Evaluation of the Work-Sharing Program

Program objective

Work-Sharing is an adjustment program designed to help employers and workers avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. Layoffs are avoided by offering Employment Insurance Part I income support to workers willing to work a temporarily reduced work week while their company recovers. The goal is for all participating employees to return to normal working hours by the end of the term of the Work-Sharing agreement.

The program helps employers retain skilled employees and avoid the costs of recruiting and training new employees when business returns to normal levels. It also helps employees maintain their skills and jobs while supplementing their wages with EI benefits for the days they are not working. While the Work-Sharing program primarily responds to temporary economic recessions, the program also has special measures which can be used to assist employers affected by a disaster or state of emergency.

In response to the high level of uncertainty faced by many businesses during the 2008-2009 recession which was both rapid and steep, the Work-Sharing program introduced a number of temporary changes to help firms remain viable during the agreement period. The current evaluation places particular emphasis on the assessment of recent program changes, both temporary and permanent, implemented in response to the economic recession ^{Footnote 1} .

Evaluation key findings

Overall, the evaluation found that the changes introduced during the 2008-2009 recession were effective as they allowed a large number of employers to avoid unnecessary layoffs when faced with a temporary downturn in business that was beyond their control, thereby meeting the objective of the program. That said, the changes did not prevent structural adjustments that may occur during and after a recession (i.e., affecting the likelihood of a firm completely shutting down or workers being laid off after the termination of a Work-Sharing agreement).

Program participation is highly counter cyclical. That is, the number of Work-Sharing claims increase during economic recessions and decline during periods of recovery and economic growth. During the last recession, participation and program expenditures went from a low of just over 10,000 claims and $11 million to a high of about 139,000 claims and $235 million. While, at peak participation, Work-Sharing as a share of total employment accounted for 0.83% of total employment, it is important to note that the program offered a form of job stability and financial security to a large number of employees which can have a multiplier effect on communities.

Averted layoffs

Many participating employers attributed Work-Sharing with helping their company avoid temporary layoffs and returning to normal levels of production. However, obtaining a precise estimate of layoffs averted can be challenging and the best estimates typically involve a number of assumptions based on observed work reductions. The evaluation found that a large percentage of layoffs were averted. This evaluation estimates that a layoff has been averted when it has remained averted for at least 6 months following the agreement termination.

• On average between the years 2000-01 and 2010-11, 60% of layoffs averted during the agreement, remained averted for at least 6 months, resulting in an estimated net effect of 11,189 and 24,385 layoffs averted during the years 2008-09 and 2009-10 respectively. This was an improvement over the estimated 49% of layoffs averted for 6 months during the 1990-91 to 2001-02 period, as documented by the 2004 Work-Sharing evaluation
• The temporary measures which extended the maximum agreement length during the 2008-2009 recession, were found to have no influence on the likelihood of workers being laid off in the six months following the expiry of the Work-Sharing agreement. Rather, the layoff rates followed a counter cyclical pattern regardless of the whether or not agreement extensions were available
• The likelihood of a firm completely shutting down after the termination of an agreement was found to be very low for firms with over 5 employees on Work-Sharing, and virtually nil for firms with over 25 employees on Work-Sharing
• More than 75% of employers said that the costs of lay-offs in terms of subsequent recruiting and training would have been very substantial and that avoiding this was the principal benefit of applying to the program

Other key findings

• The evaluation did not find any evidence to suggest that the program’s take-up, in terms of volume of participants, increased beyond what could be expected from its typical counter cyclicality. However, the average agreement size increased during the recent recession, both in terms of employees claiming Work-Sharing per employer, and in terms of the average claim duration
• It was found that Work-Sharing has positive impacts on communities and employees. Work-Sharing supports communities by averting a number of layoffs and allowing employees to retain their jobs, maintain non-salary benefits, reduce their stress and increase their economic security
• Due to the relatively small scale of the program when compared to the size of the total labour force, the ability of the program to act as an automatic stabilizer during a recession is limited
• Service delivery and policy implementation varied between regions but overall, employers were satisfied with the services provided by the program
• The program was successful in responding to the large increase in the number of applications and enquiries. On the employee (recipient) side, however, some raised the issue of delays in the delivery of initial benefits, as well as to their own lack of knowledge regarding program benefits, criteria and the associated implications of their participation
• Prior to the 2008-2009 recession, there were limited resources directed towards creating awareness of the Work-Sharing program. Increased media attention received courtesy of references in the Budget 2009, raised the program’s profile to both the public and employers alike
• Larger companies who had the resources and business expertise to develop comprehensive plans were better able to anticipate the recovery process in their plans. Comparatively, smaller firms or those whose issues were related to overall economic conditions and unforeseen circumstances had more difficulty in predicting full recovery
• Employers used the additional weeks of benefits to apply for longer agreements during the recession. The evaluation also found evidence that a portion of claimants were laid off after the termination of their agreements, and that the longer agreement lengths did not have any impact at reducing the rate of these layoffs

Recommendations

Based on the key findings, the evaluation makes the following nine recommendations:

1. explore ways to improve the speed of the delivery of benefits to employees
2. explore ways to improve reporting processes for smaller companies
3. examine the multiple signing authorities and how the process can be streamlined
4. ensure greater consistency in program delivery across the country
5. improve the efficiency of program delivery by learning from the region’s best practices
6. draw upon lessons learned from the implementation of temporary measures during the 2008-2009 economic recession to assess whether similar measures should be considered during future recessions (e.g. examine the continued relevance of the recovery plan or alternate ways to further streamline the application for employers)
7. increase outreach activities to employers. Ensure that potential beneficiaries of the program are aware of it
8. increase outreach activities to employees. Provide greater clarity on the programs benefits, criteria and all the associated implications to their participation
9. review the application process and explore how the program might be more widely used by the non-manufacturing sectors

Introduction

The Skills and Employment Branch (SEB) and Program Operations Branch (POB) would like to thank those who participated in conducting the evaluation of the Work-Sharing program. In particular, SEB and POB acknowledge the contributions of all key informants who participated in interviews during the course of this evaluation, including employees, employers, and program officers. Additionally, SEB and POB extend sincere appreciation to departmental colleagues from various operational and policy units who contributed to the development of the Management Response.

Work-Sharing is an adjustment program designed to help employers and workers avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. Layoffs are avoided by offering Employment Insurance (EI) Part I income support to workers willing to work a reduced work week while their company recovers. The goal is for all participating employees to return to normal working hours by the end of the term of the Work-Sharing agreement. The program helps employers retain skilled employees and avoid the costs of recruiting and training new employees when business recovers. It also helps employees maintain their skills and jobs while supplementing their wages with EI benefits for the days they are not working. While the Work-Sharing program has largely responded to temporary economic recessions, the program can also be used to assist employers affected by a disaster or state of emergency.

Recognizing the high level of uncertainty faced by businesses caused by the 2008-2009 economic recession, the Government of Canada put in place a stimulus package among the G-7 countries—the Economic Action Plan. With regards to Work-Sharing, temporary policy measures were implemented quickly in Budgets 2009, 2010, and 2011 and Fiscal Update 2011 to help businesses remain viable during the recession.

Significant increases in both the number of Work-Sharing enquiries and applications required scaling up of regional expertise from a service delivery, policy and processing perspective. Resources were mobilized quickly and effectively to ensure a timely response. In that context, the temporary measures were critical, giving the economy time to rebound and offering financial security to a large number of employers, employees and communities. Permanent policy adjustments were subsequently made in 2011 to make the program more flexible and efficient.

SEB and POB agree with the evaluation findings, and propose the following Management Response, in collaboration with Processing and Payment Services Branch (PPSB) and the Citizen Service Branch (CSB).

Key evaluation findings

Overall, the findings of the Work-Sharing evaluation are positive and demonstrate that there is a continued need for the program, particularly during times of economic downturn. The evaluation found that the program is achieving its expected outcomes and contributing to both monetary (e.g. financial security) and non-monetary benefits for employers, employees and communities (e.g. positive impacts to employee morale, improvements in employee/firm relations). Moreover, both employees and employers are reportedly satisfied with the service provided by the program with employers being especially positive about the degree of government support they received.

Most importantly, the evaluation found that the program was particularly effective during the economic downturn. The evaluation found that overwhelmingly firms which participated in Work-Sharing were unlikely to completely shut-down after the termination of their Work-Sharing agreement. This suggests that the program is not delaying closure of failing businesses, but rather supporting companies who are facing work-shortages due to temporary business downturns. Interestingly, by this measure the program effectiveness actually increased when the program was scaled up in the downturn. Furthermore, evidence from the evaluation’s review of program files confirms that 74% of the 226 approved agreement files reviewed returned to normal levels of business by the end of the agreement. These findings are important because they demonstrate that the program is working as it should – helping employers avoid unnecessary lay-offs when they are experiencing a temporary downturn in business that is beyond their control.

The evaluation also found that:

• layoffs averted were estimated at 11,189 in 2008-09 and 24,385 in 2009-10
• program participation continues to be counter cyclical and largely used by the manufacturing industry
• average claim duration increased during the recent recession, as employers used the temporary measures allowing for longer maximum agreement length
• there are opportunities to enhance program/service delivery models, streamline the application/approval process, and increase outreach activities to increase program participation in sectors that have made limited use of the program (i.e. Service Industry, retail, real estate, professional companies, financial industry and not-for-profit sector)

Recommendations and follow-up actions

The Work-Sharing Evaluation outlined two areas (i.e. Program Delivery and Program Participation) for follow-up action.

Program delivery

Follow-up action 1: Improve on the speed of the delivery model, especially regarding the delivery of initial benefits to employees.

The program area agrees that the timely delivery of benefits is an important factor in providing efficient and responsive service delivery.  As noted, given the large increases in both the number of Work-Sharing enquiries and applications received during the economic downturn, the department rapidly mobilized expertise from a service delivery, policy, and processing perspective to ensure a timely response.

In efforts to further enhance the service delivery model, processing of Work-Sharing claims was automated in 2009. In addition an Inventory Reduction Strategy was recently implemented to bring outstanding work to sustainable levels of EI claims by October 2016. Further to the Inventory Reduction Strategy, the Department is developing a more agile funding model to ensure the necessary mechanisms are in place to respond to increased EI claim volumes and meet the needs of Canadians.

