Employment Insurance Temporary Benefit Enhancements

The Canada Emergency Response Benefit (CERB) eligibility period expired on September 26, 2020. To support those who remain unable to work, the Government has made several modifications to Employment Insurance (EI) regular, maternity and parental programs:

1. Reduce, to 120 hours through a credit, the minimum number of hours of insurable employment required for a regular, maternity and parental claim;

2. Set a minimum EI regular, maternity and parental benefit rate of $500 per week ($300 for extended parental benefits);

3. Provide a minimum entitlement of 26 weeks for regular EI beneficiaries.

The weekly benefit rate is calculated based on the 14 best weeks of earnings.

In general, these changes are effective on September 27, 2020 for one year. There are a few exceptions: the hours credit is retroactive to March 15, 2020 and the 26‑week minimum entitlement is effective on August 9, 2020.

Modification 1: 120 hours of work required to qualify

This modification extends EI coverage to individuals that had otherwise accumulated too few hours of eligible work (120-420 hours for EI regular benefits, 120-600 hours for maternity and parental claimants, depending on region of employment). PBO estimated the number of potential beneficiaries using data from the Employment Insurance Coverage Survey (EICS) and PBO labour market projections. The EI average weekly benefit and the EI average number of weeks of benefit were estimated using SPSD/M and PBO’s EI forecasting model. The cost of this modification for the new claimants was equal to the estimated number of new beneficiaries multiplied by the estimated EI average weekly benefit and the projected EI average number of weeks of benefit.

Modification 2: Minimum benefit rate of $500 per week

This modification increases the weekly benefit to $500 for EI regular, maternity and parental beneficiaries. PBO estimated the increase using SPSDM, fixing the number of the best weeks of earnings at 14 weeks.[^1] For segments of beneficiaries not covered within SPSD/M, PBO assumed the proportional increase in average weekly benefits was consistent with SPSD/M results.

Modification 3: At least 26 weeks of regular benefits

This modification provides a minimum entitlement of 26 weeks for regular EI beneficiaries. PBO estimated the number of potential beneficiaries, the average number of additional weeks of benefits per beneficiary and the increase rate of the average number of weeks of benefits using EI administrative data. PBO assumes that the take-up rate will be at its historical average, based on EI administrative data. PBO accounted for differences in the number of hours of insurable employment and regional differences in unemployment. The EI average weekly benefit was estimated using SPSD/M and PBO’s EI forecasting model.

PBO’s total cost estimate equals the sum of the costs of all three modifications, considering the cost effects of interactions between each program change.

PBO estimates the total net cost of the EI program modifications to be $7.7 billion in 2020-21 and $5.8 billion in 2021-22. Data is consistent with PBO’s September 29, 2020 Economic and Fiscal Scenario.

Due to COVID-19, PBO’s labour market outlook is highly uncertain. Furthermore, these EI modifications are targeted, in part, to persons that are not currently covered under EI, so estimates of their numbers and past earnings are based on surveys and assumptions, not administrative data. The interaction between each discrete modification also adds uncertainty to our estimate.

• Estimates are presented on an accrual basis as would appear in the budget and public accounts.
• A positive number implies a deterioration in the budgetary balance (lower revenues or higher spending). A negative number implies an improvement in the budgetary balance (higher revenues or lower spending).
• Totals may not add due to rounding