An Act to amend the Employment Insurance Act and the Employment Insurance Regulations (Prince Edward Island)
The Employment Insurance (EI) program divides the province of Prince Edward Island into two economic regions: the Census Agglomeration (CA) of Charlottetown, and the region of PEI excluding the CA of Charlottetown.
Bill S-236 proposes the elimination of economic regions in PEI for the EI program. If adopted, a single unemployment rate will be used to assess the claims of PEI residents, instead of the two distinct unemployment rates currently used for each of the economic regions.
The PBO estimates this measure will generate around $76.6 million in savings for the Federal government between 2021-22 and 2025-26.
The measure will affect both regular and fishing benefits for the residents of Prince Edward Island.
The Employment Insurance (EI) program divides the province of Prince Edward Island into two economic regions: the Census Agglomeration (CA) of Charlottetown, and the region of PEI excluding the CA of Charlottetown.
Bill S-236 proposes the elimination of economic regions in PEI for the EI program. If adopted, a single unemployment rate will be used to assess the claims of PEI residents, instead of the two distinct unemployment rates currently used for each of the economic regions.
- 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).
Administration data from the EI program was used to extract historical data for regular and fishing benefits. Historical data was then projected using PBO’s labour market forecasts.
The unemployment rate for each economic region was replaced by a single unemployment rate for the province of PEI to estimate average weekly benefits and average benefits duration[^1]. The total amount of benefits paid was then calculated for regular and fishing benefits. Total cost was calculated as the difference between total amount of benefits paid under the proposed measure and the status quo which uses distinct unemployment rates for the claimants based on their economic regions. Because the unemployment rate for the province as a whole is lower than the current rate used for the EI region of PEI excluding the CA of Charlottetown (where a majority of the population of the province resides), the measure would result in a reduction in EI benefits paid.
Under the EI legislation, EI contribution rates must be set to ensure that the EI Operating Account would be balanced over a seven-year horizon. Annual changes are subject to a legislated limit of 5 cents and premiums are set such that the EI Operating account balances over each 7-year cycle.
The cost estimate produced is highly sensitive to the PBO’s labour market outlook. A behavioural response is not expected.