Vol. 140, No. 21 — October 18, 2006

Registration
SOR/2006-240 October 4, 2006

EMPLOYMENT INSURANCE ACT

Regulations Amending the Employment Insurance Regulations

RESOLUTION

The Canada Employment Insurance Commission, pursuant to paragraph 54(x) of the Employment Insurance Act (see footnote a), hereby makes the annexed Regulations Amending the Employment Insurance Regulations.

September 18, 2006

P.C. 2006-1074 October 4, 2006

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 paragraph 54(x) 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

AMENDMENTS

1. (1) The portion of subsection 17.1(6) of the Employment Insurance Regulations (see footnote 1) before paragraph ( a ) is replaced by the following:

(6) For the purposes of sections 7, 7.1, 12 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on October 4, 2008, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident in Madawaska — Charlotte, the applicable regional rate of unemployment is the greater of

(2) The portion of subsection 17.1(7) of the Regulations before paragraph ( a ) is replaced by the following:

(7) For the purposes of sections 7, 7.1 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on October 4, 2008, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident outside Canada and who was last employed in insurable employment in Canada in Madawaska — Charlotte, the applicable regional rate of unemployment is the greater of

(3) The portion of subsection 17.1(12) of the Regulations before paragraph ( a ) is replaced by the following:

(12) For the purposes of sections 7, 7.1, 12 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on October 4, 2008, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident in Lower St. Lawrence and North Shore, the applicable regional rate of unemployment is the greater of

(4) The portion of subsection 17.1(13) of the Regulations before paragraph ( a ) is replaced by the following:

(13) For the purposes of sections 7, 7.1 and 14 and Part VIII of the Act, in respect of the period beginning on October 13, 2002 and ending on October 4, 2008, and in the case of a claimant who, during the week referred to in subsection 10(1) of the Act, was ordinarily resident outside Canada and who was last employed in insurable employment in Canada in Lower St. Lawrence and North Shore, the applicable regional rate of unemployment is the greater of

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 is to extend transitional measures for two Employment Insurance (EI) economic regions (Madawaska-Charlotte in New Brunswick and Lower St. Lawrence and North Shore in Quebec) for two years until October 2008.

Subsection 18(2) of the Employment Insurance Regulations requires that EI regional boundaries be reviewed every five years to ensure that they reflect current labour market conditions and geographic representation of communities across Canada.

Under the EI Program, the EI regional boundaries (also referred to as economic regions) ensure that people residing in areas of similar unemployment levels face comparable EI rules in terms of eligibility and length of benefit entitlement. The current 58 EI economic regions came into force on July 9, 2000 (SOR/2000-268). The boundaries were established based on Statistics Canada data and other labour market information. However, the new economic regions had an impact that was greater than expected in two specific areas of the country: the regions of Madawaska-Charlotte in New Brunswick and Lower St. Lawrence and North Shore in Quebec. It was found that people in the two affected areas, particularly seasonal workers, were adversely impacted by the increase in the number of hours needed to qualify for EI that accorded with actual unemployment rates in the regions.

In response to the negative impact experienced by many workers in these areas, transitional measures were adopted to spread the impacts of the new boundaries (year 2000) over an adjustment period. As described in section 17.1 the Employment Insurance Regulations, the approach used was to blend unemployment rates from the new regions and the adjacent regions to which they belonged before the July 9, 2000 changes and use the higher of the blended unemployment rates in the new regions or the actual rate of unemployment in the economic region as published by Statistics Canada. The effect of these measures is to apply a higher unemployment rate than would normally be the case. As a result, claimants in the two regions require fewer hours to qualify for EI, and receive benefits for a longer period than would be the case without the transitional measures. Extending the current transitional measures would maintain the status quo with respect to how unemployment rates are calculated for EI purposes in the affected regions.

The transitional measures, with extensions, have been in place since September 2000 (SOR/2000-355), and were most recently extended to October 2006 in association with the commencement of the five-year review of EI regional boundaries.

The extension of current transitional measures takes account of timelines associated with the preparation and release of Statistics Canada's 2006 Standard Geographical Classification in early 2007, as well as the time required for the conclusion and implementation of the broader review of EI boundaries. This extension is intended to ensure that the expiry of transitional measures is associated with the introduction of new EI boundaries Canada wide, and based on the most recent Statistics Canada's Geographical Classification.

If the transitional measures were to end on October 7, 2006, the unemployment rate used to establish an EI claim would be the actual rate provided by Statistics Canada and would be calculated according to the regional boundary set in 2000 using 1996 Statistics Canada Geographical Classification data. For these two regions, this would mean an increase in the number of hours of insurable employment required to qualify for EI benefits, a reduction in the number of weeks payable, and in some cases, a reduction of the weekly benefit rate caused by the increased divisor. Based on the more recent numbers on unemployment rates, below are some examples of the possible effects in the two affected regions.

For Madawaska-Charlotte in New Brunswick, during the period of July 9, 2006, to August 5, 2006, if the actual unemployment rate of 8.1 per cent had been used, a claimant would have needed 595 hours of insurable employment to be able to establish a claim; the minimum number of weeks payable would have been 23 and the maximum, 45 weeks, depending on the number of hours worked. With the transitional rules, the unemployment rate used was 9.6 per cent. As such, the number of hours required to qualify was lowered to 560; the minimum number of weeks payable was increased to 25 and the maximum remained at 45.

For lower St. Lawrence and North Shore in Quebec, for the same period, if the actual unemployment rate of 9.5 per cent had been used, a claimant would have needed 560 hours of insurable employment to be able to establish a claim; the minimum number of weeks payable would have been 25 and the maximum, 45 weeks, depending on the number of hours worked. With the transitional rules, the unemployment rate used was 11.8 per cent. The number of hours required to qualify was therefore lowered to 490, the minimum number of weeks payable was increased to 28 and the maximum was still 45.

As the intention is for the Regulations to be in place until the completion of the boundary review, this Regulation will be repealed when the new economic regions are put in place.

Alternatives

The only alternative is to allow the transitional measures to expire as scheduled, on October 7, 2006. This would result in the implementation of boundaries that were established in the 2000 EI regional boundaries review, using old information, which will soon be updated with that obtained from the 2006 census.

Benefits and Costs

It is estimated that this measure will benefitapproximately 19,000 claimants in the two affected regions. The total cost of an extension from October 7, 2006, to October 4, 2008, is estimated at a total of $50 million ($12.5 million for 2006-2007, $25 million for 2007-2008 and $12.5 million for 2008-2009). Funding would be sourced from the EI Account.

There are no incremental administrative costs associated with this amendment.

Consultation

In 2000, Human Resources and Skills Development Canada (HRSDC) regional staff engaged in extensive consultations through local committees in both affected regions over an extended period of time following the implementation of the new boundaries. Since then, community representatives and individuals continue to engage HRSDC on this issue.

These amendments have been approved by the Canada Employment Insurance Commission, which includes representatives for workers and employers.

Compliance and Enforcement

The Government of Canada will continue to monitor the effects of the provisions, which will be reported in the Employment Insurance Monitoring and Assessment Report tabled in parliament. Additionally, the five-year review of EI regional boundaries is currently underway.

Contact

Judith Richardson
Senior Policy Advisor
Human Resources and Skills Development Canada
Employment Insurance Policy
140 Promenade du Portage, Phase IV, 3rd Floor
Gatineau, Quebec
K1A 0J9
Telephone: (819) 994-4455
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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