Commissioner s Communiqué August, 2016 Dear Colleagues, There is a lot going on during these so-called dog days of summer. Topics covered in this bulletin include: Consultations on Labour Market Transfer Agreements EI Service Quality Review CEIC to set 2017 EI rates by September 14 LMI Council under Development EI Changes from the Budget in effect July 3 HUMA review of the Temporary Foreign Worker Program Amid the many job changes taking place in the department, our office was affected with Charles Cote moving on to a new challenge. We thank him for his contributions and his help during the transition to settling in a new policy adviser. Meantime, Lucie and I are holding the fort and would be glad to hear from you. Kind regards, Judith Judith Andrew Commissioner (Employers)
-1- Consultations on Labour Market Transfer Agreements The 2016 Federal Budget announced additional spending of some $175 million on training in 2016-17. This is the first step in a plan to boost support for skills and training through the various transfer agreements with provinces and territories. In the wake of the Budget, Employment and Workforce Development Minister Mihychuk met with her provincial/territorial counterparts, and together through the Forum of Labour Market Ministers they announced broad-based consultations on the transfer agreements: June 28, 2016 Communique With a goal of ensuring that these agreements continue to be relevant, flexible, and responsive to new and emerging labour market needs and priorities, the Forum of Labour Market Ministers (FLMM), that is the Federal, provincial and territorial governments are collaboratively consulting with stakeholders during July and August 2016. This means that the Federal government, each P/T jurisdiction, and some regional groups of them are tapping employers, employees and a variety of interested others for their insights. Labour Market Ministers will discuss the consultation results at their next meeting planned to take place in Québec in October 2016. As your Commissioner (Employers) I have provided contacts for consultation at the Federal level and I have been invited to a couple, the Federal employer and one other Federal consultation, plus one regional consultation. This latter was especially appreciated seeing as I will eventually be called upon to sign off on a resolution respecting LMDA transfers. Accordingly, please keep me posted as to your organization s submissions and views concerning the transfer agreements, as well as your involvement in and views submitted to the provincial/territorial consultations. Commissioner s comment: While it is a good idea to look at the ensemble of training agreements to ensure that they dovetail to meet the needs, unfortunately the discussion paper doesn t get into any detail about the usage and performance of the underlying programs and where more money may be warranted. Also, the fact that employers collective EI funding to LMDAs is approaching double the amount that taxpayers (Federal government CRF) puts into all of the other programs combined sharpens the point regarding the need for accountability to employers who foot the lion s share of the total tab. When LMDAs were last reviewed, it was revealed that business associations and their members had scarcely heard of LMDAs, and that engagement with businesses on many of the programs was minimal. The Canada Job Grant program targeted correcting the issue of engaging employers, although the recent review has turned up other concerns, the most serious of which seems to be that employers are tending to train existing as opposed to newly-hired employees. Visit the FLMM website: http://www.flmm-fmmt.ca to find not only the training program discussion paper http://www.flmm-fmmt.ca/cmfiles/2_3_discussion_paper_lmta_en%20_final.pdf but also the Year 2 Review of the Canada Job Fund Agreements http://www.flmmfmmt.ca/cmfiles/cjg%20year%20two%20review%20final%20report%20en.pdf The most recent EI Monitoring and Assessment Report (EI MAR) Chapter III contains good information on the some $2 billion transferred to provinces/territories from EI for the Labour Market Development Agreements. The incremental impacts are reported at the national level in Chapter III, while provincial/territorial breakouts may be found in Annex 3. Here is the link to the table of contents: http://www.esdc.gc.ca/en/reports/ei/monitoring2015/index.page Stakeholders are invited to submit their views by August 19th, 2016 through the FLMM Secretariat (fmmt.flmm@mess.gouv.qc.ca).
