of 2009. The measure does not apply to claims filed after September 11.

The job market is still a long way from where it was before the recession. The national unemployment rate was 7.9% in October 2010, down a bit from the recession high of 8.6%, but still almost two percentage points above the pre recession level of just over 6.0%.  The national unemployment rate is forecast in the October Economic and Fiscal Update to remain very close to present levels for some considerable time, averaging 7.7% in 2011, and 7.4% in 2012. Some forecasters are even more pessimistic. TD Economics forecasts an 8.1% unemployment rate for 2011.

The number of regular EI beneficiaries is falling much faster than the number of unemployed workers as some workers exhaust benefits, and as those being laid-off from precarious jobs fail to qualify for EI due to high entrance requirements in terms of hours worked. (Some need 910 hours or the equivalent of six months full-time work.)

Between June, 2009 (when the recession was at its worst) and August, 2010, the number of EI beneficiaries has been falling three times faster than the number of unemployed workers (down 17.8% compared to 5.1%). As a result, the proportion of all unemployed workers collecting regular EI benefits has fallen sharply over this period, from 51.3% to 44.4%. This is about the same level as before the recession, even though the unemployment rate is still about two percentage points higher than before the recession.(See Table)

The situation is especially grim in Ontario. Less than one in three (32.0%) of unemployed Ontario workers received regular EI benefits in August. This is well below the national average of 44.4%, even though the Ontario unemployment rate is well above the national rate (8.6% compared to 7.9%  in October).

In this dismal context, the federal government announced in October that the Extended EI Benefit Pilot Project will be re-instated for two years until September 15, 2012. This had been in question since it had been folded into the general 5 week benefit extension which was part of the Economic Action Plan. Effectively this restores the extra 5 weeks of benefits, but only for the 21 EI regions which had unemployment rates above 10% back when the pilot project began in 2005.

This is good news for workers in 21 regions, which cover most of rural Atlantic Canada, rural Quebec and Northern Canada, where unemployment rates generally remain high. (If the rate in a region falls below 8% for a year, they will be dropped from the pilot.)

Left out in the cold are five EI regions which have unemployment rates above 10% today. These regions are (with the October, 2010 unemployment rate in brackets) mainly in hard-hit industrial Ontario: Huron (10.5%); Windsor (11.5%); Niagara (10.4%); and Oshawa (10.1%.) On the cusp are St.Catharines (9.6%) and Toronto (9.3%). Also excluded is the Southern Interior of BC (10.8%.)

So, the EI system has been dialled back to its pre recession parameters, which mean as little as 14 weeks of benefits for those who just manage to qualify. But nothing is being done to help the many workers who have exhausted their benefits in especially hard-hit industrial Ontario.