Evidence of meeting #24 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was regions.
A video is available from Parliament.
Conservative
Director, Old Age Security Policy, Income Security and Social Development Branch, Department of Employment and Social Development
Oh, I'm sorry. The average increase is $775.
Director, Old Age Security Policy, Income Security and Social Development Branch, Department of Employment and Social Development
That is correct.
Director, Old Age Security Policy, Income Security and Social Development Branch, Department of Employment and Social Development
Yes. The maximum increase is $947. Single seniors with an income below $4,600 will get the maximum increase, and seniors with an income between $4,600 and roughly $8,400 will get a partial increase. Beyond $8,400, there won't be any increase.
Liberal
The Chair Liberal Wayne Easter
Are there any other questions?
Okay, I guess that is clear-cut.
That's third time and done. Thank you very much, Ms. Martel. Could we have the witnesses for division 12, please?
We're dealing with division 12 of part 4, respecting the Employment Insurance Act. We have Ms. Ryan, who is director general of employment insurance policy, skills and employment branch, and Ms. Venne, who is the director, policy analysis and initiatives, employment insurance policy, in skills and employment branch.
Welcome. I believe you have a brief statement, and then we'll go to questions. Thank you very much for coming. I guess this is also for the third time.
Annette Ryan Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
Thank you, Mr. Chair.
The bill proposes to make three essential changes to the Employment Insurance Act. The first of these is to extend extra weeks of benefits for workers in regions affected by the downturn in commodity prices, the second is to eliminate new entrant and re-entrant provisions, and the third is to change the two-week waiting period to one week.
I'll speak to these briefly in turn and then take questions.
On the extension of extra benefits, the EI program provides temporary financial assistance to unemployed workers who have lost their jobs through no fault of their own while they look for employment or upgrade their skills. Dramatic declines in global commodity prices since late 2014 have produced sharp and sustained unemployment shocks in commodity-based regions. Budget 2016 provides that eligible unemployed workers in 12 regions hardest hit by the downturn in commodity prices may receive additional weeks of EI regular benefits. Five additional weeks of EI regular benefits will be available for all eligible unemployed workers in specified regions, up to a maximum of 50 weeks, and up to an additional 20 weeks will be available to eligible unemployed long-tenured workers in specified regions, up to a maximum of 70 weeks. Extended benefits will be available for a period of one year starting in July 2016, with the measure applying to all eligible claimants as of January 4, 2015.
That's the first measure, Mr. Chair.
I'll speak next to the second measure, the elimination of new entrants and re-entrants.
The government is seeking to make amendments to the EI Act and to amend the EI regulations and EI fishing regulations to eliminate the new entrant and re-entrant requirements established for regular claimants and self-employed fishers.
Currently new entrant and re-entrant rules require workers newly entering the labour force or re-entering after an absence of two years to accumulate 910 hours of insurable employment in the year preceding their claim to be eligible for employment insurance benefits. The proposed amendments will eliminate the new entrant and re-entrant provisions introduced in 1978 and instead will require claimants to meet their regional variable entrance requirement, which varies between 420 hours and 700 hours, to be eligible for EI regular benefits.
Self-employed fishers will need to reach the regional insurable earnings entrance requirements for fishers, which varies from $2,500 to $4,200 to qualify for fishing benefits.
The provisions will also allow workers to gain access to EI-funded training supports delivered through labour market development agreements with provinces and territories, as these workers must qualify for Part I benefits before qualifying for Part II benefits.
Turning to the third measure, Mr. Chair, the Employment Insurance Act currently requires claimants to serve a waiting period prior to benefits being payable and provides that it may be deferred or waived in specific circumstances.
The waiting period has been set at two weeks since 1971. These amendments to the EI Act will reduce the waiting period from two weeks to one week. All claimants whose benefit period commences before the coming into force of these amendments will be subject to the existing two-week waiting period.
Liberal
The Chair Liberal Wayne Easter
Thank you very much, Ms. Ryan.
We will go to questions, but before we start I have a question on new entrants and re-entrants.
You talked about the regular insurable hours. That system, though, still varies. It can go up from 420 to 440, etc. It jumps around according to the employment in the region. Am I correct about that?
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
That's absolutely right, Mr. Chair. The variable entrance requirements and the weeks of eligibility are specified as per a table that ranges from 6% and under for unemployment rates and then has a maximum threshold of 16% and higher, which determines benefits according to how many hours you qualify with.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you, Mr. Chair.
