EI Monitoring and Assessment Report 2012V. EI WORK-SHARING BENEFITS

1. Recent Legislative Changes

The Work-Sharing program is 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. 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 Work-Sharing benefits for the days they are not working.

As discussed in the following subsections, the number of new Work-Sharing agreements, the volume and duration of Work-Sharing claims, and the amount of Work-Sharing benefits paid remained low but still above pre-recession levels in 2011/12. Previously, these figures had increased significantly in 2009/10, attributable to the late-2000s recession and to temporary changes to the Work-Sharing program as part of the Economic Action Plan.

Work-Sharing agreements are signed for a minimum of 6 weeks to a maximum of 26 weeks, with a possible 12-week extension to a total of 38 weeks. Recognizing the level of uncertainty employers and workers faced during the late-2000s recession, the federal government—through the Economic Action Plan—introduced temporary changes to the Work-Sharing program to mitigate the effects of the recession on workers and employers.

Budget 2009 introduced temporary changes to the program 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. Budget 2009 temporary changes were in effect from February 1, 2009, to April 3, 2010.

In recognition of continuing economic uncertainty, Budget 2010 allowed 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. 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. ^{Footnote 101}

To assist employers who continued to face challenges, Budget 2011 announced an additional extension of up to 16 weeks for active or recently terminated Work-Sharing agreements. This temporary measure ended on October 29, 2011. In addition, Budget 2011 announced new policy adjustments to make the Work-Sharing program more flexible and efficient for employers. These new provisions became effective on April 3, 2011, and include a simplified recovery plan, more flexible utilization rules and technical amendments to reduce administrative burden.

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. Budget 2012 re-announced this commitment. This temporary measure ended on October 27, 2012.

2. EI Work-Sharing Benefits, Claims and Benefit Payments

Work-Sharing usage and expenditures are countercyclical: they increase during a contraction in the labour market and decline during an expansion. As illustrated in Chart 35, the number of Work-Sharing claims peaked in 2009/10, reaching 127,880 claims as a result of the late-2000 recession. As the recovery took hold, the number of Work-Sharing claims started to decline. In 2011/12, there were 23,755 new Work-Sharing claims established, representing an increase of 12.7% compared to the previous year.. Even though Work-Sharing claims have decreased to levels of around 20,000 claims in the last two fiscal years, these volumes remain higher than those recorded before the recession.

Two factors explain the increase in Work-Sharing claim volume in 2011/12. One factor is the new provisions in place to make the Work-Sharing program more flexible and efficient, and the other factor is the fragility of the economic recovery given an uncertain global context. In other words, as a result of the recent recession, the Work-Sharing program has been adapted to give employers the support they need to keep their business afloat in an uncertain economic environment.

Work-Sharing benefit payments grew substantially during the late-2000s recession. In 2011/12 Work-Sharing benefits amounted to $31.7 million, a notable decrease from $98.3 million in 2010/11 and the $294.7 million peak reached in 2009/10.

The significant amount of Work-Sharing benefits paid in recent years can be explained by the higher volume of claims, as discussed earlier, coupled with the temporary increases in the maximum duration of Work-Sharing agreements introduced as part of the Economic Action Plan. Despite the recent decline in Work-Sharing benefits paid, the amount paid in 2011/12 remained above pre-recession levels. This is consistent with the volume of claims observed for that fiscal year.

The average duration of Work-Sharing claims established in 2010/11 was 13.3 weeks, ^{Footnote 103} a decrease from levels for claims established in 2009/10 (19.3 weeks) and 2008/09 (20.6 weeks). The current average duration is close to the average of 13.1 weeks for claims established in 2007/08, before the recession.

3. EI Work-Sharing Claims, by Industry, Province, Gender and Age

The manufacturing industry benefits significantly from the Work-Sharing program. For instance, this industry accounted for 79.3% of EI Work-Sharing claims and 80.9% of EI Work-Sharing benefit payments made in 2011/12.