EI Service Quality Review -2- In Budget 2016, the Government of Canada committed to improve EI services for Canadians with an allocation of more money for EI administration, including call centres. To validate and help guide the expenditures, the department s Parliamentary Secretaries Rodger Cuzner and Terry Duguid as well as MP Remi Massé have been tasked with conducting the Employment Insurance Service Quality Review (SQR). The review is focused on three key areas: 1. Streamlining applications 2. Reducing wait times for service delivery 3. Reducing administrative burden for employers The SQR panel started with Ottawa area meetings while Parliament was in session, and has fanned out nationwide over the summer. Your Commissioner (Employers) has been taking part in consultations, wherever possible, and has met with the panel more than once. Commissioner s comment: Employers have in this review a unique opportunity to press for replacing the terribly old, problematic Record of Employment (ROE) form (which harkens back to when people were paid cash in pay envelopes) with a modern system that captures and uses employers existing payroll data for EI purposes. According to a 2011 joint Canadian Payroll Association (CPA) Service Canada survey, ROE administration costs employers over $155 million annually, which explains why the ROE has been a serious concern for the over 30 years this Commissioner has worked in business advocacy. Accordingly, our office commends to your attention the work that has been done on this file by the CPA, whose advocacy mandate is to increase the efficiency and effectiveness of payroll related legislation, regulation and administration for employers, government and the general public. Note: The CPA has kindly agreed to share their draft submission to the SQR with business groups for your review and feedback. Contact Rachel De Grace, CPA s Manager of Advocacy and Legislative Content: rachel.degrace@payroll.ca The Service Quality Review is receiving submissions until August 31, including via their on-line survey https://hrsdc-rhdcc.sondages-surveys.ca/s/employment-insurance_assurance-emploi/?l=en CEIC to set 2017 EI Rates by September 14 Now that the EI account has returned to cumulative balance, for 2017 the CEIC will resume setting EI rates, after a long hiatus, adding this task to its usual duties in setting the annual maximum insurable earnings and the premium reductions (for the Quebec Parental Insurance Plan and the Premium Reduction Program). Over the summer, the Chief Actuary engaged by CEIC has been analyzing revenue and expenditure data, preparatory to crunching the numbers using the new seven-year break-even, smoothing mechanism. The resulting Actuarial Report plus the Commission s Summary Report will be provided to the Ministers of ESD and Finance prior to publication and tabling. Rate-setting, plus publication of reports, will be completed by September 14. Outside of rate-setting, but important to it, is the question of applicable tax credits. The Small Business Job Credit--a two-year measure to support small businesses by lowering their Employment Insurance (EI) premiums from the legislated rate in 2015 and 2016-- is ending. Minus the Small Business Job Credit, and without having any fresh analysis to hand, it appears that small businesses could be facing a premium increase for next year.
-3- One platform plank of the new Liberal government was to waive employers Employment Insurance premiums for a 12-month period on any net new hire of a full-time employee, aged 18 to 24, in 2016, 2017, or 2018. Nothing was mentioned about this in the Budget; however, incorporating this promised youth hiring incentive in time for 2017 would certainly come as welcome news for businesses losing the benefit of the Small Business Job Credit. It would also be welcome news for young people seeking jobs. As the work proceeds throughout the summer, to the announcement in mid-september, your Commissioner will appreciate having the benefit of your views on all of this. LMI Council under Development The FLMM communique of June 28 (link above) noted that the (Labour Market) Ministers endorsed a business plan for the implementation of the new Labour Market Information (LMI) Council. Also published on the FLMM website is the LMI Multilateral Framework which describes the state of LMI, sets out the vision, establishes principals and shared priorities for moving forward: http://www.flmmfmmt.ca/cmfiles/lmi%20draft%20multilateral%20framework%20-%20en.pdf We understand that officials are working behind-the-scenes to create the new LMI Council as well as the Stakeholder Advisory Committee, so stay tuned for developments. Commissioner s Comment: Regular readers of this bulletin will know that Commissioners have argued that Labour Market Information ought to remain a tri-partite endeavour, as opposed to a multi-partite one, specifically since a sizeable chunk of LMI funding draws from the EI account, using the authorities in LMI held by the Canada Employment Insurance Commission (CEIC). Another drawback of the present track is that new structures inevitably end up costing way more in time, effort and money than anticipated, which then means that the real need (e.g. for better LMI quickly) is given short shrift. A look back shows that this latest iteration of thinking on how to re-organize LMI started over two years ago, and in the interim governments (Federal and P/T) and key officials involved have changed. Meantime, your Commissioner would be pleased to have the benefit of your advice. EI Changes from the Budget in Effect July 3 The Government of Canada Employment Insurance (EI) program changes which were outlined in Budget 2016 mostly came into effect on July 3, 2016. The changes are summarized at this link: http://www.esdc.gc.ca/en/ei/changes_2016.page?