Employment Insurance Monitoring and Assessment Report for the fiscal year beginning April 1, 2016 and ending March 31, 2017

From: Employment and Social Development Canada

In line with its legally mandated responsibilities under Section 3 of the Employment Insurance Act, the Employment Insurance Commission is pleased to present this report to Parliament with the objective of monitoring and assessing the impact and effectiveness of benefits and other assistance offered under the Employment Insurance (EI) program. This analysis is intended to provide a clear understanding of the impact of EI on the Canadian economy and the ways it works to address the needs of Canadian workers, their families and employers.

The Employment Insurance program

The Employment Insurance (EI) program provides support to partially replace lost employment income for eligible unemployed contributors to the program while they look for new employment or upgrade their skills, or who are absent from work due to specific life circumstances (such as sickness, maternity, childbirth or providing care to family members). The EI program also helps unemployed individuals find suitable employment.

Canada's employment insurance system dates back to the 1940 creation of the Unemployment Insurance Commission, the precursor to the current EI Commission. Collection of premiums to fund the program began in 1941 and the first benefit payments were issued in 1942. Major reforms to the program were introduced in 1971, which also saw the creation of benefits for sickness and maternity, the expansion of coverage to all employees and benefits geared to reflect a claimant's income. Another series of significant reforms were introduced in 1996 when a cap on premium payments based on insured earnings was introduced, as well as an hours-based eligibility system. These two elements represent the foundation for the current EI program.

Through the income benefits of EI Part I and the employment benefits and support measures funded through EI Part II, workers across Canada are provided support for their transition back into the labour market and to maintain attachment to the labour force.

EI Part I provides direct income support through EI regular benefits, EI fishing benefits, Work-Sharing benefits and EI special benefits.Footnote 1

EI regular benefits are available to eligible individuals who lose their job with a valid reason for separation—for instance, due to work shortages, seasonal or mass layoffs―while individuals are available and able to work, but can't find a job. To qualify for regular benefits, individuals must, among other things, have accumulated a minimum number of insurable hours of employment over their qualifying period, depending on their local unemployment rate.

EI fishing benefits are paid to qualifying self-employed fishers who are actively seeking work. Unlike regular EI benefits, eligibility for EI fishing benefits is based on earnings and not insurable hours of employment.

Work-Sharing is an adjustment program designed to help employers and employees avoid layoffs due to temporary reductions in the normal level of business activity that are beyond the control of the employer. Following the establishment of a Work-Sharing agreement with an employer, eligible workers who opt to work a temporarily reduced week receive income support in the form of paid benefits, while the employer or markets recover.

EI special benefits provide support to employees or self-employed persons who are sick, are pregnant, recently gave birth, are caring for a newborn or newly adopted child, or who are caring for a family member with a critical illness or injury or at end of life.

Programs delivered under Part II of the Employment Insurance Act are called Employment Benefit and Support Measures (EBSMs). The purpose of these programs is "to help maintain a sustainable Employment Insurance system through the establishment of employment benefits for insured participants and the maintenance of a national employment service".Footnote 2 EBSMs are labour market programs and services established to help unemployed Canadians return to work and to develop a labour force that meets the current and emerging needs of employers. These programs are delivered mostly by provincial and territorial government through Labour Market Development Agreements.

Budget 2016 announced a number of reforms and investments in the EI program that were implemented during this reporting fiscal year. The initial impacts of these policy changes and investments are found throughout this report. Reforms introduced to EI Part I included: making changes to the eligibility rules for new entrants and re-entrants to the labour market; temporarily enhancing benefits in certain regions affected by downturns in global commodity prices; and reducing the EI waiting period from two weeks to one week. Budget 2016 investments provided an additional $125 million to provinces and territories to support EI Part II skills and training measures; temporary additional funding allowing EI call centres to hire more staff; and led to the launch of the EI Service Quality Review.

Recent changes to Employment Insurance

Budget 2017 introduced a number of changes to the EI program, including:

  • an earlier access to EI maternity benefits;
  • more flexible EI parental benefits;
  • new EI family caregiver benefits for adults;
  • a broader definition of eligible caregivers to extended family members for the new EI family caregiver benefits for adults and children (previously named PCIC);
  • a broader list of medical practitioners who are authorized to sign medical certificates for receiving caregiver benefits;
  • an additional $1.8 billion over six years, starting in fiscal year 2017 to 2018 (FY1718), to expand the Labour Market Development Agreements;
  • amendments to the Employment Insurance Act to broaden worker eligibility for programs and services under the Labour Market Development Agreements;
  • a better use of existing flexibilities within the EI program that allow claimants to pursue self-funded training and maintain their EI status; and
  • $12 million in FY1718 to develop modern approaches to EI service delivery.

These changes, however, will not be part of this report since they were not implemented during the fiscal year 2016 to 2017 and thus the impact cannot be assessed in this Report.
Future Monitoring and Assessment reports will cover the impacts of recently announced changes, beginning in the Report for FY1718.

The Canada Employment Insurance Commission

The Canada Employment Insurance Commission (CEIC) has the legislated mandate to monitor and assess the EI program. CEIC also oversees a research agenda that supports the preparation of its annual EI Monitoring and Assessment Report. At the end of each fiscal year, the CEIC presents the report to the Minister of Families, Children and Social Development (the Minister), who tables it in Parliament.

The CEIC makes regulations under the authority of the Employment Insurance Act, with the approval of the Governor in Council. In addition, the CEIC plays a key role in overseeing the EI program, reviewing and approving policies related to program administration and delivery. EI program operations are carried out, on behalf of the CEIC, by Employment and Social Development Canada (ESDC) and Service Canada.

In another key role, the CEIC contributes to the financial transparency of the EI program. Annually, it commissions an EI premium report from the Chief Actuary, prepares a summary report and conveys both reports to the Minister as well as the Minister of Finance for tabling in Parliament. The CEIC also sets the maximum insurable earnings, according to legislative requirements, and as of 2017 is responsible for rate-setting based on a seven-year break-even principle for the EI Operating Account.

The CEIC advises on which EI appeal decisions will be submitted for review by the Federal Court of Appeal. Two of the Commissioners, the Commissioner for Employers and the Commissioner for Workers, serve in a tri-partite committee with the chair of the Social Security Tribunal. The Minister consults this committee regarding Governor-in-Council appointments of members for the EI section of that Tribunal.

The CEIC consists of four members, three of whom are voting members, representing the interests of workers, employers and government. The Commissioners for Employers and Workers are appointed for renewable terms of up to five years and are mandated to represent the concerns and positions of workers and employers on policy development and program delivery related to EI and the labour market. The Deputy Minister of Employment and Social Development represents the federal government and acts as the Chairperson of the CEIC. The Senior Associate Deputy Minister of Employment and Social Development acts as the Vice-Chairperson, with voting privileges only when acting on behalf of the Chairperson.

The report

The Employment Insurance Monitoring and Assessment Report is produced under the direction and guidance of the CEIC. ESDC and Service Canada officials support the CEIC in preparing the report. The report relies on multiple sources of information to provide a comprehensive analysis of the impact and effectiveness of the EI program, including EI administrative data, Statistics Canada survey data, internal and external analytical reports and peer-reviewed evaluation studies.

The first chapter discusses the state of the Canadian labour market over the 2016 to 2017 fiscal year. The second chapter analyzes the usage, impact and effectiveness of EI benefits provided chiefly under EI Part I for the same period. The third chapter assesses the support provided under EI Part II to unemployed Canadians through active employment and re-employment programs and services, known as Employment Benefits and Support Measures. The fourth and final chapter presents information on EI program administration and service delivery.

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