Employment Insurance Monitoring and Assessment Report for the fiscal year beginning April 1, 2017 and ending March 31, 2018
Chapter 2 - 5 Employment Insurance work-sharing benefits

2.5.1 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 the past few years (see Chart 30).

The total number of Work-Sharing agreements decreased significantly from 862 agreements established in FY1617 to 198 agreements in FY1718, which is consistent with the recovery of the Canadian economy that was observed during past years (see Chapter 1). The number of agreements decreased in all provinces, with the largest decrease reported in Alberta (-92.6%), Saskatchewan (-90.2%) and Manitoba (-83.3%). In absolute terms, the number of agreements dropped more in Alberta (-428 agreements), Quebec (-72 agreements) and Ontario (-52 agreements). The highest number of Work-Sharing agreements was established in Ontario (71 agreements), representing 35.9% of all agreements, followed by Quebec with 55 agreements (27.8%) of all agreements.

Chart 30 – Text version

	FY0809	FY0910	FY1011	FY1112	FY1213	FY1314	FY1415	FY1516	FY1617	FY1718
Total count of Work-Sharing agreements	2,305	7,717	1,379	1,198	830	649	411	917	862	198

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

Continuing with the trend observed in previous years, the goods-producing industries represented the majority of all Work-Sharing agreements established in FY1718 (see Table 41).

When assessed by firm size, small-sized enterprises (with fewer than 50 employees) comprised 66.7% of all Work-Sharing agreements in the fiscal year examined, down from 78.4% reported in the previous fiscal year. Combined, small and medium-sized enterprises (SMEs) with fewer than 500 employees accounted for 99.5% of all Work-Sharing agreements in FY1718, which is similar to the level in the previous fiscal year. The number of Work-Sharing agreements involving large-sized enterprise (with 500 employees or more) dropped from five agreements in FY1617 to only one agreement in FY1718. 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.

2.5.2 Employment Insurance Work-Sharing claims and amounts 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 31 illustrates the number of Work-Sharing claims and benefits paid from FY0910 to FY1718. 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 special Work-Sharing measures introduced in response, such as extending agreement duration, streamlining the administrative process and easing eligibility requirements for employers.^{Footnote 76} 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) more than doubled from the previous fiscal year. 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 FY1718, like the previous year, the total number of Work-Sharing claims established declined significantly by 68.9% from 11,900 claims in FY1617 to 3,700 claims in FY1718, reflecting the improved economic conditions observed in the fiscal year examined. The total amount paid in Work-Sharing benefits decreased from $43.4 million in FY1617 to $13.1 million in FY1718, representing a decrease of -69.8%.

Chart 31 – Text version

	FY0910	FY1011	FY1112	FY1213	FY1314	FY1415	FY1516	FY1617	FY1718
New claims established (left scale)	127,033	20,929	23,755	13,890	11,673	8,024	20,521	11,936	3,708
Amount paid in benefits ($ millions) (right scale)	$294.7	$98.3	$31.7	$26.1	$21.3	$17.7	$38.8	$43.4	$13.1

• 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, data on amount paid are based on a 10% sample..

2.5.3 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. In view of this, the program provides partial income stabilization to offset reductions in hours that are 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 week 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 employee's wage and the degree of reductions in the hours worked, significant variability is also observed across industries in the reported weekly benefit rates.

In FY1718, the average weekly Work-Sharing benefit rate decreased by -12.5% to $109, down from the average weekly benefit rate of $125 in the previous fiscal year (see Table 43). This represents the second consecutive decrease 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 Saskatchewan ($160), followed by Newfoundland and Labrador ($153), while the lowest was in New Brunswick ($71). Like the previous year, the average weekly Work-Sharing benefit rate for both men and women decreased in FY1718. Men received an average weekly benefit rate of $115 in FY1718, down from $131 in FY1617; while women received an average weekly benefit rate of $99 in FY1718, down from $107 in FY1617. The average weekly benefit rate for all age groups decreased, at $110 for workers aged 25 to 54 years, which was a little higher than for workers aged 55 years and older ($108) and those aged 24 years and under ($102).

The average weekly Work-Sharing benefit rate in goods-producing industries declined by 14.2% to $106 in FY1718, from $124 reported in the previous fiscal year. Workers in the Agriculture, forestry, fishing and hunting industry received the highest amount of average weekly benefits ($133) in the goods-producing sector. The average weekly Work-Sharing benefit rate decreased in FY1718 to $123 from the previous fiscal year ($129) in service-producing industries. See Annex 2.21.3 for detailed information on average Work-Sharing weekly benefit rate by industry.

The average duration of Work-Sharing claims completed in FY1718 was 17.3 weeks, relatively unchanged from FY1617 (17.4 weeks). Over the period FY1213 to FY1617, the average duration has increased every year with the exception of FY1516 (see Chart 32). The higher average durations observed in FY1617 and FY1718 could be explained in part by the temporary measures extending the maximum duration of Work-Sharing agreements in certain industries during that period.

Chart 32 – Text version

	FY1213	FY1314	FY1415	FY1516	FY1617	FY1718
Average duration (weeks)	10.7r	12.9r	15.6r	14.4r	17.4r	17.3p

• Note: Includes all claims for which at least $1 of Work-Sharing benefits was paid.
• ^*In previous EI Monitoring and Assessment Reports, the average actual duration of Work-Sharing benefits were reported based on all claims established during the reporting fiscal year, with statistical adjustments to account for claims that were still not completed by the time of reporting. Starting with this year’s report, actual duration estimates for Work-Sharing benefits are based on claims that were completed (that is, claims that are terminated or for which no activity was reported as of August of the following fiscal year) during the reporting fiscal year. This methodology is expected to provide more precise duration estimates relative to the former one, and is identical to the one used to estimate actual durations for almost all other types of EI benefits provided in this report. Compared to other types of EI benefits, the number of Work-Sharing claims is much lower, which makes the variability in the revised average actual durations for past years much higher.
• ^r Revised data.
• ^p Preliminary estimates.
• Source: Employment and Social Development Canada, Employment Insurance (EI) administrative data. Data are based on a 100% sample of EI administrative data.

2.5.4 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 (e.g., the firm is shutting down or deciding to go ahead with layoffs), the Work-Sharing agreement ends before the anticipated end date—this is referred to as early termination. During the last five fiscal years, just over one third (36%) of agreements were terminated earlier than their scheduled end date and almost three quarters (72%) of firms returned to their normal level of employment.