PPSB conducted a study of benefit processing times for the program to determine areas for improvement in order to ensure the speed of pay targets were met. This study indicated that 87% were paid within 28 days, 9% had a delay attributable to the employer or employee and 3% had a delay attributable to Service Canada.

In addition, the Department has reminded the Insurance Payment Operations Centres (IPOCs) of the need to process the utilization reports within the speed of service targets. The Department will monitor this on an ongoing basis.

Further, the results of this study will be shared with departmental stakeholders in order for them to ensure that communications with employers and employees regarding their WS agreements/benefits reiterate the message that all documentation must be provided in a timely manner for payments to be issued within the prescribed timelines.

Follow-up action 2: Improve reporting processes for smaller companies.

It is recognized that smaller companies do not always have the capacity, tools and/or resources required to participate in the electronic reporting system. The Department has recently posted new electronic Utilization Reports that use 60-70% less disk space and may reduce challenges for companies with less robust systems. Although the data gateway system facilitates timely and efficient reporting for employers, it is not the only reporting option available and employers are not obligated to use it. At their discretion, employers may elect to submit paper-based reports via mail or through regional service sites. The reporting mechanisms chosen by the employer must respect applicable privacy and security protocols pertaining to information management. Program officers will continue to work with employers to identify their preferred approach.

Follow-up action 3: Examine the multiple signing authorities and how the process can be streamlined.

The program area agrees that it is important to continually assess program delivery processes to identify potential opportunities for enhancement. In this regard, while multiple signing authorities may present challenges in facilitating timely approval of agreements, the program area has taken steps to ensure that all applications are processed as expeditiously as possible.

As per program guidelines WS agreements over $600,000 as well as special measures or policy changes currently require approval of the Canadian Employment Insurance Commission (CEIC). However, this does not prove to be time consuming as applications, upon submission to National Headquarters, only require eight processing days which is within the service delivery standard.

Furthermore, it is important to note that in 2014 only 1.3% of WS agreements were over $600,000 and therefore processed by NHQ.

Follow-up action 4: Ensure greater consistency in program delivery across the country.

The program area agrees that it is important for regional staff to have timely access to policy advice and necessary program tools in order to promote consistency in program delivery across the country.

In this regard, a policy guide and various operational directives were formulated by the program area and disseminated to key stakeholders to promote standardization. The program area will undertake a complete assessment and update of internal and external documents and tools (e.g. Work-Sharing Operational Directives, Applicant Guide, Qs and As, and CSGC Desk Aid), in consultation with regional business expertise advisors. This update will ensure greater consistency and cohesiveness in program delivery across the country.

In addition, the program area has developed an online, national Work-Sharing Training package available through the Online Learning Campus (OLC), which contains five modules aimed at providing program officers with a comprehensive overview of the program. Moving forward, the program area will update the online training package to include a sixth module on the use of the Common System for Grants and Contributions (CSGC) in the delivery of the Work-Sharing program.

The program area will also continue to collaborate with the regions to equip staff with the necessary tools and guidelines to operationalize the program (i.e. Online Training Modules, Operational Directives, regional conference calls).

Furthermore, the program area will evaluate its current Channel Management Strategy for both the 1-800/1-866 call lines and the Service Canada Internet site, to ensure that the department is providing consistent, seamless, responsive and accessible multi-channel service to both employers and employees inquiring about the Work-Sharing program. The program area will continue to ensure that employers/employees across the country have access to up-to-date information through a variety of channels that better meet their needs.

Follow-up action 5: Improve the efficiency of program delivery by learning from the region’s best practices.

The program area acknowledges that some variations in service delivery models across the country are to be expected given differences in regional labour markets and operational structures. However, the Department recently centralized program service delivery within the regions to promote greater information sharing and consistency in program delivery.

Moreover, as part of its ongoing management practices, the program area takes stock of program delivery issues/opportunities across jurisdictions and aims to facilitate information sharing between NHQ and the regions in a variety of ways throughout the year (e.g. monthly conference calls, site visits). Moving forward, the program area will continue to identify best practices in program delivery from both a Canadian and/or international perspective and will share this information among regional partners to help inform potential program/policy enhancements. Furthermore, the program area has undertaken process mapping in each of the regions in order to validate current processes, identify best practices and areas for improvement, and ensure greater standardization of business practices. Best practices will be disseminated to each of the regions in order to optimize operational efficiencies. Linkages between other departmental programs are also being considered to better consolidate intelligence on labour market demand.

Follow-up action 6: Draw upon lessons learned from the implementation of temporary measures during the 2008-2009 economic downturn to assess whether similar measures should be considered during future downturns (e.g. examine the continued relevance of the recovery plan or alternate ways to further streamline the application for employers).

The program area regularly monitors and assesses the economic environment, including labour market conditions across the country to determine the appropriate policy response in the event of an economic downturn. During the 2008-2010 economic downturn, resources were mobilized quickly and effectively under the Economic Action Plan (EAP) to ensure a timely response to assist employers facing layoff situations.

