The number of Canadians receiving jobless benefits through Employment Insurance has fallen to a record low, another sign of a tight labour market that is creating plenty of job opportunities.
In March, around 388,000 people received what are known as regular jobless benefits through the EI system, a slight decrease from February and down 27 per cent from a year earlier, according to figures published Thursday by Statistics Canada. (People can also access the EI program for other benefits such as sickness and parental leave.)
This was the lowest number of regular EI beneficiaries in Statscan records that date back to 1997, not including the early months of the COVID-19 pandemic, when the EI program was largely shoved aside and the Canada Emergency Response Benefit (CERB) became the primary mode of providing financial assistance to millions of laid-off people.
Statscan noted that changes in beneficiary levels can reflect several events, including the newly jobless accessing benefits and others exhausting their EI support. However, the recent plunge in EI recipients is happening alongside a hot labour market that is continuing to churn out jobs.
To bring inflation under control, the Bank of Canada is trying to slow the economy through higher lending rates – and in particular, to increase the unemployment rate and tamp down wage growth. So far, that is not happening. At 5 per cent, the jobless rate is just above its record low, set last summer. Employment has risen by 414,000 people (2.1 per cent) the past year.
Still, there are mounting signs that labour demand is easing, and the longer that interest rates stay at elevated levels, the more likely that people will lose work and try to access jobless benefits.
This is concerning, according to many social-policy experts, because the unemployed increasingly struggle to get regular EI benefits and the system is long overdue for reform.
“We’ve had long-standing coverage issues,” said Jennifer Robson, an associate professor of political management at Carleton University. “That’s still a problem.”
Indeed, about eight in 10 unemployed workers could count on receiving EI jobless benefits in the 1980s. That had dropped to around four in 10 people in the years just before the pandemic. To some degree, this reflects the changing nature of work. There is a rising proportion of gig workers, who don’t pay EI premiums and thus can’t receive benefits. Others pay premiums, but haven’t worked enough insurable hours to qualify for support.
The pandemic also showed how the existing system is slow to respond to economic shocks and can be easily overwhelmed with claims. The federal government was forced to create CERB to quickly disburse funds.
Another issue is the size of benefit payments. This year, the maximum EI jobless benefit is $650 a week, although it’s much lower for some recipients, depending on their earnings history.
The federal government intends to shake up the program. The 2020 Speech from the Throne said: “This pandemic has shown that Canada needs an EI system for the 21st century, including for the self-employed and those in the gig economy.”
Subsequently, Ottawa held consultations on how to update EI and said it would release a “long-term plan” for the system after those talks had concluded last summer. That plan has yet to be released.
The federal government has made several changes to the program. For instance, it has increased the duration of EI sickness benefits to a maximum of 26 weeks, up from 15 weeks, as of late last year.
However, “they’ve really not done any of the big structural stuff,” Dr. Robson said.
With Canada facing the potential for a recession, or weak economic growth, laid-off workers will experience the same shortcomings of the EI system as they have in past downturns, Dr. Robson added.
“We swear we will do better before next time, and then we put it off, we put it off, we put it off, because it’s hard and potentially politically and fiscally costly to a government,” she said. “Economic cycles will continue to hand us this lesson until we agree to learn from it.”
Matt Lundy