Employment Insurance Monitoring and Assessment Report for the fiscal year beginning April 1, 2016 and ending March 31, 2017 Chapter II - 5. Employment Insurance Work-Sharing benefits

5.1 Employment Insurance Work-Sharing agreements

The number of Work-Sharing agreements established in a given fiscal year increases during periods of economic shocks and uncertainty, and decreases during periods of economic growth and stability. This countercyclical pattern can be observed by looking at the number of Work-Sharing agreements established in Canada in past few years (see Chart 32).

Show data table

	Canada
2008/2009	2,305
2009/2010	7,717
2010/2011	1,379
2011/2012	1,198
2012/2013	830
2013/2014	649
2014/2015	411
2015/2016	917
2016/2017	862

• Source: Employment and Social Development Canada, Common System of Grants and Contributions.

The total number of Work-Sharing agreements decreased slightly from 917 agreements established in FY1516 to 862 agreements in FY1617, which is consistent with the recovery of the Canadian economy that was observed in the reporting period examined (see Chapter 1). The number of agreements decreased in Central and Western provinces except Alberta, with the largest decrease reported in Quebec (-26 agreements) and British Columbia (-21 agreements). On the other hand, among the Atlantic provinces, Nova Scotia reported the largest increase (+8 agreements) followed by Newfoundland and Labrador (+2 agreements). There was no change in the number of Work-Sharing agreements in Prince Edward Island and New Brunswick in FY1617 compared to the previous fiscal year. Same as the previous fiscal year, the highest number of Work-Sharing agreements was established in Alberta (458 agreements), representing 53.1% of the all agreements.

Continuing with the trend observed in previous years, the goods-producing industries represented the majority of all Work-Sharing agreements established in FY1617 (see Table 40). The share of Work-Sharing agreements in the goods-producing increased from 69.6% in FY1516 to 70.3% in FY1617. Consistent with previous years, the Manufacturing industry reported the largest number of Work-Sharing agreements (426 agreements), equivalent to 49.4% of all agreements established in the fiscal year examined. The Mining, quarrying, and oil and gas extractions industry, and the Construction industry reported significant increase in the number of agreements established in FY1617 compared to the previous fiscal year (+34 agreements for both industries). The total number of Work-Sharing agreements in the services-producing industries decreased from 279 agreements in FY1516 to 256 agreements in FY1617. The Wholesale trade industry and the Professional, scientific, and technical services industry had a decrease in the number of agreements established (-15 agreements and -18 agreements, respectively) while the Retail trade industry had small increase (+5 agreements).

When assessed by firm size, small-sized enterprises (with fewer than 50 employees) comprised 78.4% of all Work-Sharing agreements in the fiscal year examined, up from 76.6% reported in the previous fiscal year. Combined, small and medium sized enterprises (SMEs) with fewer than 500 employees accounted for 99.4% of all Work-Sharing agreements in FY1617, which is similar to the level in the previous fiscal year (99.2%). The number of Work-Sharing agreements involving large-sized enterprise (with 500 employees or more) dropped from seven agreements in FY1516 to only five agreements in FY1617. This was consistent with the general trend observed since the 2008 recession, as Work-Sharing agreements have been primarily initiated to assist SMEs in recovering from economic shocks to their normal levels of business activity.

5.2 Employment Insurance Work-Sharing claims and amount paid

The use of Work-Sharing benefits is linked to the trends observed in Work-Sharing agreements, and is countercyclical to economic conditions (similar to the number of new claims established and amounts paid under EI regular benefits). As with the number of Work-Sharing agreements, the total number of Work-Sharing claims established and the total amounts paid in Work-Sharing benefits increase during labour market contraction and economic uncertainties, and decrease during periods of economic expansion.

Chart 33 illustrates the number of Work-Sharing claims and benefits paid from FY0809 to FY1617. The number of Work-Sharing claims and benefits paid peaked to just over 127,000 claims and $294.7 million paid in FY0910, corresponding to the recession in 2008 and the temporary Employment Insurance changes introduced in response, such as extending agreement duration, streamlining the administrative process and easing eligibility requirements for employers.^{Footnote 90} The number of Work-Sharing claims has declined significantly since then as the economy began to recover after the recession, before increasing once again in FY1516 when the number of Work-Sharing claims (20,500 claims) more than doubled from the previous fiscal year (8,000 claims). This was attributable to the downturn in global commodity prices which represented an external economic shock impacting many firms in affected industries and commodity-based regions that experienced sudden and unexpected declines in business activity. In FY1617, the total number of Work-Sharing claims established declined significantly (-41.8%) from the previous fiscal year to 11,900 claims, reflecting the improved economic conditions observed in the fiscal year examined.

Show data table

	Work-Sharing claims (left scale)	Amount paid in benefits ($ millions) (right scale)
2008/2009	68,437	$56.4
2009/2010	127,033	$294.7
2010/2011	20,929	$98.3
2011/2012	23,755	$31.7
2012/2013	13,890	$26.1
2013/2014	11,673	$21.3
2014/2015	8,024	$17.7
2015/2016	20,521	$38.8
2016/2017	11,936	$43.4

• Note: Includes all claims for which at least $1 of Work-Sharing benefits was paid.
• Source: Employment and Social Development Canada, Employment Insurance (EI) administrative data. Data are based on a 100% sample of EI administrative data.