As recovery took hold, the Department undertook a comprehensive review of Work-Sharing in summer-fall of 2010 to prepare for the EAP exit. Key insights/lessons learned from the review, consistent with the findings of the evaluation, indicated that:

• employers were strongly supportive and appreciative of the program
• temporary measures were an appropriate response
• opportunities for administrative adjustments and simplified applications should be considered
• distinguishing between temporary and permanent shock/predicting recovery is challenging; and
• increasing awareness of program is important so that more sectors can use the program

As a result of lessons learned from EAP, a new Work-Sharing program policy was adopted by the Canada Employment Insurance Commission as of April 3, 2011. Permanent changes included a modified Recovery Plan and new utilization rules providing for a minimum 10% work reduction, allowing more flexibility for participating employers to adjust to work fluctuations during the Work-Sharing period.

Given the positive findings of the evaluation, the program area agrees that a similar program response would be considered in the future, should there be another shock to the economy which could include elimination of the recovery plan and potentially longer agreement durations and extensions without the cooling-off period. These are all elements that, when implemented, contribute to the success of the program. In addition, all program partners (i.e. POB, SEB, PPSB and CSB) are reviewing procedures and roles and responsibilities to ensure departmental readiness of various scenarios, should they occur.

1.1 Overview

The 2004 Work-Sharing evaluation found the program worked as intended. The goal of the current 2015 evaluation is to place particular emphasis on the evaluation of recent program changes, both temporary and permanent, introduced in response to the recent economic recession. A detailed description of the nine lines of evidence is provided in Appendix I and a matrix linking the lines of evidence to the evaluation questions is presented in Appendix II. The next section provides a description of the program. Section 3 presents the key findings, and section 4 concludes.

1.2 Background

The Work-Sharing program came into existence under Bill C-27 in 1977, which permitted the use of Unemployment Insurance (UI) funds for a number of “developmental uses.” In the fall of 1977, the program was implemented on a pilot basis. An evaluation of this pilot program found it to be significantly more expensive for the UI Account than the layoff alternative, and the program was discontinued.

In 1981, however, due to a severe economic recession, the federal government reintroduced the Work-Sharing program with some rule changes to remedy the high cost problems found in the pilot phase evaluation. These rule changes made Work-Sharing benefits equivalent to regular UI benefits, and limits were imposed on the Work-Sharing agreement duration. The program was made permanent in 1985. It has been a component of the UI and then the EI program ever since, with little fundamental change in its design or rules until 2009.

1.3 Objective

Work-Sharing is an adjustment program designed to help employers and workers avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. Layoffs are avoided by offering Employment Insurance Part I income support to workers willing to work a reduced work week while their company recovers. The goal is for all participating employees to return to normal working hours by the end of the term of the Work-Sharing agreement. The program helps employers retain skilled employees and avoid the costs of recruiting and training new employees when business returns to normal levels. It also helps employees maintain their skills and jobs while supplementing their wages with EI benefits for the days they are not working. While the Work-Sharing program has largely responded to temporary economic recessions, the program has also been used on numerous occasions to assist employers affected by a disaster or state of emergency.

To illustrate how the program works, consider a firm with 100 identical workers, and is considering a temporary layoff of 20 of these workers. If the 20 workers were laid off, they would collect regular EI benefits during their unemployment at a rate of 55% of their insurable earnings. Work-Sharing allows all 100 of the firm’s employees to share the costs of the downturn. Rather than laying off the 20 workers, the firm could reduce the work week by 20% (e.g. work a four-day week) for all 100 workers. All of the workers would collect Work-Sharing benefits for 1 day per week (at the same rate of 55% of their insurable earnings).

1.4 Eligibility

In order for employers to qualify for the Work-Sharing program, they must satisfy the basic eligibility criteria:

• the firm must have been in business in Canada for at least two years
• there must be a minimum of two employees in the work unit ^{Footnote 2}
• the shortage of work must be beyond the control of the employer
• the shortage of work must not be due to seasonal factors
• the employer must have the consent of the employees’ union, or if there is no union, of all the employees in the work unit

The employer must submit a recovery plan which demonstrates how the business will return to normal levels upon completion of the agreement. Work-sharing agreements must include a reduction in work activity consisting of between 10 and 60% of the employees’ regular work schedule (i.e., one-half to three days a week). The minimum expected reduction was previously 20%, but Budget 2011 permanently reduced it to 10%. Work-Sharing agreements are signed for a minimum of 6 consecutive weeks up to 26 weeks. Employers may subsequently request an extension of up to 12 weeks, resulting in an overall maximum agreement duration of 38 weeks. Employers are subject to a “cooling-off” period (i.e. number of weeks equal to the duration of the previous agreement) before entering into a new agreement with the same group of employees.

For an individual employee to be qualified for benefits under the Work-Sharing program, he/she must be qualified to receive regular EI benefits. Unlike with regular EI, participants are not required to serve a two-week waiting period prior to drawing benefits. However, if workers are laid off subsequent to the Work-Sharing program, they are fully entitled to regular EI benefits. In such cases, the employees must then serve the two-week waiting period before collecting EI benefits. The amount of time that they are entitled to EI benefits is not affected by their prior use of the Work-Sharing program.

