EI Monitoring and Assessment Report 2012/13 V. 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. 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.

As discussed in the following subsections, in 2012/13, 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 compared to levels at the height of the late-2000s recession but still above pre-recession levels. Previously, these figures had increased significantly in 2009/10, due to the 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 most recent 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.

The temporary measures introduced under Economic Action Plan 2009 extended agreement durations, streamlined the administrative process, and eased eligibility requirements for employers. Temporary measures were also introduced in Budget 2010, Budget 2011, and the Economic and Fiscal Update 2011. All temporary Work-Sharing measures concluded in October 2012.

Budget 2011 introduced new permanent policy adjustments to make Work-Sharing more flexible and efficient for employers. The changes included a simplified recovery plan, more flexible utilization rules, and technical amendments to reduce administrative burden. In order to determine how effective the temporary measures and the new policy were in supporting employers and workers during and after the recession, a departmental evaluation is currently underway, with results expected in 2014/15.

Under the 2011 policy, the Work-Sharing program developed a standard response to disasters and states of emergency, which was used in 2013 to assist employers facing layoff situations as a result of the extensive flooding in Alberta and Manitoba in June and the train explosion in Lac-Mégantic, Quebec in July. Special measures in response to these disasters eased certain criteria related to the programs’ application, administration and recovery plan in order to make it easier for employers to access Work-Sharing under challenging circumstances. This response can help employers keep valuable skilled workers while focusing on clean-up efforts and returning to normal operations.

2. EI Work-Sharing Claims and Benefits

Work-Sharing usage and expenditures are countercyclical: they increase during a contraction in the labour market and decline during an expansion. ^{Footnote 120} As illustrated in Chart 37, 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 2012/13, there were 13,890 new Work-Sharing claims established, representing a decrease of 41.5% compared to the previous year. With an improving economy, the number of Work-Sharing claims is edging closer to pre-recession levels as less employers require support to keep their business afloat.

Work-Sharing benefits grew substantially during the late-2000s recession. In 2012/13 Work-Sharing benefits amounted to $26.1 million, a decrease from $31.7 million in 2011/12 and the $294.7 million peak reached in 2009/10.

• Show Data Table

  Chart 37: EI Work-Sharing Claims and Benefits, 2007/08 to 2012/13

  	EI Work-Sharing claims	EI Work-Sharing benefits
  2007/08	13	$15
  2008/09	69	$56
  2009/10	128	$295
  2010/11	21	$98
  2011/12	24	$32
  2012/13	14	$26

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 2012/13 remained above pre-recession levels.

The average duration of Work-Sharing claims established in 2011/12 was 12.8 weeks, ^{Footnote 121} a decrease from levels of claims established in 2010/11 (13.3 weeks) and 2009/10 (19.3 weeks). The current average duration is shorter than 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 77.0% of EI Work-Sharing claims and 73.2% of EI Work-Sharing benefits paid in 2012/13.

• Source: EI administrative data; Statistics Canada, Labour Force Survey.

As illustrated in Table 30, Quebec accounted for 45% of Work-Sharing claims and benefits paid in 2012/13, while Ontario accounted for 38.9% of Work-Sharing claims and benefits paid. Together, these provinces accounted for 84.2% of the claims and 84.0% of the benefits paid under Work-Sharing. British Columbia and Alberta together accounted for another 9.4% of the Work-Sharing claims.

Men and workers aged 25 to 54 are over-represented among Work-Sharing claims. The fact that both of these groups are over-represented in the manufacturing industry seems 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 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 38). However, the number of multiplied by over five-fold in 2008/09 and over three-fold in 2009/10.

• Show Data Table

  Chart 38: Work-Sharing Agreements, 2007/08 to 2012/13

  	Work Sharing Agreements
  2007/08	433
  2008/09	2,305
  2009/10	7,717
  2010/11	1,379
  2011/12	1,198
  2012/13	830

  • Source: ESDC, Common System for Grants and Contributions.

More recently, there were 830 Work-Sharing agreements that began in 2012/13, a 30.7% decrease from the 1,198 agreements that commenced the year before. ^{Footnote 122} 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 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 2012/13, there were 374 Work-Sharing agreements launched in Ontario and 261 in Quebec, comprising 45.1% and 31.4% of all Work-Sharing agreements, respectively. Together, British Columbia (117 agreements), Alberta (26 agreements) and Manitoba (20 agreements) accounted for 19.6% of all Work-Sharing agreements, while the rest of the provinces accounted for 3.9% of all agreements.

Small and medium-sized enterprises continued to make up the majority of Work-Sharing agreements. ^{Footnote 123} In 2012/13, more than three-quarters (79.0%) of established agreements involved small enterprises (fewer than 50 employees). A further 20.4% of agreements established in 2012/13 involved medium-sized enterprises (51 to 499 employees) and only 0.6% of agreements were established with large enterprises (500 or more employees).

Of all Work-Sharing agreements established in 2012/13 (830), the manufacturing industry accounted for 512 or 61.7%, compared with a share of 60.7% in 2011/12. 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 2012/13. In comparison, the professional, scientific and technical services industry represented the second-highest proportion of Work-Sharing agreements, with 76 agreements or 9.2% of all agreements, while representing 7.4% of national employment in 2012/13.

Of the 830 Work-Sharing agreements established in 2012/13, a total of 346 were terminated earlier than their scheduled end date, accounting for 41.7% of all agreements (see Chart 39). Of the 346 agreements that ended earlier than anticipated, 91.0% concluded because the firm returned to a normal level of employment. ^{Footnote 124}

• Show Data Table

  Chart 39: EI Work-Sharing Agreements, by Early Termination, 2012/13

  Work-Sharing agreements terminated on schedule	484 (58.3%)
  Work-Sharing agreements terminated earlier than the scheduled end date	346 (41.7%)
  Level of employment returned to normal	315 (38.0%)
  Level of employment did not return to normal	31 (3.7%)

  • Source: ESDC, Common System for Grants and Contributions.

The proportion of Work-Sharing agreements that ended ahead of schedule in 2012/13 (41.7%) was higher than the corresponding proportion in 2011/12 (34.7 %) but lower than the peak proportion in 2009/10 (54.0%). ^{Footnote 125}