_ga=1.103982656.1907817886.1454969882 and in the attached chart with commentary, prepared by our office. Please note that reducing the EI waiting period from two weeks to one week is scheduled to come into effect in 2017. You may also be interested in your Commissioner s testimony before the Senate Standing Committee on Social Affairs, Science and Technology regarding the EI changes contained in Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures: http://www.parl.gc.ca/content/sen/committee/421/soci/52626-e.htm
-4- HUMA Review of Temporary Foreign Worker Program The Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities (aka HUMA) started its review of the Temporary Foreign Worker Program (TFWP) in May, 2016. The Committee heard from officials on May 11, first Paul Thompson, Senior ADM Skills and Employment Branch, ESDC and then David Manicom, Assoc. ADM and Robert Judge, Director, both of IRCC. Other sessions were held between mid-may and mid-june, which included several employer witnesses: http://www.parl.gc.ca/committees/en/huma/studyactivity?studyactivityid=8845433 The HUMA report on TFWP has not yet been tabled before Parliament; although it was ready for tabling, a legislative timing issue has delayed it to September, we understand. Accordingly, we will soon see whether the present group of HUMA Parliamentarians will take the points that employers generally used the program appropriately and that a fair TFWP needs to be in place to fill positions where there simply are no locally available candidates. HUMA Review on Previous EI Changes Tabled On June 15, 2016 HUMA presented to the House of Commons a report entitled Exploring the Impact of Recent Changes to Employment Insurance and Ways to Improve Access to the Program. The Committee held four meetings as part of this study between March and May 2016. During this period 21 witnesses appeared before the Committee, including representatives from Employment and Social Development Canada (ESDC) and Statistics Canada. In addition to these public hearings, 19 briefs were submitted to the Committee. Your Commissioner (Employers) was invited as a witness, and her testimony may be viewed here: http://www.parl.gc.ca/housepublications/publication.aspx?language=e&mode=1&parl=42&ses=1&docid=825 1276#Int-8906133 HUMA s full report containing 15 recommendations may be accessed at this link: http://www.parl.gc.ca/housepublications/publication.aspx?language=e&mode=1&parl=42&ses=1&docid=836 3042 Stay tuned for our forthcoming detailed response to the HUMA report, not unlike the one our office prepared on the previous HUMA review of LMDAs. Commissioner s Comment: On balance, there are more recommendations on the positive side from the standpoint of employers than there are in the neutral or misguided categories. Among the positive ones are those proposing that Service Canada increase its efforts to have EI claimants search for jobs, including signing up for www.jobbank.gc.ca Job Alerts, possibly automatically. Another gives a nod to the good idea of administering (and paying for) special benefits separately from EI, seeing as they are approaching one-third of the system cost, which would grow enormously if another recommendation to extend sickness benefits is heeded. Your Commissioner has been advocating for first improving and then better publicizing the EI Premium Reduction Program, which gives EI premium relief to employers offering sickness plans in their employee benefit packages. Commissioner for Employers Canada Employment Insurance Commission Place du Portage, Phase IV, Gatineau, QC Telephone: 819-654-6267 K1A 0J9 Commissioner, Judith Andrew: http://www.esdc.gc.ca/eng/jobs/ei/commission/ce_andrew.shtml Canada Employment Insurance Commission: http://www.esdc.gc.ca/eng/jobs/ei/commission/index.shtml
