Employment Insurance Monitoring and Assessment Report for the fiscal year beginning April 1, 2016 and ending March 31, 2017
Chapter II - Impact and Effectiveness of Employment Insurance Benefits (Part I of the Employment Insurance Act)
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1. Employment Insurance benefits overview
The Employment Insurance (EI) program provides income support to partially replace employment income for eligible unemployed contributors to the program while they look for new employment or upgrade their skills and for those who are absent from work due to specific life circumstances (such as sickness, pregnancy, or caregiving for a newborn, a newly adopted child, a critically ill child or a gravely ill family member with a significant risk of death).
In this chapter, EI benefits include regular benefits, fishing benefits, Work-Sharing benefits as well as special benefits, which include maternity benefits, parental benefits, sickness benefits, compassionate care benefits and benefits for Parents of Critically Ill Children. Subsection 1.1 covers the number of new claims established in the fiscal year, total amount paid over the fiscal year, and benefit levels of claims established. Subsection 1.2 examines combined (or mixed) benefit claims. Subsection 1.3 provides an analysis of the usage of EI benefits relatively to EI contribution premiums.
1.1 Employment Insurance claims, amount paid and level of benefits
For the period starting on April 1, 2016 and ending on March 31, 2017 (FY1617), the number of new EI claims established decreased by 5.6% (-107,100) to 1.8 million new EI claims. This decrease almost completely offset the increase observed in new claims during the previous reporting period (+116,600). Total EI benefit payments increased by $799.0 million (+4.5%) to reach $18.5 billion, the highest level recorded since the $19.4 billion recorded in FY0910 (see Chart 1).
Text description of chart 1
|Employment Insurance claims (left scale)||Amount paid in Employment Insurance benefits (right scale)|
As highlighted in Chapter 1, a downturn in commodity prices significantly impacted the labour market in recent years. In response to this downturn, the Government introduced a temporary measure to extend the benefits in the 15 most impacted EI economic regions. The temporary measure introduced on July 3, 2016 applied to anyone who started a claim for EI regular benefits on or after January 4, 2015 and was still unemployed at the time the measure came into force or during the year following its implementation. It had an impact on the number of claims and the amounts of benefits paid as fewer claims were established in FY1617 because eligible claimants could claim more weeks of benefits and for a longer period of time while the amount of benefits paid in the regions affected by the measure increased significantly. The effects of this measure are therefore reflected throughout most of this chapter and will be discussed in greater details in subsection 2.2.4.
According to Statistics Canada, there were 826,300 beneficiaries receiving EI benefits on average each month in FY1617, an increase of 3.6% from 797,300 beneficiaries during the previous reporting periodFootnote 4, On average, 68.5% of the beneficiaries were receiving regular benefits, 29.3% were receiving special benefits, 1.4% were receiving fishing benefits, and 0.8% were receiving work-sharing benefits.
The average weekly benefit rate grew from $443, in the previous year, to $447 during the reporting period. Meanwhile, the proportion of claimants receiving the maximum weekly benefitFootnote 5 decreased to 45.6% in FY1617, down from 48.1% in FY1516. Over the same period, median weekly wages of the employed population increased from $815 to $824 (+1.1%), the smallest increase observed in the last 10 years.Footnote 6
New Employment Insurance claims established
The decrease in new EI claims registered in the reporting fiscal year (-107,100) was mostly driven by regular claims (-114,300). This decrease was partially counterbalanced by the increase in sickness benefits claims (+13,200) and claims for compassionate care benefits (+2,300) (see Table 2).
|Type of Employment Insurance benefits||New claims established|
|Regular*||1 476,380 r||1,362,070||-114,310 (-7.7%)|
|Compassionate Care||7,871||10,193||+2,322 (+29.5%)|
|Parents of Critically Ill Children||3,740 r||4,211||+471 (+12.6%)|
Notes: Data may not add up to the total due to rounding. Percentage change is based on unrounded numbers. Includes claims for which at least $1 of EI benefits was paid. The sum of claims by benefit type does not add up as multiple benefit types can be combined in one single claim.
*Also include claims for which the claimant uniquely claimed regular benefits while attending full-time training under section 25 of the Employment Insurance Act.
