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EI coverage not a good economic indicator

EI coverage not a good economic indicator

Posted on: 5/24/2019 | Author: ATB Financial's Economics + Research Team

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Using the number of people receiving federal Employment Insurance (EI) as an economic indicator can be challenging, since changes in the number of beneficiaries are often difficult to interpret. While we can be confident that a rising number of EI beneficiaries is a sign of economic friction, the opposite is not always the case.

It is true to say the number of beneficiaries rises when the economy stalls and more people lose their job. However, a falling number of beneficiaries does not necessarily mean the economy is improving and more people are finding work. The reason being, benefits can, and often do, run out before recipients find work. In addition, it is not reflected when new entrants into the labour force—who do not qualify for EI—are having trouble finding work.

If, however, we compare the number of people receiving EI to the number of people who are unemployed, this can help indicate how well the social safety net is catching unemployed workers.

As of March 2019, about 30 per cent of the 172,100 unemployed Albertans were receiving EI, up from 26 per cent in October but down from 37 per cent the previous March.

Coverage for unemployed Albertans age 15 to 24 was 13 per cent in March. Albertans in this age group are the least likely to meet the EI eligibility requirements either because they have been in school or because they have not worked enough hours. Coverage for the 25 to 54 age group was 35 per cent while about 32 per cent of unemployed Albertans age 55 and over were receiving EI in March.

Employment Insurance is an important component of the safety net, but being unemployed does not necessarily mean someone is receiving EI. As well, a falling number of EI beneficiaries may or may not mean the economy is improving.

 

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