1.5 Delivery

The application process begins with the employer completing a Work-Sharing application. The application can be submitted to a regional, district, or local Service Canada Center. Service Canada staff can help employers in completing their applications to ensure that the eligibility criteria to participate in the Work-Sharing program are met. Service Canada officers review the application and produce a Recommendation Report as to whether the application should be accepted or rejected. If the Recommendation Report is favorable, it can be approved by the local office, regional office, or National Headquarters, all depending on the dollar value of the agreement. Specifically, agreements over $600,000 require approval from the Canadian Employment Commission (CEIC).

Once approved, a legal document, or “Work-Sharing Agreement”, is developed by Service Canada. The document becomes legally binding once it has been signed by the authorized employer representative, employee representatives and Service Canada representatives.

After a Work-Sharing agreement has been activated, Service Canada staff will ensure that the agreements are being carried out in compliance with regulations. When necessary, this will involve on-site visits to ensure that regulations and agreements are being complied with. The extent and nature of this monitoring activity varies depending upon the circumstances involved, and may be limited by available resources and staff workloads.

The Work-Sharing agreement details the terms and conditions for participation in the program, such as the duration of the agreement and the workers who will participate as the ‘unit’. Both the size and composition of the Work-Sharing unit, as well as the duration of the agreement may be amended by the employer by completing the appropriate Work-Sharing documentation.

Extension of a Work-Sharing Agreement can occur but it is not automatic. All requests for an extension must be submitted by the employer at least 30 days prior to the end date of their Work-Sharing agreement, and subsequently assessed and approved by Service Canada. The request for an extension must provide reasons why recovery was not achieved and must demonstrate a continued reduction in business activity that would result in the layoff of one or more employees. The employer must provide an updated recovery plan outlining the progress to date, with a list of activities that will take place during the extension period that will lead to normal working hours by the end of the agreement.

Upon completion of the Work-Sharing agreement, the Program Officer completes a close-out report summarizing the key outcomes.

1.6 Temporary measures

Recognizing the level of uncertainty employers and workers faced during the 2008-2009 recession, the Government introduced temporary changes to the Work-Sharing program to mitigate the effects of the recession on workers and employers.

Specifically, Budget 2009 introduced temporary measures which included extending the duration of agreements by 14 weeks to a maximum of 52 weeks, increasing access to the program through greater flexibility in the qualifying criteria and streamlining processes for employers. This included eliminating the requirement for employers to outline specific steps, including time lines and benchmarks, which would be taken during the life of the agreement to increase business and alleviate the work shortage. Rather, the focus for the employer was to provide steps they would take to remain viable during the timeframe of the agreement in order that recovery would be achieved as the economy strengthened, and employers were permitted to enter into new Work-Sharing agreements involving the same group of employees immediately after the end of a preceding Work-Sharing agreement instead of having to wait for a “cooling-off” period equal to the total length of time the previous Work-Sharing agreement was in place before re-applying. Budget 2009 temporary changes were in effect from February 1, 2009, to April 3, 2010.

In recognition of continuing economic uncertainty, Budget 2010 extended the temporary measures introduced in Budget 2009 by allowing employers with existing or recently terminated agreements to extend their Work-Sharing agreements up to an additional 26 weeks, to a maximum duration of 78 weeks. Previously, firms would have had to wait for the length of time of their original agreement before entering into a new one. The greater flexibility in qualifying criteria also remained in place for new Work-Sharing agreements. The Budget 2010 temporary changes were in effect until April 2, 2011.

To assist employers who continued to face challenges, Budget 2011 announced an additional extension of up to 16 weeks to employers with active or recently terminated Work-Sharing agreements. This temporary measure ended on October 29, 2011. In addition to these temporary measures, Budget 2011 introduced new permanent policy adjustments to make Work-Sharing more flexible and efficient to employers. Changes included a simplified recovery plan that no longer required employer’s business history, a detailed comparison of the company’s sales and production costs over the past two years, specific information on the cause of the work shortage specific to the business and the economic recession, and a description of any measures taken by the employer before applying for the program to remain viable during the recession. Also, where a significant community impact is relevant, greater consideration of local labour market conditions is given in the assessment of the application.

Other permanent policy changes included more flexible utilization rules, such as reducing the minimum expected work reduction criteria from 20% to 10%, technical amendments to program administration, and special measures for streamline approval processes when responding to disasters and states of emergency.

Reflecting slower than anticipated global growth during the first half of 2011, the November 2011 Economic and Fiscal Update announced an additional temporary extension of 16 weeks for employers in active, recently terminated or new agreements who still needed support. This temporary measure ended on October 27, 2012.

There were also changes to the dollar value of agreements and their associated level of approval. National Headquarter is responsible for reviewing applications or extensions for Canadian Employment Commission (CEIC) approval when they are estimated to exceed the following amounts, depending on submission dates:

• over $600,000, before February 1, 2009
• over $900,000, February 1, 2009 to April 2, 2011
• over $600,000, as of April 3, 2011

Regional offices are responsible for approval of applications or extensions when they are estimated to exceed $300,000 ($450,000 between March 3, 2009 and April 2nd 2011) but are below the amounts specified above. Otherwise, local offices are responsible for full administration, including approval of agreements below $300,000. Directors at Service Canada Centers have approval authority up to $300,000, and managers at Local Offices have approval authority up to $150,000.