**Due to the incompatibility of administrative data sources, the total for Canada excludes claims established for parents of critically Ill children benefits that did not receive any other type of EI benefits.
Source: Employment and Social Development Canada, Employment Insurance (EI) administrative data. Data are based on a 10% sample of EI administrative data, except for compassionate care benefits, parents of critically ill children benefits, fishing benefits and work-sharing benefits (100% sample).
The volume of regular claims tends to be more sensitive to economic cycles and to labour market conditions (see Chapter I for a perspective on the prevailing labour market in FY1617). For the reporting fiscal year, the measure that extended regular benefits for workers in affected regions by the downturn in commodity price also contributed to the overall decline observed in regular claims level (see subsection 2.4 for further details on this measure). In contrast, the volume of new claims for special benefits generally relates more to demographic changes, changes in labour force characteristics, and changes to the EI program design (see section 2.6 for more details on special benefits).
Following an overall increase in new EI claims established across Canada from FY1415 to FY1516, all jurisdictions experienced either decreases or modest increases during the reporting period. Alberta (-33,900 or -14.4%) and Saskatchewan (-7,300 or -12.7%) recorded the most significant decreases in percentage (see Table 3). During the two preceding reporting period, these two provinces had registered the greatest increases in new EI claims with a cumulative two-year increase of 89,400 new claims (+61.2%) and of 12,700 new claims (+28.6%), respectively. The province of Alberta and Saskatchewan were also amongst those the most affected by the downturn in commodity prices. The four economic regions of Alberta and three out of four economic regions in Saskatchewan were included in the temporary measure that extended regular benefits entitlement for eligible claims.
|New claims established
|Amount paid ($ millions)
|2015/2016||2016/2017||Change (%)||2015/2016||2016/2017||Change (%)|
|Newfoundland and Labrador||85,910
|Prince Edward Island||22,140
Notes: Data may not add up to the total due to rounding. Percentage change is based on unrounded numbers. Includes claims for which at least $1 of EI benefits was paid.
* Excludes Parents of Critically Ill Children benefits due to the incompatibility of administrative data sources.
Source: Employment and Social Development Canada, Employment Insurance (EI) administrative data. Data are based on a sample of 10% of the EI administrative data.
The variation in new claims established by men (-91,700 or -8.5%) mostly drove the overall decrease in new claims established during the fiscal year starting on April 1, 2016 and ending on March 31, 2017. Claims established by men represented 54.1% of all new claims established. Levels of new EI claims decreased for every age group with almost half of the decrease bared by the 25 to 44 age cohort (-49,500 or -5.3%), followed by the 45 to 54 age cohort (-31,700 or -7.9%). Older workers (55 years and over) experienced the smallest decrease (-9,700 or -2.4%) bringing their share of new EI claims at 21.2%. Back in FY0809, this age cohort made 15.0% of all new claims established. This increased share of claims initiated by older workers follows the general trend of their greater representation in the labour force. Their proportion of the labour force increased from 15.5% in FY0809 to 20.6% in FY1617.Footnote 7
Slightly over half of the decrease in EI new claims observed during the reporting fiscal year came from long-tenured workers (-56,900 or -9.5%). Claims established by this claimant category increased significantly during the previous reporting period (+188,600 or +45.7%). New claims established by occasional claimants (-28,000 or -2.8%) and frequent claimants (-22,200 or -6.6%) also decreased, but to a lesser degree.
Total amount paid in Employment Insurance benefits
The increase in EI benefits (+$0.8 billion or +4.5%) during the reporting fiscal year to a total of $18.5 billion was mainly driven by higher regular benefit payments (+$547.9 million). As detailed in subsection 2.2.4, an increase of $998.4M in the reporting period is attributable to the temporary relief provided in Budget 2016 to regions impacted by the downturn in commodity prices.
The share of EI benefits paid by benefit types remained relatively unchanged compared to the previous reporting period. Regular benefits (68.5%) and special benefits (29.7%) accounted for 98.2% of total EI benefits payments as other benefit types (fishing benefits and Work-Sharing benefits) represented a little bit less than 2.0% of total EI benefits paid (see Chart 2).
