Decline in EI Beneficiaries Points to a Strong Canadian Economy

The latest numbers from Statistics Canada report a decrease in the number of regular Employment Insurance (EI) beneficiaries, supporting the overall strength of the Canadian economy, reported yesterday by the Finance Minister.

In August 2017 there were 9,600 fewer EI recipients than in the month before; the 1.8 per cent decline brought the total number of people receiving EI benefits to 524,200, continuing a downward trend that began in October 2016.

Compared to prior year, there was a significant drop (8 per cent) in the number of EI recipients, but year-over-year comparisons are not entirely fair and are not encouraged by Statistics Canada because EI policy changes that took effect in July 2016 inflated the number of beneficiaries to higher than normal levels in the second half of 2016. For example, simplified job search responsibilities, elimination of higher eligibility requirements for new entrants and re-entrants to the labour market, and extended duration of benefits for regions affected by the 2014-16 commodities downturn all drove the number of beneficiaries up in the latter half of 2016.

Still, the continuing month-to-month declines in the number of beneficiaries is encouraging news, as is the fact that decreases occurred across the country, other than in Saskatchewan (1.9 per cent increase) and British Columbia (virtually flat). The most notable declines were in Manitoba (8 per cent) and Alberta (4 per cent).

The decrease from previous month was also reflected across all major demographic groups, except for men aged 15 to 24, for whom there was little change. Overall decline was 3 per cent for women and 1 per cent for men. The number of claims was also down almost 5 per cent from July; the number of claims gives an indication of the number of people who could become beneficiaries.

Tax and financial advisors should speak now to EI recipients as part of their year-end tax planning activities and suggest the management of RRSP contribution opportunities, especially if the recipient is in line for a potential EI clawback.

Additional educational resources: Debt and Cash Flow Management course, This topic will also be discussed in depth in the Knowledge Bureau CE Summits tour November 21 – 28.

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