Introduction

From: Employment and Social Development Canada

Official title: Employment Insurance Monitoring and Assessment Report for the fiscal year beginning April 1, 2018 and ending March 31, 2019: Introduction

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 way it works to address the needs of Canadian workers, their families and employers.

The Employment Insurance program

The Employment Insurance (EI) program provides temporary 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. For example:

  • sickness
  • pregnancy
  • providing care to a newborn or newly adopted child
  • providing care and support to a critically ill family member, or
  • providing end-of-life care to a family member with significant risk of death

Canada’s employment insurance system dates back to the 1940 creation of the Unemployment Insurance Commission, the precursor of the current Canada 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 1071, which 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 changes 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 2 elements represent the foundation for the current EI program.

EI Part I provides direct income support through EI Regular Benefits, Fishing Benefits, Work-Sharing Benefits and Special BenefitsFootnote 1. EI Part II provides Employment Benefits and Support Measures, including those offered under the Labour Market Development Agreements (LMDAs) and Aboriginal Skills and Employment Training Strategy (ASETS).

Through the income benefits funded through Part I and the Employment Benefits and Support Measures funded through Part II, workers across Canada are provided support for optimal employment transitions.

EI regular benefits provide temporary income support to partially replace lost employment income for eligible claimants while they search for work or upgrade their skills. To qualify, individuals must, among other things, have accumulated a minimum number of hours of insurable employment depending on where they live. Individuals must be available for and actively seeking employment during their claim period.

EI fishing benefits are paid to qualifying self-employed fishers who are actively seeking work. Unlike EI regular benefits, eligibility is based on insurable earnings during the claimant’s qualification period rather than insurable hours worked.

Work-sharing is an adjustment program designed to help employers and employees avoid layoffs due to temporary slowdowns in business activity that are beyond the control of the employer. Once a Work-Sharing agreement with an employer has been established, eligible workers who opt to work a temporarily reduced week receive income support in the form of EI benefits, while the employer or market recovers.

EI special benefits provide support to employees or self-employed persons who are sick, pregnant, recently gave birth, caring for a newborn or a newly adopted child, or caring for a family member who is critically ill, injured or requires end-of-life care.

Under the umbrella of Employment Benefits and Support Measures, programs delivered under Part II of the Employment Insurance Act help individuals in Canada prepare for, find and maintain employment. 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 These programs are delivered by provinces and territories through the Labour Market Development Agreements (LMDAs), as well as by the Government of Canada in the case of pan-Canadian programming.

Recent changes to the Employment Insurance program

Budget 2019 introduced a number of reforms to the EI program, including:

  • The EI Training Support Benefit, as part of the Canada Training Benefit, which will provide income support for up to 4 weeks of paid leave every 4 years. This benefit will provide workers with the flexibility to train when it works best for them.
  • The EI Small Business Premium Rebate, which will provide a rebate to any business that pays employer premiums equal to or less than $20,000 per year, which will offset the cost of EI premiums resulting from the introduction of the EI Training Support Benefit.
  • Investing $253.8 million over 5 years starting in FY1920, with $56.7 million per year ongoing to make the EI, CPP and OAS recourse process easier to navigate and more responsive to Canadians.
  • Allocating a permanent annual funding of $7.4 million to implement activities designed to strengthen the integrity of the EI Program.

Other changes to the EI program in 2019 include:

  • Expanding eligibility under EI Part II for Employment Benefits (for example, skills development, wage subsidies) to include unemployed individuals who have made minimum premium contributions in at least 5 of the last 10 years (EI Premiums Paid Eligibility). Eligibility for Employment Assistance Services (for example, employment counselling, job search assistance) was also expanded to include the employed (these services were previously only available to the unemployed). Eligibility for Employer-Sponsored Training, under the Labour Market Partnerships Support Measures, was also broadened to increase flexibility for provinces and territories to support employers. These changes will allow a broader range of clientele to access EI-funded programs and services;
  • Making available additional time-limited targeted funding under the LMDAs, to support workers and communities affected by duties and tariffs imposed by the United States on Canadian softwood exports, as well as steel and aluminium products. Additional targeted funding was also offered to provinces and territories under the LMDAs to assist workers in seasonal industries. For FY1819, nearly $75 million was available to provinces and territories under these 3 measures ($20.5M for workers in seasonal industries, $25M for workers affected by the steel and aluminium trade dispute and $29.1M for workers affected by the softwood lumber trade dispute).

These changes, however, will not be reflected in this report since they were not implemented during FY1819 and thus the impact cannot be assessed. Future Monitoring and Assessment reports will cover the impacts of recently announced changes, beginning in the report for FY1920.

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 Employment, Workforce Development and Disability Inclusion (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. Employment and Social Development Canada (ESDC) and Service Canada carry out EI program operations on behalf of the CEIC.

In another key role, the CEIC contributes to the financial transparency of the EI program. Annually, it commissions and 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 7 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 4 members, 3 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 5 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 ESDC represents the federal government and acts as the Chairperson of the CEIC. The Senior Associate Deputy Minister of ESDC 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 FY1819. The second chapter analyzes the usage, impact and effectiveness of EI benefits provided chiefly under EI Part I during the same period. The third chapter assesses supports provided under EI Part II to eligible individuals in the form of active employment and re-employment programs and services through Employment Benefits and Support Measures. The fourth and final chapter presents information on EI program administration and service delivery.

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