2.1 Continued need for the program

2.2 Alignment with government priorities

Temporary changes to the Work-Sharing program were first introduced in 2009. In the 2009 Budget Plan ^{Footnote 4} , the Government’s objective was “strengthening benefits for Canadian workers (…) so more Canadians can continue working.” This was accomplished by extending the maximum length of time workers can receive benefits and by temporarily increasing access to the program through greater flexibility in the qualifying criteria and streamlining the process for employers. In doing so, the program kept more Canadians actively participating in the labour market.

Budgets 2009, 2010 and 2011 were created to support Canadians affected by the recent short-term economic recession. In a similar regard, the Work-Sharing program is designed to assist employees and employers temporarily, by providing them short-term assistance while the economy recovers. The temporary changes to the Work-Sharing program and the awareness the program received from the Budget Plans allowed for more Canadians to receive assistance during the difficult economic times.

2.3 Alignment with federal roles and responsibilities

The Government of Canada is responsible for Part I of the Employment Insurance (EI) Act. The provision of EI benefits under Part I of the EI Act support ESDC’s Strategic Outcome of: A skilled, adaptable and inclusive labour force and an efficient labour market.

Part I of the EI program provides temporary financial assistance to workers who have lost their job through no fault of their own while they look for work or upgrade their skills. Work-Sharing provides income support in the form of employment insurance benefits to eligible workers who work a temporarily reduced work-week while their employer recovers. The goal is for all the participating employees to return to normal working hours by the end of the term of the Work-Sharing agreement. During economic recovery, the Work-Sharing program creates an efficient labour market transition, as the program allows companies to retain their skilled employees so that they can quickly ramp up production when business levels return to normal.

2.4 Achievement of expected outcomes

2.4.1 Participation in the Work-Sharing program

The Work-Sharing program is highly counter cyclical. Program participation is high when economic growth is low, and as shown in Figure 1, when unemployment rises, so does the number of Work-Sharing claims.

Textual description of figure 1 - Number of Work-Sharing claims and change in unemployment

From fiscal year 2000 to 2013, figure 1 displays from the left axis, the number of Work-Sharing claims displayed as a histogram, and from the right axis, the percentage change in unemployment over time.

The figure shows the counter cyclicality of program usage. The number of Work-Sharing claims increased in years when there was an increase in the percentage change in unemployment, and similarly decreased in years when there was a decrease in the percentage change in unemployment.

The number of claims peaked in 2009-10 with close to 140,000 claims, at the same time, the percentage change in unemployment was over 25%. In contrast, since 2012–13, the number of claims each year has been below 20,000, and the percentage change in unemployment has been below 5%.

The counter cyclical use of Work-Sharing can also be seen in Table 2 which presents program participation and expenditures by fiscal year. Participation and expenditures peaked in 2009-10 following the economic recession when new Work-Sharing claims were at a high of about 139,000 and expenditures amounted to $235 million (2007-08 dollars). ^{Footnote 5} Alternatively, participation and expenditures were lowest in mid-2000s, with little more than 10,000 new claims and $11 million in expenditures (2007- 08 dollars).

Table 2: Participation and benefits paid to Work-Sharing participants

Fiscal year	New Work-Sharing claims	Employment ('000)	Work-Sharing claims % of employment	Work-Sharing benefits paid (Nominal dollars)	Work-Sharing benefits paid (2007-2008 dollars)
2000-01	17,270	14,819	0.12	$17,603,128	$20,152,408
2001-02	47,835	14,985	0.32	$50,199,252	$56,387,812
2002–03	16,791	15,426	0.11	$14,759,298	$16,165,715
2003–04	31,248	15,723	0.20	$24,955,856	$26,870,370
2004–05	11,932	15,971	0.07	$10,812,629	$11,438,909
2005–06	11,368	16,188	0.07	$11,183,319	$11,556,000
2006–07	10,452	16,513	0.06	$11,534,991	$11,716,599
2007–08	14,735	16,896	0.09	$20,535,544	$20,458,824
2008-09	77,220	17,038	0.45	$173,185,968	$169,085,632
2009-10	138,935	16,828	0.83	$243,384,608	$235,438,560
2010-11	22,743	17,121	0.13	$29,117,222	$27,737,292
2011–12	25,539	17,344	0.15	$31,723,844	$29,476,278
2012–13	15,479	17,579	0.09	$20,720,738	$8,962,012

Table 2 also shows Work-Sharing take up as a percentage of employment. Work-Sharing participation has been consistently low, never accounting for more than one percent of employment. But its trend still conveys the programs counter cyclicality. Work-Sharing claims as a percentage of employment reached a maximum of 0.83% in fiscal year 2009-10, and participation was lowest in 2006-07, accounting for 0.06% of employment.

Similarly, Figure 2 provides the annual number of Records of Employment (ROEs) issued for the purpose of Work-Sharing during the period of 1989 to 2011. Again, program participation was highly counter-cyclical. Work-Sharing ROEs peaked during the recessions of 1990-1991 and 2009-2010, and, to a much lesser degree, in 2001. Between those periods, annual participation was consistently low.