Amounts paid in EI benefits increased in all jurisdictions, except for Quebec and Ontario (see Table 3). For the fourth year in a row, Alberta registered the largest year-over-year percentage increase (+33.7%) followed by Saskatchewan (+17.2%).
The amount paid in EI benefits increased similarly for both men (+4.9%) and women (+4.1%). It also increased for every age groups and claimant categories except for claimants aged 24 years old or less (-0.1%) and frequent claimants (-2.3%).
Text description of Chart 2
|$ million||% share|
|Compassionate care benefits||$54.1||1.0%|
|Benefits for Parents of Critically Ill Children||$26.5||0.5%|
*The total amount paid reported in Chart 2 does not correspond to the total reported in Table 3 because data on compassionate care benefits and parents of critically ill children can only be reported on a 100% sampling basis on an aggregate level.
Source: Employment and Social Development Canada. Employment Insurance (EI) administrative data. Data are based on a sample of 10% of the EI administrative data, except for compassionate care benefits and benefits for parents of critically ill children (100% sample).
Level of benefits
Variable best weeks (VBW)
Under the VBW provision—introduced nationally on April 7, 2013—the weekly benefit rate is calculated based on an EI claimant’s highest (best) weeks of insurable earnings during the qualifying period. The number of weeks used to calculate the weekly benefit ranges from 14 to 22, depending on the monthly regional unemployment rate*.
|Unemployment rate||Number of weeks|
|6.0% and under||22|
|6.1% to 7.0%||21|
|7.1% to 8.0%||20|
|8.1% to 9.0%||19|
|9.1% to 10.0%||18|
|10.1% to 11.0%||17|
|11.1% to 12.0%||16|
|12.1% to 13.0%||15|
|More than 13.0%||14|
*Monthly regional unemployment rates used for the EI program are a moving average of seasonally adjusted rates of unemployment produced by Statistics Canada, as per section 17 of the Employment Insurance Regulations.
The average weekly benefit rate modestly increased 1.0% nationally to $447 in FY1617. Most jurisdictions recorded variations of $5 or less, except Quebec (+$6), Yukon (+$8), Ontario (+$10), and Nunavut (+$13). Northwest Territories had the highest proportion of claimants receiving the maximum weekly benefit rate (75.6%) and New Brunswick had the lowest proportion of claimants receiving the maximum rate (34.6%).
The average weekly benefit rate increased to $473 (+0.8%) for men and to $416 for women (+1.7%). About 56.6% of claims established by men received the maximum weekly benefit rate compared to only 32.7% for claims established by women. Claimants aged 24 years old or less were the only age group to experience a decrease (-$7) in their average weekly benefit rate. Similar to previous years, their average weekly benefit rate ($400) was also lower than for claimants aged 25 to 44 years old ($460), those aged 45 to 54 years old ($452), and those aged 55 years old and over ($433).
The average weekly benefit rate was the highest among long-tenured workers ($485), who were also the most likely to receive the maximum weekly benefit rate (61.4%). In comparison, frequent claimants received an average of $457 in weekly benefits and occasional claimants received $422.
Family supplement provision
Targeting low-income families, the Family Supplement Provision provides additional benefits to EI claimants with children (under the age of 18) who have an annual family net income equal to or less than $25,921 and—for the purposes of this reporting period—received either the Canada Child Tax Benefit (CCTB) or Canada Child Benefit (CCB).Footnote 8 Under the Family Supplement Provision, which is available to all benefit types, the weekly amount of family supplement can increase a claimant’s benefit rate from 55% to a maximum of 80% of his or her weekly insurable earnings, subject to the maximum weekly benefit.Footnote 9 The amount provided to eligible claimants is determined by the claimant’s family net income, the number of children in the claimant’s family, and the age of the claimant’s children (see Table 4).
Approximately 79,400 claims received the family supplement in FY1617, a decrease of 0.6% when compared with the previous year. The number of EI claims receiving the family supplement has now decreased for 15 consecutive years from a high of 187,300 claims in FY0102. Women (79.2%) and claimants aged 25 to 44 (71.8%) continued to be the main demographic groups benefiting from the family supplement provision.
