Canadian Manufacturing

Extra EI help to hard-hit regions tops $1B, blowing past budget estimates

The Liberal program was designed to assist out-of-work Canadians in 15 regions sideswiped by the oil industry downturn

April 25, 2017  by Jordan Press, The Canadian Press

OTTAWA—A federal program designed to give extra financial help to out-of-work Canadians in the hardest-hit economic regions of the country has blown past Liberal budget estimates with more than $1 billion in payouts.

The payments to date are double what the government anticipated it would spend to provide extra weeks of employment insurance benefits to workers in 15 regions smarting from a sharp downturn in energy prices.

When the plan was set up last year, the government initially estimated that 235,000 people would use the extra benefits.

By October, just over three months into the program, the take-up rate was almost half of forecast numbers.


Now, six months later, Employment and Social Development Canada says there have more than 267,000 claims for the extra weeks as of the middle of April, with benefits totalling almost $1.06 billion.

Last year’s budget and fall economic update estimated that benefit payments in the fiscal year that ended March 31 would be $557.3 million—about half of what has been spent as of April 17—and that overall spending between April 2016 and March 2019 would total $827.4 million.

“The fact that there were a larger number of people who took up the extended benefits does to me suggest that the labour markets evolved in a way that was weaker than expected,” said Trevor Tombe, an assistant professor of economics at the University of Calgary who has kept a close eye on the extended benefit program.

“That’s the thing about forecasts. Things change.”

And there is still time for more time for workers to apply for the extra help, with the program’s cut-off set for Canada Day.

The department said a report is coming in September with a revised cost for the program as part of the chief actuary’s review of EI premiums.

The Liberals unveiled the extended benefit program last year to help workers in 15 regions of the country with stubborn unemployment rates.

Eligible workers received an extra five weeks of regular benefits effective July 2016 but retroactive to January 2015. Long-tenured workers in the regions were eligible for an extra 20 weeks of benefits, to a maximum of 70 weeks—again, starting last July but retroactive to January 2015.

Across all the regions, 190,183 workers received an extra five weeks of benefits, while 77,439 long-tenured workers qualified for the extra 20 weeks. They were, on average, using about eight weeks of extra benefits, although the department was unable to say how many exhausted their benefits.

“There is no question that some regions in the country are facing challenging times,” said Emilie Gauduchon-Campbell, a spokeswoman for Social Development Minister Jean-Yves Duclos.

“These temporary measures aimed to support workers and their families while they are looking for good jobs and to provide stability for their communities.”

She said the government isn’t considering changes to the program, such as lengthening the eligibility period for the extended benefits.

Conservative critic Pierre Poilievre said the figures suggest that the Liberals should change their policies, lower taxes and balance the budget.

“These numbers show that borrowing billions and hiking taxes have not created opportunity,” Poilievre, a former social development minister, said in an statement. “Rather, they have condemned hundreds of thousands of workers to unemployment,”

The March 2016 budget listed 12 regions that qualified for the extra help under federal requirements. Last May, the Liberals added three more regions: Edmonton, southern Saskatchewan and B.C.’s southern interior.

The economy in Alberta—where benefit payments were the highest—has rebounded with improvements in manufacturing and employment rates since a low point in the fall of 2016, Tombe said.