The total amount paid in Work-Sharing benefits increased from $38.8 million in FY1516 to $43.4 million in FY1617, representing an increase of 11.9%. While the total amount paid in Work-Sharing benefits increased for the second consecutive year, it was still well below the peak of $294.7 million observed in FY0910.

The average number of beneficiaries^{Footnote 91} receiving Work-Sharing benefits each month increased from 5,530 in FY1516 to 6,780 in FY1617, even though the total number of new claims established had declined during the same time period. This explains the increase in the total amount paid in Work-Sharing benefits in FY1617 compared to the previous fiscal year. Chart 34 outlines the average number of beneficiaries receiving Work-Sharing benefits over the last decade. The increase in the average number of Work-Sharing beneficiaries in FY1617 represents the second consecutive yearly increase, after declining for five years since FY1011.

Show data table

	Average number of beneficiaries
2008/2009	9,554
2009/2010	52,694
2010/2011	21,299
2011/2012	6,189
2012/2013	4,706
2013/2014	3,636
2014/2015	2,685
2015/2016	5,526
2016/2017	6,781

• Source: Statistics Canada, Labour Force Survey, CANSIM table 276-0020.

5.3 Level and duration of Employment Insurance Work-Sharing benefits

The Work-Sharing program is designed to provide income support for workers in firms that experience temporary reductions in demand for reasons beyond the employer’s control. As such, the program provides partial income stabilization to offset reductions in hours that is agreed upon by the employees participating in the program, but is not meant to provide full coverage of insurable hours or insurable earnings. As a result, the data reported on Work-Sharing claims are not directly comparable to other types of EI benefits. This is particularly true of the weekly benefit rates paid to claimants, which are meant to only cover up to 60% of a regular work weeks for affected employees in a work unit subject to a Work-Sharing agreement depending on the agreed upon decrease in work levels. Because of this, the weekly benefit rates for Work-Sharing claimants are lower on average than for other types of EI benefits. Because the weekly Work-Sharing benefit rate is determined by the employees wage and the degree of reductions in the hours worked, significant variability is also observed across industries in the reported weekly benefit rates.

In FY1617, the average weekly Work-Sharing benefit rate was $125, down from the average weekly benefit rate of $131 in the previous fiscal year (see Table 42). This represents a decrease of 4.6% in the average weekly benefit rate after increasing for four previous consecutive years. Similar to the previous years, a high degree of variability can be observed among the average weekly benefit paid in each province in the fiscal year examined; for example, the highest average weekly benefit rate was in Prince Edward Island ($211) while the lowest was in Manitoba ($101). The average weekly Work-Sharing benefit rate for both men and women decreased in FY1617 compared to the previous fiscal year. Men received an average weekly benefit rate of $131 in FY1617, down from $136 in FY1516; while women received an average weekly benefit rate of $107 in FY1617, down from $115 in FY1516. The average weekly benefit was $126 for workers who were aged 25 to 54 years, a little higher than for workers aged 24 years and under ($120) and those aged 55 years and older ($124).

The average weekly Work-Sharing benefit rate in the goods-producing industries declined by 6.1% to $124 in FY1617, from $132 reported in the previous fiscal year (see Table 42). Workers in the Construction industry received the highest amount of average weekly benefits ($148) in the goods-producing sector. On the other hand, the average weekly Work-Sharing benefit rate remained unchanged in FY1617 from the previous fiscal year at $129 in the service-producing industries. The largest decline in the average weekly benefit rate in FY1617 was observed in the Accommodation and food services industry (-40.8%). See Annex 2.21.3 for detailed information on average Work-Sharing weekly benefit rate by industry.

The average duration^{Footnote 94} of Work-Sharing claims established in FY1617 was 17.1 weeks, a decrease of 0.4 weeks from FY1516 (17.5 weeks). This represents a decline in the average duration of Work-Sharing claims after steadily rising since FY1112 (see Chart 35).

Show data table

	Average duration (weeks)
2008/2009	14.3
2009/2010	19.0
2010/2011	13.2
2011/2012	13.1
2012/2013	13.3
2013/2014	14.4
2014/2015	15.5
2015/2016	17.5
2016/2017	17.1

• Note: Includes all claims for which at least $1 of EI Work-Sharing benefits was paid.
• Source: Employment and Social Development Canada, Employment Insurance (EI) administrative data. Data are based on a 100% sample of EI administrative data.

5.4 Employment Insurance Work-Sharing agreements subject to early termination

When a firm returns to normal levels of business activity ahead of recovery plan timelines, or withdraws from the Work-Sharing agreement for other reasons (such as it is closing down or deciding to go ahead with layoffs), the Work-Sharing agreements end before the anticipated end date of the agreement—this is referred to as early termination. Of the 862 Work-Sharing agreements established in FY1617 by firms across Canada, a total of 110 agreements were terminated earlier than their scheduled end date (12.8% of all agreements). This proportion increased from FY1516 (6.3%) and was the highest in the past five fiscal years, but was still much lower than the proportion reported in FY1011 (38.1%). Of the 110 early terminated agreements in FY1617, 82 agreements (9.5% of total Work-Sharing agreements) concluded because these firms returned to their normal level of employment, while the other 28 agreements (3.2% of total Work-Sharing agreements) concluded because the firms did not return to normal levels of employment (see Table 43).