During the reporting fiscal year, low-income families received a total of $88.7 million in additional benefits through the family supplement, a decrease of $1.9M (-2.1%) compared to the previous reporting period. Family supplements averaged $44 per week and have remained relatively unchanged since FY0001. At the same time, the consumer price index increased by 34.4%Footnote 10 between FY0001 and FY1617, decreasing the purchasing power of the average supplement. In addition, as reported in a recent studyFootnote 11, the fact that weekly top-ups have remained unchanged since 1997 means fewer claims are reaching the maximum replacement rate of 80% of the claimant’s weekly income (3.3% of family supplement claims in FY1617).
|Selected family income range|
|$21,751 to $22,000||$23,751 to $24,000||$25,751 to $25,921|
|Number of children|
|Each additional child||$27.45||$22.85||$11.90||$0.95|
|Age of children|
|Supplement for each child under 7 years old||$4.15||$3.45||$1.80||$0.15|
Source: Employment Insurance Regulations, section 34.
1.2 Combined Employment Insurance claims
Under certain provisions of the EI program, a claimant may receive multiple types of benefits as part of a single claim, assuming that the claimant meets each benefit type’s eligibility requirements.Footnote 12 A “pure” claim is one in which an EI claimant receives a single benefit type, while a “combined” or “mixed” claim is one in which the claimant receives more than one benefit type. Pure claims represented 82.0% of all completed claims in FY1617 (see Table 5).Footnote 13
Women were three times more likely to claim more than one type of benefits (29.3%) than men (9.4%), mostly due to their ability to claim maternity benefits and to their high probability of claiming both maternity and parental benefits. Indeed, maternity benefits were almost always combined with other benefit types (98.4% of maternity claims), especially with parental benefits (98.3% of all combined maternity claims). However, a significant portion also claimed sickness benefits (15.1% of combined maternity claims).
The combination of maternity, parental and sickness benefits was the most common one among claims with three or more benefit types, with 24,500 claims in the reporting period. According to a 2013 studyFootnote 14, 98% of women living outside of QuebecFootnote 15 who claimed EI maternity or parental in combination with sickness benefits took sickness benefits first—this may have been due to difficulties related to the pregnancy resulting in the claimant becoming unavailable for work before becoming eligible for maternity benefits, as they were only available from eight weeks prior to the child’s expected date of birth.Footnote 16
|Benefit type*||Total claims||Pure claims||Combined claims||Benefit type most often combined with
(Share of combined claims)
|Level (‘000s)||Level (‘000s)||Share
|Compassionate care||9.7||5.7||58.4%||4.0||41.6%||Sickness (56.6%)|
Note: Data may not add up to the total due to rounding. Percentage change is based on unrounded numbers. Includes claims for which at least $1 of EI benefits was paid. Completed claims include those that are terminated and those that are dormant and remained inactive as of August the following fiscal year.
* Excludes benefits for Parents of Critically Ill Children.
** Parental benefits for biological parents and parental benefits for adoptive parents are grouped together.
*** The total number of claims and of combined claims is lower than the sum of claims associated with each benefit type, because combined claims are only counted once even though they appear in more than one benefit type.
Source: Employment and Social Development Canada, Employment Insurance (EI) administrative data. Data are based on a 10% sample of EI administrative data.
Claims for parental benefits were combined with other benefits in a lesser proportion (86.0%) as only 13.7% of men who claimed parental benefits were also paid other types of benefit (of those, 89.0% received regular benefits and 12.0% received sickness benefits). For their part, 98.5% of women that claimed parental benefits received at least another benefit type (99.5% previously received maternity benefits and 14.5% received sickness benefits).
Sickness benefits were the third most combined type of benefits (47.4% of all sickness claims), mostly with regular benefits (84.0% of all combined sickness claims). Men combined their sickness benefits predominantly with regular benefits (96.4% of all the combined sickness claims established by men). Comparatively, women combined their sickness benefits not only with regular benefits (71.5% of all combined sickness claims established by women), but also with maternity (27.5%) and parental benefits (26.1%).Footnote 17 Sickness benefits also represented the greatest share of combined regular claims (91.0%) with little variance when looked at by gender.
