Employment Insurance Regulations - Amendments

The following information is out of date.

Description

The basic reason for the review of Employment Insurance (EI) economic regions was to modify regional boundaries, where necessary, in response to changes in labour market conditions. The goal was to ensure the continued equity and fairness of the EI program, and was based on Statistics Canada data as well as other more recent labour market information.

The new EI economic regions were introduced on July 9, 2000. Experience since the adoption of the regulations, coupled with further analysis, has revealed that introduction of the new economic regions has had a greater than expected impact in two areas of the country: New Brunswick and eastern Quebec. The specific areas affected are the regions of Madawaska-Charlotte in New Brunswick and Lower St. Lawrence and North Shore in Quebec.

Concurrent with the introduction of the regions, their rates of unemployment decreased in the first two months after adoption of the changes.

In New Brunswick, Madawaska-Charlotte has seen a 4 point drop in unemployment rate. Thus, hours required to qualify for EI are up by 140, whereas maximum benefits are down by 8 weeks

In Quebec, the North Shore has seen a 7 point drop in its unemployment rate. Thus, hours required to qualify for EI are up by 105, whereas maximum benefits are down by 11 weeks.

Lower St. Lawrence and North Shore has seen a 3 point drop in unemployment rate. Thus, hours required to qualify for EI are up by 105, whereas maximum benefits are down by 7 weeks.

To further compound things, unusually inclement weather has reduced seasonal work at exactly the time required to qualify for EI.

The combination of these events has been too sudden for people to adjust on their own.

Although the principles and rationale for the changes introduced in July are still valid, the inability of people in the two affected areas to adjust to the greater than expected increase in qualifying conditions for EI requires a transitional measure to smooth out the implementation of the new economic regions.

Alternatives

Two alternatives were considered.

One was to maintain the current EI regional boundaries. This option was rejected because it would be unfairly harsh on the affected residents of New Brunswick and Quebec

The other alternative was a three-year transition using a regulation that averages blended unemployment rates from the new regions and the adjacent regions to which they belonged before the July 9 changes and uses the higher of the average or the actual rate.

Benefits and Costs

In the first year, claimants in the affected areas will see no increase in the number of hours required to qualify for benefits and no decrease in the maximum number of weeks they can receive as compared to the July 9 changes. In the second and third years, the qualifying and entitlement conditions will be somewhat less generous than in year one, but more generous than would have been the case under the July 9 changes.

The net result of these changes is intended to be neutral on the total cost of the EI program.

Consultation

Consultations have taken place with Human Resources Development Canada (HRDC) regional staff and local economists since the implementation of the July 9 changes. There have also been consultations with citizens and their elected representatives in the affected areas. These proposals have been approved by the Employment Insurance Commission, which includes representatives of employers, employees and the government.

Compliance and Enforcement

The appropriate HRDC regional offices will be provided with detailed descriptions of the transitional unemployment rates.

Once these transitional rates come into effect they will become the basis for determining the unemployment rate of the labour market area in which each individual EI claimant resides. This will in turn determine the number of weeks of insurable employment claimant need before they can qualify for EI as well as the number of weeks of benefits they can potentially receive during the length of the benefit claim.

Contact

Gordon McFee
Director
Policy and Legislation Development, Insurance Branch
Human Resources Development Canada
9th Floor, 140 Promenade du Portage
Ottawa, Ontario
K1A 0J9
(819) 997-8622 (Telephone)
(819) 953-9381 (Facsimile)