Changes To Make Small Weeks A Permanent And National Feature Of EI Program
Changes To Make Small Weeks A Permanent And National Feature Of EI Program
Date: November 16, 2001
[PRINCE EDWARD ISLAND] - The Honourable Lawrence MacAulay, Solicitor General of Canada and Member of Parliament for Cardigan, announced today on behalf of the Honourable Jane Stewart, Minister of Human Resources Development Canada, an amendment to the Employment Insurance Regulations that will make small weeks a permanent and national feature of the Employment Insurance (EI) program. This feature will be effective on November 18, 2001, and will allow EI claimants to exclude low-earning weeks (less than $150) for benefit calculation purposes.
"I am very pleased that the Small Weeks pilot project has been a success and that people in all areas of Prince Edward Island have benefited. Our evaluation shows that participants worked about an average of two extra small weeks. By making small weeks a permanent feature of EI, workers in this province will continue to benefit," said Minister MacAulay. "This amendment is in keeping with the commitment made by the Government of Canada to monitor and assess the impact of the EI program and make adjustments where necessary to best suit the needs of Canadians," added Minister MacAulay.
In 1997, the Government of Canada began testing two methods of benefit calculation to help people in high unemployment areas. The method of excluding small weeks when calculating EI benefits was chosen for further pilot testing. Because of its positive impact on people, this method will become a permanent feature across Canada.
As a result, and where possible, the weeks of work where the income earned is less than $150 will not be counted towards the average earnings used for the calculation of EI benefits. Without this change, in some instances, the counting of small weeks lowered the benefit rate of individuals who had varying work patterns (i.e., temporary or part-time employment).
"Allowing people to exclude low-earning weeks in the calculation of their benefits is one way of helping them to increase their income and lengthen their labour force attachment," said Minister Stewart.
Under the pilot project, approximately 138,000 claimants per year benefited at a cost of approximately $55 million. Moving to a national implementation will result in about 82,000 additional Canadians becoming eligible for small weeks at an additional cost of $30 million above the cost of the pilot. Funding would come from the premiums paid by Canadian employers and employees that make up the EI account.
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For information:
Dale Dewar
Regional Advisor
Minister MacAulay's office
(902) 566-7010
Ghyslain Charron
Media Relations
Human Resources Development Canada
(819) 994-5559
BACKGROUNDER
How did the Small Weeks initiative come about?
Under the Employment Insurance (EI) rules introduced with the 1996 EI reform, the inclusion of small weeks of earnings in determining the benefit level had the effect of lowering the benefit level of individuals with variable work patterns. (A small week of work is defined as a week when a worker earns less than $150). Some workers found that a week without earnings is preferable to a week of low earnings because the latter reduces their average earnings, and hence the weekly EI benefits. Both employers and individuals identified this as a disincentive to accept part-time or short-term work.
A parliamentary advisory group appointed in January 1997 recommended that adjustment measures be put in place, hence the Small Weeks adjustment projects and subsequent pilot projects. It has been decided to implement the Small Weeks initiative as a permanent and national feature of the EI program. The new EI regulations will come into effect on November 18, 2001 to prevent a gap in eligibility.
Terminology
Regular week: a week with earnings of $150 or more
Small week: a week with earnings of less than $150
Rate calculation period: the 26 weeks preceding the last paid employment day
Minimum divisor: the divisor is the actual number of weeks of work in the rate calculation period or the minimum divisor as determined by the unemployment rate in the region (i.e., 14 to 22). The minimum divisor is based on the 35-hour weeks of work required in a region to qualify for Employment Insurance (EI) benefits plus an additional two weeks. This additional two weeks provides an incentive for individuals to increase their work effort by at least two weeks beyond the minimum entrance requirement for their region.
Excluding "small" weeks
All regular weeks that fall within the rate calculation period will be used to determine the average earnings. If the number of regular weeks is less than the minimum divisor, the best small weeks will be used to bring the number of weeks up to meet the minimum divisor. The remaining small weeks will be excluded for benefit calculation purposes; however, they will be used to determine eligibility for, and duration of, benefits.
For example, in a region where the minimum divisor is 14, an individual has worked 12 weeks at $400, 13 weeks at $125 and one week at $140. The average earnings would be calculated using the 12 weeks at $400 and the best two small weeks (i.e., one week at $140 and one week at $125) totaling 14 weeks in the rate calculation period and $5,065. The remaining 12 weeks at $125 would be ignored in the calculation of the benefit rate. Using the minimum (14) in that region, the weekly benefit would be as follows: ($5,065 ¸ 14) x 55% = $199 per week
The benefit rate without excluding small weeks would have been $139.
An Evaluation of the EI Pilot Project on Small Weeks, 1998-2001 Final Report
What were the objectives of the evaluation?
- to investigate the effect of the pilot project on workers' willingness to accept small weeks prior to starting an EI claim;
- to determine the projects' impact on participants' weeks of work and earnings; and
- to assess the projects' impacts on male and female claimants separately.
Overall, evaluation results confirm that the pilot project achieved what it set out to do: encourage workers to accept all available work.
Participants not only worked additional weeks and benefited from increased earnings, but when they became unemployed their benefit rates were higher and the number of weeks of entitlement was greater. Simply put, the disincentive to accept small weeks of work was removed by ensuring that weeks with low earnings do not reduce future EI benefits.
Specifically, the study found that:- On average, participants received an additional $725 in income: 44% in additional earnings from work; and 56% in additional EI benefits.
- About 12.9% of claimants in the participating regions worked about two extra small weeks on average.
- Women were more likely than men to participate in the program, 17.8% for women versus 9.0% for men. The take-up rate by women was higher because women tend to work in non-standard employment more than men; this includes having variable work patterns and weeks with low earnings.
- The average weekly benefit rate for women increased by slightly over $17 and about $20 for men. On average, a female participant was able to increase her total income-additional earnings from employment plus additional EI benefits-by $658. A male participant increased his total income by $820 on average. This difference is attributable to the fact that men tend to work in higher paid and full-time employment, while women work more often in part-time employment.
- Youth, like women, tend to work in non-standard employment. As a result, youth tended to have a slightly higher probability of participating in the program as compared to adults.
The study highlights the findings available to date and uses data from November 1998 to August 2000.
Given this solid base of evidence, the Government of Canada has amended the Employment Insurance Regulations to make small weeks a permanent and national feature of the EI program.