Compassionate care benefits, when combined with other benefits, were almost exclusively claimed with either sickness benefits (56.6%) or regular benefits (56.3%). Men tended to combine compassionate care benefits with regular benefits in a greater proportion (73.6%) than women (48.9%). Women were more likely to combine compassionate care benefits with sickness benefits (63.8%) versus men (39.7%). A recent study found that since introducing compassionate care benefits, the proportion of pure EI compassionate care claims have steadily increased from 41.0% in FY0304Footnote 18 to 58.4% during the reporting fiscal year.
Around one fifth (22.1%) of Work-Sharing claims were combined with other benefit types, predominantly with regular benefits (84.4% of all combined Work-Sharing claims). This is mostly due to the fact that both benefit types are taken due to a downturn in business activity which increases the risk of layoffs (Work-Sharing benefits) and actual layoffs (regular benefits). Regular benefits are usually claimed following Work-Sharing benefits, most likely reflecting an absence of improvement in a participating firm’s activity that eventually leads to a downsizing of the firm’s labour.
While fishers have the possibility to combine fishing benefits with other benefits type under some restrictions, only 13.3% of fishing claims were combined with other benefit types, largely with sickness benefits (84.4% of combined fishing claims). No fishing claim was recorded to have been combined either with maternity, parental, or compassionate care benefits in the last five years.
1.3 Benefits-to-Contributions ratios
EI benefits paid as a share of contributions paid, more commonly referred as the benefits-to-contributions ratio (B/C ratio), provides useful information in comparing the usage of benefits relative to EI contribution premiums paid (see Annex 2.27 for a detailed account of EI premiums collected and benefits paid). This section highlights the key findings of the adjusted total B/C ratio and the adjusted regular B/C ratio for 2015.Footnote 19 As EI contributions are not being assigned to a specific benefit type, the regular B/C ratio accounts for reductions in EI contributions related to special benefits.Footnote 20
In Canada, total EI benefits paid as a share of total EI premiums paid increased from a ratio of 0.70 in 2014 to 0.72 in 2015 (unadjusted B/C ratio). During the same period, the unadjusted regular B/C ratio also increased from 0.41 to 0.45. As explained in the methodological note below, both of these ratios are normalized to 1.0 and serve as the base to derive the adjusted B/C ratios for every demographic groups.
JurisdictionsFootnote 21 with the highest proportion of seasonal claimants generally exhibit adjusted total B/C ratios above the national average. For 2015, the Atlantic provinces and Quebec received more EI benefits than their employees and employers contributed in EI premiums, when compared to the national average. Excluding the payments of special benefits results in an even higher adjusted regular B/C ratio in these jurisdictions, which highlights their greater usage of regular benefits compared to other regions (see Chart 3). On the other hand, Ontario, the western provinces, the Northwest Territories and Nunavut received less EI benefits and regular benefits per dollar contributed in premiums than Canada as a whole.
Text description of Chart 3
|Region||Adjusted total Benefits-to-Contributions ratio (left scale)||Adjusted Regular Benefits-to-Contributios ratio (left scale)||Adjusted total Benefits-to-Contributions ratio for Canada (1.0) (left scale)||Unemployment rate (right scale)|
|Prince Edward Island||3.31||3.48||1.0||10.5%|
|Newfoundland and Labrador||3.49||4.07||1.0||12.8%|
Sources: Canada Revenue Agency (CRA), T4 slips with employment income (for data on contributions); Employment and Social Development Canada (ESDC), Employment Insurance (EI) administrative data (for data on benefits); and Statistics Canada, Labour Force Survey, CANSIM tables 282-0100 and 282-0087 (for data on unemployment rates). CRA data are based on a 10% sample of T4 slips with employment income, and ESDC data are based on a 10% sample of EI administrative data.
In 2015, women continued to receive relatively more EI benefits than they contributed in premiums when compared to men (adjusted total B/C ratio of 1.06). However, when looked at more closely, it is women aged between 25 and 44 years old (adjusted B/C ratio of 1.48) that entirely drove the ratio up for women (see Table 6). Women of this age are the socio-demographic group most likely to receive maternity and/or parental benefits. As such, they represented the only age cohort that exhibited an adjusted B/C ratio higher than their male counterparts. Excluding special benefits, their adjusted regular B/C ratio dropped to 0.68.