Textual description of figure 2 - Annual number of Work-Sharing records of employment (ROEs)

From fiscal year 1989 to 2012, figure 2 displays from the left axis, the annual number of Work-Sharing Records of Employment represented as a solid line, and from the right axis the number of monthly unique employer’s represented as a dotted line.

Over time, the number of Work-Sharing Records of employment follows a similar pattern to the number of monthly unique employers, both peaking during the economic downturns of 1990-1991 and 2008-2009. In 1990-1991, close to 150 thousand records of employment were issued for work-sharing, and in 2008-2009, close to 200 thousand records of employment were issued for the purpose of Work-Sharing. However, in 1990-1991, over 14,000 unique employers were identified per month, compared to less than 14,000 unique employers per month in 2008/2009. This suggests that the average size of Work-Sharing agreements increased per participating employer following the 2008-2009 recession.

There is no evidence to suggest that the program’s take-up, in terms of the number of employees claiming Work-Sharing, increased beyond what could be expected from its typical counter cyclicality. However, during the 2008-2009 recession, the number of employees per agreement increased. The dotted line of Figure 2 provides the monthly number of unique employers, summed for each year. The number of unique employers follows a similar pattern to the total number of employees. However, the number of employees was higher relative to the number of employers during the 2009-2010 peak as compared to the 1990-1991 peak, suggesting an increase in the average agreement size.

2.7 Demonstration of efficiency and economy

Greater participation leads to greater program costs. But how much of the increased participation can be attributed to the economic recession, the additional weeks, or the relaxed admission requirements? While little evidence was found to suggest that the number of new claims was impacted by the additional weeks or the relaxed admission requirements, it was noted that employers used the additional weeks of benefits to apply for longer agreements during the recession.

The evaluation also found evidence that a portion of claimants were laid off after the termination of their agreement, and that the longer agreement lengths did not have any impact at reducing the rate of these layoffs. The additional weeks of paid benefits to these employees who were subsequently laid off after their extended agreement ended might represent an additional cost to the Work-Sharing program that cannot be attributed to the economic recession alone. This evaluation however, could not explicitly differentiate between the many factors that would have led to the additional program cost.

3.1 Conclusions

The evaluation supports a continued need for the Work-Sharing program, especially during periods of economic recession or unforeseen events such as disasters or states of emergency. The program helped employees and employers affected by the 2008-2009 recession. It continues to provide ongoing assistance to specific communities. The program aligns with the federal roles and responsibilities outlined under Part I of the Employment Insurance Act.

Temporary changes to the program provided support to the government’s Budget Plan objectives of strengthening benefits, addressing labour market challenges, and supporting Canadians affected by the short-term economic recession. Most countries with similar Work-Sharing policies acted in a similar fashion by making changes to their program in response to the recession.

3.2 Recommendations

The evaluation makes the following nine recommendations.

Key fact: The most frequently cited issue by employees was delays in the delivery of benefits to employees, especially regarding the delivery of initial benefits.

Recommendation 1: Explore ways to improve the speed of the delivery of benefits to employees.

Key fact: Employers were particularly positive regarding the new data gateway system, although it was found to be less beneficial to smaller companies with less robust electronic information management systems.

Recommendation 2: Explore ways to improve reporting processes for smaller companies.

Key fact: Most program officers raised the issue of the time it takes to move files through the various signing authorities, and they expressed their concern that there are too many opportunities for files to be held up, especially for the files that must go to National Headquarters and the Canadian Employment Insurance Commission for approval.

Recommendation 3: Examine the multiple signing authorities and how the process can be streamlined.

Key fact: The delivery of the new provision allowing for laid-off workers to be called back to employment as part of a Work-Sharing agreement varied between regions. Some program officers indicated they proactively discussed with the firm the possibility of calling back laid-off workers while others assumed it was done only if it was part of the recovery plan.

Recommendation 4: Ensure greater consistency in program delivery across the country.

Key fact: The service delivery models vary across the country. Ontario has developed an integrated service delivery system that centralizes processing, and they have managed to meet a faster level of service of 20 days for approval, almost 10 days under the national recommended standard of 30 days.

Recommendation 5: Improve the efficiency of program delivery by learning from the region’s best practices.

Key fact: Very few employers spoke positively about the process of developing the recovery plan, some describing it as lengthy and burdensome, and program officers unanimously identified the recovery plan as the most time-consuming task they undertake in assessing the applications.

Recommendation 6: Draw upon lessons learned from the implementation of temporary measures during the 2008-2009 economic recession to assess whether similar measures should be considered during future recessions (e.g. examine the continued relevance of the recovery plan or alternate ways to further streamline the application for employers).

Key fact: The majority of program officers indicated that prior to the recession, there were limited resources directed towards creating program awareness. Nearly half of employee representatives interviewed believed that there was limited awareness of the program by employers.

Recommendation 7: Increase outreach activities to employers. Ensure that potential beneficiaries of the program are aware of it.