Expanding Access for New Entrants and Re-entrants Summary of 2016 Budget Measures on Employment Insurance (effective July 3, 2016 (except where noted otherwise)) Provision Change Impact Commissioner s Comments New entrants and re-entrants (NEREs) to the labour market needed to accumulate at least 910 hours of insurable employment in the 52 weeks preceding their claim in order to qualify for EI benefits. New entrants and re-entrants only need to accumulate 420 to 700 hours of insurable employment, depending on the unemployment rate in their region to qualify for EI benefits. NEREs face the same eligibility criteria as other claimants in the regions where they live. Eliminating this measure will simplify EI administration, a welcome change in this complex system. While the estimated cost at some $567 million is substantial, employers do not countenance basic unfairness in the system. Research shows that NERE status is not the determining factor in subsequent EI usage patterns. Reducing the EI Waiting Period from Two Weeks to One Extending the Working While on Claim Pilot Project Simplifying Job Search Responsibilities for EI Claimants Extending EI Regular Benefits in Affected Regions Extending the Maximum Duration of Work-Sharing Agreements Since 1971, EI claimants have had to serve a two-week waiting period, similar to an insurance elimination period, prior to receiving benefits. The Working While on Claim (WWC) pilot project allows claimants to keep 50 cents of EI benefits for every dollar earned while on claim, up to a maximum of 90 per cent of their previous weekly earnings. The waiting period, applying to regular, fishing and special benefits, is to be reduced from two weeks to one week, effective January 2017. The number of weeks of benefits and timeframes for issuing Records of Employment (ROEs) will not change. The WWC pilot is extended two years from August 7, 2016 to August 11, 2018. Claimants also have the option of reverting to the previous pilot rule, namely earning to the greater of $75 or 40% of weekly EI benefits, beyond which face 100% claw back. The 2012 Connecting The Budget legislation repealed Canadians with Available Jobs- those changes that strictly defined CCAJ measures required the job search responsibilities of claimants to actively look for unemployed workers, reverting to work. They had to expand their the pre-ccaj rules job search parameters (same, similar, any job) and accept lesser paying posts (90-80-70% of previous) as time elapsed, based on claimant category. A commute time of maximum one hour was included in the definition of suitable work. Claimants are eligible to receive between 14 and 45 weeks of EI regular benefits, depending on the unemployment rate in their region and the number of insurable hours worked during their qualifying period. Work-Sharing agreements may be established for 26 weeks, and can be extended by 12 weeks, for a maximum length of 38 weeks. Claimants in affected regions are eligible to receive an extra 5 weeks of EI regular benefits, up to a maximum of 50 weeks. Long-tenured workers in affected regions would be eligible to receive up to an additional 20 weeks of EI regular benefits, up to a maximum of 70 weeks. The maximum duration of Work- Sharing agreements is extended to 76 weeks for businesses directly or indirectly affected by the downturn in the commodities sector. Reducing the EI waiting period is intended to reduce the time claimants go without income. This measure will put an additional $650 million in claimants pockets, upfront, starting next year. Employer top-up plans (SUB and maternity/parental) will have to be re-jigged/re-negotiated. The default rule applies automatically, while reversion to the optional rule may be elected up to the end of the claim to maximize the combined take-home amount. Taking account of the vocal opposition to the 2012 changes, particularly from Quebec and east, and from seasonal employees (and sometimes employers) who typically relied on EI to supplement incomes between seasons, it is expected that returning to the former rules will be well received. These benefits will be available for one year, beginning in July 2016, and will apply to anyone who started a claim for regular EI benefits on or after January 5, 2015, and is still unemployed. Work-Sharing helps employers to retain skilled employees, thereby avoiding the costs and difficulties of recruiting and training new employees. The program helps employees to maintain their skills and jobs while supplementing their earnings with EI benefits. This well-intended change is costly and may have unintended consequences, such as higher claim volumes slowing processing. Employers need Reg. 19 (3.1) on ROE reporting to continue to respect their pay cycles. Apart from the improvement in takehome pay for those who cannot could not find much WWC, this twopronged pilot will demonstrate employer and employee wishes. Either fewer people will find more WWC or more people will obtain smaller amount of WWC. Government communications state: long-standing requirements that claimants must search for and accept available work while on EI will continue to be upheld. Unemployed people on EI should be required to register for JobBank.gc.ca to be matched with suitable jobs on offer. Extending benefits in hard-hit regions is similar to what was done in the last recession, and will be received as welcome news in the 15 regions where the extensions apply. Extending the duration of Work- Sharing agreements is also a welcome strategy to help avert layoffs in economically hard-hit regions. Typically these agreements cost the EI fund less than outright layoffs, and help employers retain their workers and more effectively recover.