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EI and Working-While-on-Claim Provisions in Canada – Does working part-time help claimants ?

Canada’s Employment Insurance (EI) program provides income support for workers who have lost their jobs. The program also strives to help recently unemployed Canadians keep a foothold in the labour market and provide a stepping stone to new permanent work. It does so through working-while-on-claim (WWC) provisions that encourage claimants to take part-time or casual jobs and still keep a portion of their EI benefits. The objective is to prevent them from being unemployed for prolonged periods, help them maintain their skills and network of workforce contacts, and demonstrate their commitment to work to prospective employers.

In this study, authors Colin Busby, Stéphanie Lluis and Brian McCall investigate whether working part-time does indeed help EI claimants transition to permanent work. They review evidence from a series of pilot projects that the federal government launched between 2005 and 2018 to determine if adjustments to WWC provisions would encourage more claimants to take up part-time work or to work more hours. They also survey the outcomes of similar provisions in other countries.

The Canadian pilot projects tested two key changes to the WWC provisions. The first raised the threshold of employment earnings claimants are allowed to attain without having their benefits reduced. Compared with prior rules, this change encouraged more claimants to take on temporary work. The second change eliminated the earnings threshold and reduced the rate at which benefits were clawed back on all earnings. This encouraged claimants to take part-time jobs that offered more hours and higher earnings.

As the authors point out, however, the EI administrative data that were used to evaluate the pilot projects provided postclaim job information only for individuals who returned to the EI system with a subsequent claim. The findings were, therefore, based mainly on the behaviour of repeat and seasonal EI claimants. This means that not much is known about those who used the provisions but did not file a subsequent claim, and whether the revised provisions helped them find permanent work.

Research conducted in other countries that have similar working-while-on-claim rules, but collect more comprehensive data, provides a better indication of how the rules affect the ability of claimants — including nonrepeat claimants — to transition to permanent work. An evaluation of the provisions in France found that, for most unemployed workers, taking on part-time work during a claim did indeed act as a stepping stone to permanent work. Similar research in Germany and Belgium suggests that long-term unemployed workers who take up casual or part-time work during a claim are more likely to find permanent employment. In Belgium, researchers found this was especially true for women. However, research findings from other countries suggest that poorly designed provisions may lock some workers into a pattern of part-time or casual work.

Busby, Lluis and McCall conclude that WWC provisions can help unemployed Canadians successfully transfer to permanent jobs. But the rules should be improved and new programs introduced for those unlikely to benefit from part-time, casual work. They urge policy-makers to collect postclaim data for all EI claimants to enable experimenting with the provisions and conducting comprehensive evaluation of how well they support transitions to permanent work.

The authors recommend that policy-makers revise current WWC provisions to reintroduce a fixed weekly allowable earnings threshold below which there is no reduction in benefits, while keeping a modest clawback rate for earnings above the threshold. Canadian and international evidence suggests that, under these proposed rules, more people would be encouraged to work while on claim and many would be encouraged to work additional hours.

They also urge the federal government to make WWC provisions more generous during economic downturns. This recommendation is especially timely as the economy recovers from the COVID-19 pandemic and the massive work interruptions it has caused. During economic recessions, there tend to be more part-time jobs available than full-time. To encourage displaced workers to stay connected to the labour market during such times, policy-makers should temporarily allow claimants to keep more employment earnings without having their EI benefits reduced.

A comprehensive evaluation of EI WWC provisions would help to establish clearly the extent to which these measures support unemployed workers’ transitions back to work. They may be beneficial for some claimants but not for others. For instance, about half of EI claimants choose not to work while on claim. This is likely the case for displaced long-­tenured workers, who may not see the benefit of taking low-paying or part-time work. For them, alternative programs — for example, wage insurance, which subsidizes the take-up of full-time work — may be more appropriate. As Canada’s postpandemic economy enters its recovery phase, this would be an opportune time to introduce and test such measures.

Chosen excerpts by Job Market Monitor. Read the whole story @ Transitioning Back to Work: How to Improve EI Working-While-on-Claim Provisions

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