Key fact: Employee representatives explained there was a lack of clarity regarding the application of program criteria, potential clawbacks in Work-Sharing benefits due to other income sources, and potential financial implications of participating in the program on future EI or Canadian Pension Plan benefits.

Recommendation 8: Increase outreach activities to employees. Provide greater clarity on the programs benefits, criteria and all the associated implications to their participation.

Key fact: A large proportion of the workforce is now employed in non-manufacturing type jobs. Program officers explained that the biggest barrier to the programs take-up by these non-manufacturing sectors is the application guidelines favored towards firms with simple production processes.

Recommendation 9: Review the application process and explore how the program might be more widely used by the non-manufacturing sectors.

Continued need for program

Q1. Question 1. Is there still a need for the Work-Sharing program?

• Literature review, Program file review, Program officer interviews, Employer interviews, Employee interviews

Q2. Question 2. What are the characteristics of the industries who participate in the Work-Sharing program?

• Program file review, Program officer interviews

Q3. Question 3. Is the rationale for extending the benefit period of Work-Sharing agreement and easing the admission requirements during the 2008-2009 recession relevant and why?

• Program officer interviews, Employer interviews, Employee interviews

Q4. Question 4.How does Canada’s Work-Sharing program compare to Work-Sharing policies in other countries?

• Literature review

Alignment with government priorities

Q5. Question 5.Do the temporary changes to the Work-Sharing program line up with the Economic Action Plan objectives?

• N/A

Alignment with federal roles and responsibilities

Q6. Question 6.How is the Work-Sharing program aligned with the Federal roles and responsibilities?

• N/A

Achievement of expected outcomes

Q7. Question 7.How is the program used? (gender, number of employees, level of work reduction, duration of the claims, etc.)

• Usage report, Technical study: employer reliance

Q8. Question 8.How does the actual usage compare to the agreement reported numbers? In what way is the use restricted due to the enforcement of the eligibility rules of EI regular claims?

• Program file revie, Employer interviews

Q9. Question 9.To what degree are the costs of lay-off to the employer in terms of subsequent recruitment and training of a skilled work force avoided?

• Employer interviews

Q10. Question 10.Is there evidence of missed opportunities or underutilization in some sectors?

• Program file review, Program officer interviews

Q11. Question 11.How is the new provision being used which allows for laid-off workers to be called back to be employment as part of a Work-Sharing agreement?

• Program officer interviews

Q12. Question 12.How frequently are new employees hired during the period of WS agreements?

• Program file review, Program officer interviews

Q13. Question 13.What are the determinants of the employer’s awareness of the program?

• Program officer interviews, Employer interviews, Employee interviews

Q14. Question 14.How is the service delivery model influencing the speediness of the approval process?

• Program officer interviews, Employer interviews

Q15. Question 15.How responsive is the Work-Sharing program to the employer’s needs?

• Program officer interviews, Employer interviews

Q16. Question 16.How is the electronic data gateway helping answering employer’s needs?

• Program officer interviews, Employer interviews

Q17. Question 17.Do the reduced requirements in the application process and the extension of the benefits increase the take-up over and above the cyclical growth?

• Literature review, Program officer interviews, Employer interviews, Technical study: employer reliance, Technical study: impacts of temporary budgetary changes

Q18. Question 18.What are the determinants of the appropriate duration of a Work-Sharing agreement?

• Program officer interviews, Employer interviews, Technical study: impacts of temporary budgetary changes

Q19. Question 19.To what extent does the recovery plan reflect the actual recovery process?

• Program file review, Program officer interviews, Employer interviews

Q20. Question 20.How is the Government degree of support and follow-up appropriate from an employer’s perspective?

• Employer interviews

Q21. Question 21.What are the monetary and non-monetary costs and benefits of the WS program for the employees?

• Employer interviews, Employee interviews

Q22. Question 22.How are the reduced hours used by employees? Is training or job search activities undertaken?

• Employee interviews

Q23. Question 23.How responsive is the Work-Sharing program to the employee’s needs?

• Employee interviews

Q24. Question 24.How many temporary layoffs are averted as a result of employers participating in the Work-Sharing program? How much of the Work Sharing take-up is only postponing unemployment?

• Literature review, Program file review, Employer interviews, Usage report, Technical study: impacts of temporary budgetary changes

Q25. Question 25.What proportion of participating businesses returned to normal levels of business during or after the end of the agreements? To what extent was the program a contributing factor?

• Program file review, Employer interviews

Q26. Question 26.What is the impact of the Work-Sharing program on communities? Do the temporary changes have a greater impact on communities?

• Program officer interviews, Technical study: impact on regional employment

Q27. Question 27.What is the impact of the Work Sharing on the stabilization of the economy? To what extent can the program be seen as an automatic stabilizer?

• Literature review

Demonstration of efficiency and economy

Q28. Question 28.How much of the additional costs of the Work-Sharing program are due to the downturn in the economy, the addition in weeks or the relaxed admission requirements?

• Usage report, Technical study: employer reliance, Technical study: impacts of temporary budgetary changes

Q29. Question 29.Do the reduced requirements in the application process have a positive impact on the administrative costs and efficiency of the program?

• Literature review, Program file review, Program officer interviews