Many thanks to the witnesses for appearing today. I have a few questions.
I would really like to understand the logic underpinning the calculations used to determine eligibility for the five-week extension of benefits.
Before, five weeks of benefits were given to workers in regions with high unemployment rates, therefore, often in regions in which seasonal employment was predominant or significant. We now have a new formula: the region must now have experienced a 2% increase in its unemployment rate over a three-month period without showing any signs of recovery. In the end, the bill lists the 12 regions that are eligible, and three other regions should be added to that list. In accordance with the formula that has been proposed, by next month, four other regions could have been added to the list, but we have just learned that these four other regions will not be included, because a decision has been made not to make any further changes to the list at this point.
I would really like to understand the rationale and thinking that led to these decisions. Frankly, it makes no sense at all, particularly to someone like me, who is from eastern Quebec, where there is a crying need to bridge this gap.
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
In fact, you had two questions. If you don't mind, I will answer in English.
The first question speaks to the issue of why benefits would be extended, and as I understand it, sir, the second question would speak to why these regions were selected.
In terms of why benefits would be extended for five weeks—
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I have nothing against the extension of benefits. I understand the rationale. I want to know the thinking behind the establishment of the formula that was used.
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
The formula essentially reflects a range of analyses that we were undertaking within the department for a period of months. Following the downturn in commodity prices, we instituted a range of measures to track the EI claims that were coming in. We saw a marked increase in EI claims in early 2015. It was quite specific. In the week after Christmas, there was a large increase in the number of claims. These claims were very localized by province and aligned very closely with any number of other metrics.
In terms of the demographics of the claims that were coming in the door, not only were they located in regions that were heavily dependent on commodities, but the claimants themselves showed a marked pattern of professions related to the oil sector and the commodity sector. That was one level of analysis that was done, and we did not see similar patterns across the country.
In other features that we noticed, we did begin to see an increase in the exhaustion of benefits that started in September or October of 2015. We didn't get a sense from the earlier claimants who were coming into the program that people were having great difficulties in re-entering the workforce, but later in the year it very much increased.
Those patterns of both high intake and then high exhaustion were very localized and correlated with any number of other metrics, and they were specifically the metrics on which we based access to the extended benefits.
The other most pertinent analysis we did was parallel to the downturn in 2009, when there was a much more widespread increase in unemployment rates. There was a pattern of 2% or more in most parts of the country, essentially.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I understand the argument about the collapse in commodity prices and the repercussions this may have. However, a 2% increase in a region's unemployment rate over a three-month period, whether because of the collapse in commodity prices or for any other reason, is highly problematic.
I understand that the sharp drop in commodity prices is one of the reasons for extending the number of weeks of benefits, but why is it the only one?
My second question is a follow-up to the first one. Why limit the list of regions that could benefit from this measure now? Why not consider the regions that could become eligible according to the criteria in June or July for example?
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
In the first instance, the specific criteria we used correlated with other measures, but in the interests of clarity and precision, we set the specific criteria of 2% for a period of three months in hopes of bringing that precision.
Could I ask you to repeat your second question?
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Why would it be determined that, as of now, no other regions would be added, even if they were to become eligible according to the defined criteria?
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
That's a good question. It has to do with the timetable for implementation, in the sense that the extended benefits begin in January 2015.
The idea of it being a measure that tracks a sharp and sustained deterioration in labour markets and having that access to benefits begin in January of 2015 would become increasingly less connected to the proposed policy measure.
In terms of the flexibility that's built into the system—that was related to the chair's first question—the program remains able to adjust to ongoing changes in economic regions. When regions have a change over a period of almost a year and a half, versus the change in commodity prices, it constitutes less of a sudden increase in unemployment and moves away from the policy intent of dealing with those mass layoffs that occurred at a given time.
Those two measures—the policy design as well as the idea that we are trying to bring extraordinary measures that target a sharp and sudden deterioration—both speak to timing that gets less direct the further you get away from the period of the downturn.
Liberal
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
The cost of this program over two years is probably around $582 million. Is that right?
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
That's exactly correct.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
With regard to these special regions that we're discussing with Mr. Caron, what will the overall cost be for that program?
Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
I'm happy to speak to that. The cost for the additional three regions that the Prime Minister announced would be $214 million in the two-year period that follows the budget and $241 million over the entire span of the program, because some people will continue to collect benefits into a third year. Administrative costs will be $4.4 million, and our estimate is that this will help some 63,500 people.
Liberal