Methodological note: Adjusted benefits-to-contributions ratios
The total and regular B/C ratios presented in this section are normalized, with the ratio of Canada set at 1.0. This results in adjusted B/C ratios; an adjusted ratio higher than 1.0 means that the underlying sub-population (such as province or territory, demographic group) is a net beneficiary of the EI program, while those with an adjusted ratio lower than 1.0 are net contributors to the program relative to Canada as a whole.
|Age category||Adjusted total B/C ratio||Adjusted regular B/C ratio|
|24 years old and under||1.23||0.90||1.09||1.52||0.52||1.09|
|25 to 44 years old||0.89||1.48||1.15||1.12||0.68||0.93|
|45 to 54 years old||0.84||0.64||0.75||1.11||0.78||0.96|
|55 years old and over||1.11||0.70||0.93||1.46||0.87||1.20|
While men had on average an adjusted total B/C ratio below the national average, those aged less than 25 years old and those aged 55 years old and over were above it. When only considering regular benefits, the gender gap observed in the total adjusted B/C ratio reverses as men showed a ratio of 1.21 compared to 0.73 for women. In fact, men from all age groups showed an adjusted regular B/C ratio above the national average.
Employees from goods-producing industries, with an average adjusted regular B/C ratio of 1.91, were generally above the national average. Those from the service-producing industries (adjusted regular B/C ratio of 0.71) were below the national average (see Chart 4). Workers from goods-producing industries were overrepresented among EI regular claims with 21.6% of employment and 39.5% of all regular claims in 2015. The greater reliance of workers from the goods-producing sectors on EI regular benefits relative to those of the services-producing industries can be connected to the larger share of seasonal employment, which is associated with Construction (adjusted regular B/C ratios of 3.05 in 2015) and Agriculture, forestry, fishing and hunting (adjusted regular B/C ratios of 3.91) industries.
Text description of Chart 4
|Adjusted Regular Benefits-to-Contributions Ratio|
|Agriculture, forestry, fishing and hunting||3.91|
|Mining and oil and gas extraction||1.77|
|Transportation and warehousing||0.90|
|Finance and insurance||0.27|
|Real estate and rental and leasing||0.95|
|Professional, scientific and technical services||0.88|
|Business, building and other support services||1.33|
|Health care and social assistance||0.35|
|Information, culture and recreation||0.83|
|Accommodation and food services||1.10|
|Other services (except public administration)||0.99|
Sources: Canada Revenue Agency (CRA), T4 slips with employment income (for data on contributions); Employment and Social Development Canada (ESDC), Employment Insurance (EI) administrative data (for data on benefits). CRA data are based on a 10% sample of T4 slips with employment income, and ESDC data are based on a 10% sample of EI administrative data.
Implicit income redistribution and the Employment Insurance program
Due to differences in income support provided by the EI program across socio-economic sub-populations, the program can act as an implicit income redistribution mechanism in Canada, providing greater income support (relative to contributions) to individuals in the lower part of the income distribution as compared to those with greater earnings. A 2012 evaluation study* showed that the benefit and contribution aspects of the program tend to be redistributive and that the impact of the program on the redistribution of earnings increased substantially during the late 2000s recession.
Moreover, a study on the financial impact of receiving EI benefits** concluded that the EI program has a considerable positive income redistribution effect, with lower income families having a higher adjusted total benefits-to-contributions ratio than higher income families. In fact, families with after-tax incomes below the median received 34% of total EI benefits and paid 18% of all premiums, representing an adjusted total benefits-to-contributions ratio of close to 2.0.*Ross Finnie and Ian Irvine, The Redistributional Impact of Employment Insurance 2007 to 2009 (Ottawa: HRSDC, Evaluation Directorate, 2013).
**Constantine Kapsalis, Financial Impacts of Receiving Employment Insurance (Ottawa: Data Probe Economic Consulting Inc., 2010).
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