Table 15

EI Work-Sharing Claims and Benefits Paid, 2011/12

	Work- Sharing Claims	Work- Sharing Benefit Payments	Employment Share (2011/12)
Total	23,755	$31,724,420	17,334,280
Newfoundland and Labrador	0.4%	0.2%	1.3%
Prince Edward Island	0.1%	0.6%	0.4%
Nova Scotia	1.4%	1.2%	2.6%
New Brunswick	0.3%	0.4%	2.0%
Quebec	28.3%	30.1%	22.8%
Ontario	56.2%	52.1%	38.9%
Manitoba	2.5%	3.4%	3.6%
Saskatchewan	0.1%	0.1%	3.0%
Alberta	3.9%	3.4%	12.2%
British Columbia	6.9%	8.5%	13.2%
Gender
Male	65.3%	72.8%	52.5%
Female	34.7%	27.2%	47.5%
Ages
Under 25	6.3%	5.4%	14.2%
25 to 44	44.2%	41.1%	43.2%
45 to 54	31.9%	33.5%	24.8%
55 and Older	17.6%	20.0%	17.9%
Source: EI administrative data; Statistics Canada, Labour Force Survey.

As illustrated in Table 15, Ontario accounted for over half of Work-Sharing claims and benefits paid in 2011/12, while Quebec accounted for over 25% of Work-Sharing claims and benefits paid. Together, these provinces accounted for 84.5% of the claims and 82.2% of the benefits paid under Work-Sharing. British Columbia and Alberta together accounted for another 10.8% of the Work-Sharing claimants.

Men and workers aged 45 and over are over-represented among Work-Sharing claimants. The fact that both of these groups are over-represented in the manufacturing industry seem to explain their high participation in the Work-Sharing program.

4. EI Work-Sharing Agreements

4.1 EI Work-Sharing Agreements Overview

As in the case of Work-Sharing claims and benefits paid, Work-Sharing agreements also follow a counter-cyclical pattern. Up until the recent recession, which began in late 2008, the number of new Work-Sharing agreements had remained relatively low (see Chart 36). This changed when the number of agreements increased significantly in comparison to the year before, by multiplying by over five-fold in 2008/09 and over three-fold in 2009/10.

More recently, there were 1,198 Work-Sharing agreements that began in 2011/12, a 13.1% decrease from the 1,379 agreements that commenced the year before. ^{Footnote 104} While the number of agreements has decreased significantly from the peak of 7,717 in 2009/10, it remains above pre-recession levels. This is consistent with the higher level of Work-Sharing claims and benefits paid and a direct result of the more flexible and efficient Work-Sharing program and the fragile economic recovery.

4.2 EI Work-Sharing Agreements, by Province, Industry and Enterprise Size

In 2011/12, there were 547 Work-Sharing agreements launched in Ontario and 320 in Quebec, comprising 45.7% and 26.7% of all Work-Sharing agreements, respectively. Together, British Columbia (209 agreements), Alberta (54 agreements) and Manitoba (33 agreements) accounted for 24.7% of all Work-Sharing agreements, while the rest of the provinces accounted for less than 3% of all agreements.

Small and medium-sized enterprises continued to make up the majority of Work-Sharing agreements. ^{Footnote 105} In 2011/12, more than three-quarters (77.4%) of established agreements involved small enterprises (fewer than 50 employees). A further 21.3% of agreements established in 2011/12 involved medium-sized enterprises (51 to 499 employees) and only 1.3% of agreements were established with large enterprises (500 or more employees). Despite the large difference in shares, Work-Sharing agreements with large enterprises affect many more employees than do agreements involving small and medium-size enterprises.

Of all Work-Sharing agreements established in 2011/12 (1,198), the manufacturing industry accounted for 727 or 60.7%, compared with a share of 52.5% in 2010/11. ^{Footnote 106} As in the case of Work-Sharing claims and benefits paid, Work-Sharing agreements in manufacturing were over-represented among all industries, as manufacturing represented 10.1% of total employment in Canada in 2011/12. In comparison, the professional, scientific and technical services industry represented the second-highest proportion of Work-Sharing agreements, with 97 agreements or 8.1% of all agreements, while representing 7.6% of national employment in 2011/12.

Of the 1,198 Work-Sharing agreements established in 2011/12, a total of 416 were terminated earlier than their scheduled end date, accounting for 34.7% of all agreements (see Chart 37). Of the 416 agreements that ended earlier than anticipated, 88.2% concluded because the firm returned to a normal level of employment. ^{Footnote 107}

The proportion of Work-Sharing agreements that ended ahead of schedule in 2011/12 (34.7%) was lower than the corresponding proportion in 2010/11 (36.3%) and the peak proportion in 2009/10 (54.0%). ^{Footnote 108} This recent decrease is in line with the conclusion of recent temporary measures that extended the maximum duration of Work-Sharing agreements.