I appreciate the opportunity to address the committee today on the employment insurance program and the policy changes that were introduced in recent years, particularly since 2012.
As noted, I'm joined by Benoît Long, my colleague from Service Canada, the senior assistant deputy minister for processing and payment services; and Annette Ryan, from the policy group at ESDC.
Before discussing the changes to the EI program and their effects, I think it is important to start by describing the evolving labour market context for the EI program.
Following the 2009 recession, the Canadian economy—and indeed, most developed economies—experienced a sharp economic contraction and gradual recovery. The labour market picture also displays industry-level adjustments and technological trends that continue to reshape the nature of work and business operations prior to and since the recession.
These trends make it difficult to assess the impacts of specific policy changes as separate from the wider labour market recovery.
Up until the commodity weaknesses experienced more recently in early 2015, we had seen a steady decline in the number of EI regular beneficiaries from the peak seen in the recession unemployment in June 2009, with recent initial and renewal intake of regular benefit claims essentially matching the period prior to the 2009 recession.
Another issue has been the concerns around the beneficiary-to-unemployment ratio, or BU ratio, which was 38.6% in 2014, which means that roughly 487,000 unemployed Canadians of the 1.3 million unemployed were in receipt of EI benefits. This is widely used by some stakeholders as a measure of access to the EI program.
What is less well recognized, however, is that just under 40% of the unemployed have not worked in the last 12 months. Some long-term unemployed can be supported by EI-funded programs, such as labour market development agreements with provinces, or by other programs, such as the youth employment strategy. The latter program is designed to address youth unemployment, but because it's a contributory program, those Canadians with no recent labour market attachment and who have not paid EI premiums find themselves outside the scope of the program. By contrast, just under 100,000, or about 8% of the unemployed were those who had insufficient hours to qualify for EI regular benefits.
As discussed in greater detail in the monitoring and assessment report that was tabled recently, on April 22, the EI coverage survey showed that 83% of the unemployed who had insurable employment and a valid job separation were eligible to receive EI regular benefits. This was on par with pre-recession figures. I would also note that we expect to see a slight increase in this eligibility rate as a result of the recently announced measures to expand the eligibility of new entrants and re-entrants.
Another policy change that relates somewhat to the issue of access to EI is the change to the EI waiting period, which is being moved from two weeks to one week beginning in January 2017.
There are four policy changes to the EI program around the 2012 and 2013 period that have garnered the most attention and that I will address in turn. The first is the sunsetting of the extra five weeks pilot project. The second is the introduction of a new working while on claim pilot project. The third is the change in calculating EI benefit rates through the introduction of variable best weeks. And last, are the series of measures undertaken as part of the connecting Canadians with available jobs, or CCAJ, initiative.
EI special benefits, an important and growing part of the EI program, also saw a variety of access expansions during this period, such as the introduction of the parents of critically ill children measure in 2012 and greater ability to access sickness from parental benefits. There were also changes to the handling of reconsiderations and appeals with the creation of the Social Security Tribunal.
I will be happy to discuss these changes in more detail should you have any questions related to them.
Turning to the other policy measures I mentioned, the extra five weeks pilot project provided five weeks of additional entitlement and was originally introduced with a target population of seasonal workers who experienced a persistent gap in their employment. A look at our evaluation of this measure shows that there's only a small share of the extra weeks that went to this targeted population. About 5% of the benefits paid went to these so-called seasonal gappers, which suggests that the measure as designed was not ideally targeted to the issue in hand.
Turning to the working while on claim pilot project, this was designed to encourage greater work attachment by allowing claimants to retain 50% of their benefits for any work while on claim, in contrast to the previous rules that allowed 100% set aside of their earnings for one day a week and zero thereafter. In general, this pilot was successful, as the degree of attachment to the labour force did increase, particularly among those who worked exactly one day a week. Compared to 2011, the ratio of earnings to regular benefits has increased as a result. There is one worrying statistic. While many people are working more days in a given week, overall a small share of people worked while on claim under the new rules, and low-income earners were overrepresented in the group that stopped working while on claim. There's more work being done on claim, but by fewer people.
One provision under this pilot was that individuals were given the option to revert to previous rules. The take-up of this option was not high, at about 12,000 people out of a possible 777,000. Budget 2016 opened up the eligibility further, allowing all new claimants to revert to the old rules, which is particularly advantageous for those who cannot find more than one day of work.
Turning to the variable best weeks pilot project, this is a successor to a previous pilot project in some regions of the country, which calculated benefits based on the best 14 weeks. This is a new model that calculates the benefits on the basis of the number of best weeks in the particular region. The number of weeks used ranges from 14 to 22 weeks, depending on the region's unemployment rate. As noted in the previous presentation, we've seen a convergence of the levels of benefits as a result of this.
The last measure I'll speak to is the connecting Canadians with available jobs initiative. There were a number of rules put in place around the acceptance of suitable work. There were definitions added to the EI regulations that determined such things as the length of the daily commute, the type of work, and the earnings for a new job. These provisions were reversed in budget 2016.
In closing, I would like to turn to the recent impacts of the commodities downturn. Cases of sudden economic deterioration, such as we saw more broadly in the 2009 recession, and again in regions affected by the commodities downturn, can stretch the responsiveness of the EI system. This is because regional benefit access and duration are linked to a three-month moving average of local unemployment rates, which provides a gradual response to changing labour market conditions. While this provides stability in normal circumstances, it can miss sustained deteriorations, such as the ones we have seen.
The budget measures announced in the recent budget provide additional weeks: five weeks of benefits for all regular claimants and an additional 20 weeks for long-tenured workers.
Those are the key points I wanted to make. I thank you for your time, and I'm open to any questions.
