Vol. 141, No. 25 — December 12, 2007

Registration
SOR/2007-274 December 3, 2007

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

RESOLUTION

The Canada Employment Insurance Commission, pursuant to section 109 of the Employment Insurance Act (see footnote a), hereby makes the annexed Regulations Amending the Employment Insurance Regulations.

November 14, 2007

P.C. 2007-1801 December 3, 2007

Her Excellency the Governor General in Council, on the recommendation of the Minister of Human Resources and Skills Development and the Treasury Board, pursuant to section 109 of the Employment Insurance Act (see footnote b), hereby approves the annexed Regulations Amending the Employment Insurance Regulations, made by the Canada Employment Insurance Commission.

REGULATIONS AMENDING THE EMPLOYMENT INSURANCE REGULATIONS

AMENDMENT

1. Paragraph 77.6(2)(a) of the Employment Insurance Regulations (see footnote 1) is replaced by the following:

(a) whose benefit period is established in the period beginning on June 11, 2006 and ending on May 31, 2009; and

COMING INTO FORCE

2. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The purpose of the amendment to section 77.6 of the Employment Insurance Regulations (EI) is to extend for an additional eighteen (18) months, until May 31, 2009, the final date for claimants to establish benefit periods in order to be included in Pilot Project No. 10 — Extended Benefits.

Pilot Project No. 10 (SOR/2006-166) is testing the impact of increasing EI entitlement by providing up to five additional weeks of benefits to EI claimants, up to the maximum of 45 weeks of benefits. The purpose of the pilot is to determine whether providing additional weeks of EI benefits would:

• help to address the annual income gap faced by a subset of EI claimants known as "seasonal gapers";
• maintain current incentives to work; and
• have any adverse labour market effects on other EI claimants in 21 EI economic regions of relatively high unemployment.

Seasonal gappers are frequent EI claimants whose combined weeks of seasonal work and EI benefits are not sufficient to provide income each week of the year. As a result, they experience an income "gap" when their EI benefits end prior to finding new employment. The pilot project currently includes each claimant:

• whose benefit period is established in the period beginning on June 11, 2006 and ending on December 9, 2007; and
• who, at the time the benefit period is established, is ordinarily resident in a region described in Schedule I that is set out in Schedule II.6.

The amendment to paragraph 77.6(2)(a) of the EI Regulations will extend the final date for claimants to establish benefit periods in order to be included in Pilot Project No. 10 — Extended Benefits. The extension includes each claimant whose benefit period is established in the period beginning June 11, 2006 and ending on or before May 31, 2009. As claims are made effective only on the Sunday of the week in which there is an interruption of earnings or the week in which the application is filed, claims with an interruption in earnings up to and including June 6, 2009 will now fall under pilot project No. 10.

All other qualifying criteria remain unchanged. The pilot will continue to apply to claims for regular benefits but not to benefit periods established under the Employment Insurance (Fishing) Regulations or to benefit periods in regard to maternity, parental, sickness or compassionate care benefits.

The extension will further test the labour market effects of increasing EI entitlement of claimants.

In order to understand the pilot's labour market effects, it is necessary to have information about clients that covers a significant period of time, and to analyze the information. However, data available to date covers the first year and 9 months of the pilot and is not yet sufficient to allow for definitive conclusions regarding whether the pilot has any negative effects arising out of changes in the behaviour of EI claimants.

Since it is only at the end of their claim that clients are paid any additional weeks of EI benefits, the observations required to assess the impacts of the current pilot need to be collected over the entire length of individual claims, which can last up to 45 weeks. As a result, there are long delays before a full cycle of data is available for analysis (approximately 26 months is required to obtain 12 months of observations).

The extension would allow the Government to acquire additional cycles of comparative data that would support a more complete assessment and understanding of the pilot's labour market effects observed to date.

Authority for these amendments is provided under section 109 of the Employment Insurance Act which allows for the establishment and operation of pilot projects.

Alternatives

The alternative is not to amend Pilot Project No. 10. This would eliminate the opportunity to acquire additional cycles of data and to continue observing and assessing the labour market and behavioural impact of increasing EI entitlement to EI claimants.

Benefits and cost

The current estimated client impacts vary slightly from those presented when the pilot was first introduced. More specifically, as a result of improving economic conditions and falling unemployment in many regions, there has been a small decline in the estimated number of claimants in pilot regions who are provided access to the additional weeks of entitlement from 330,000 to 315,000 claimants.

Although fewer claimants are expected to receive access to additional weeks of EI benefits, it is estimated pilot costs will increase from $90M to $104M. This increase can be attributed to two main factors — rising wages and salaries, and an increase in the number of claimants that are paid additional weeks of EI benefits from 95,000 to 104,000. Rising wages and salaries result in higher weekly benefit rates, thereby increasing the cost of each additional week of EI benefits paid.

The number of claimants receiving additional weeks of EI benefits is expected to increase due to the program's variable entrance requirement system under which the number of weeks that EI benefits claimants are entitled to varies according to the local unemployment rate. More specifically, as the unemployment rate rises, benefit durations are extended to allow more time for a successful job match, while they are shortened when unemployment rates fall to recognize the greater availability of employment opportunities. Consistent with the VER, lower unemployment rates in many pilot regions have resulted in shorter benefit entitlements for a given number of hours worked and a consequential increase in the number of claimants who are paid additional weeks of benefits.

Consultation

In extending the scope of the application of the pilot, the Government took into account previous consultations with Members of Parliament as well as representations and correspondence from concerned individuals, stakeholder groups and businesses.

These amendments have been approved by the Canada Employment Insurance Commission.

Compliance and enforcement

The Government of Canada will closely monitor the effects of the pilot project and when available, the results will be published in the EI Commission's annual Monitoring and Assessment Report tabled in Parliament.

A formal evaluation is underway using data from the previous and current pilots, which will provide a full assessment of the impacts of the pilot project.

Contact

Tammy Kirkham Lloyd
Senior Policy Advisor
Human Resources and Social Development Canada
Employment Insurance Policy
140 Promenade du Portage, Phase IV, 3rd Floor
Gatineau, Quebec
K1A 0J9
Telephone: 819-997-8628
Fax: 819-934-6631

Footnote a

S.C. 1996, c. 23

Footnote b

S.C. 1996, c. 23

Footnote 1

SOR/96-332

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