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Business Commentary EI eligibility requirements need to be reconsidered with part-timers in mind

Parisa Mahboubi is a senior policy analyst at the C.D. Howe Institute.

Canada’s unemployment rate remained at its lowest recorded level at the end of 2018, but it does not reveal the whole story. Although a low unemployment rate points to a strong labour market performance, it masks variations among the provinces.

The jobless rate in Atlantic Canada, for example, is significantly higher than the national rate, but the majority of unemployed persons reside in Ontario, where access to unemployment benefits is more limited because of eligibility criteria. More balanced Employment Insurance (EI) eligibility – both regionally and toward workers in non-standard jobs – would better recognize the labour market reality in Ontario.

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With no month-over-month change, the national unemployment rate in December stayed at 5.6 per cent, meaning that more than 1.1 million Canadians 15 years of age and over were seeking work. The jobless rates in British Columbia, Quebec and Ontario were below the national figure, while, among other provinces, it was particularly high in Newfoundland and Labrador, at about 14 per cent. But despite its high unemployment rate, its relatively small population meant that only 2.8 per cent of jobless Canadians were in the province. In contrast, Ontario had the largest share of unemployed Canadians (more than 37 per cent).

Although there is nothing surprising about provinces with larger employed populations also being home to more unemployed people, there should be concerns when EI eligibility rules are tighter for workers in non-traditional jobs than for others, and in certain provinces than in others. Only 26 per cent of unemployed Ontarians received EI benefits, which was the second lowest rate among provinces after Alberta, according to the latest data available from Statistics Canada.

At the same time, those provinces with lower unemployment rates have a higher share of part-time workers. Part-time work is the most common form of non-standard employment – often low-paying jobs with fewer hours a week, a high degree of instability and no access to benefits. But the greatest challenge faced by part-timers is likely to be job security.

Among unemployed workers, the eligibility rate is lower for those who worked part-time. EI eligibility requires that a certain number of insurable hours are worked in the 12 months prior to layoff, depending on the regional rate of unemployment (420 to 700 hours). Workers in regions with low jobless rates need to accumulate more hours, making it harder for part-timers to qualify. This means that a larger portion of formerly part-time workers fail to meet EI requirements since they are more likely to reside in regions with a low unemployment rate, such as Ontario.

These discrepancies suggest that the unemployment rate in a given region and the number of hours worked should not determine EI eligibility. They do not reflect trends and variations in the types of employment owing to labour market changes. The proportion of part-time employment is driven not only by economic downturns but also by the desire of businesses for greater flexibility, such as technological change and globalization, along with some workers' preferences with work-life balance.

Governments should therefore consider providing better support for part-time workers through changes to the criteria for EI eligibility. Prior to 1997, eligibility was based on the total number of weeks worked, rather than hours. The weeks-based system protected more part-time workers who work fewer hours a week. To better address income and employment insecurity associated with part-time jobs, the EI program could boost eligibility by reverting to pre-1997 criteria and harmonizing EI eligibility criteria across provinces.

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