March Saw Sharpest Increase in Number of EI Recepients Since Recession Began

According to a report released by Statistics Canada recently, 681,400 people were receiving regular Employment Insurance benefits in March 2009, up by 65,300 or 10.6% from the previous month. The strongest percent increases occurred in Alberta and British Columbia, but this to some extent is due to the fact that these provinces had low unemployment rates compared to other parts of the country at the beginning of the recession – so now they seem bound to catch up with the rest of the country.

It is interesting that since the slowdown began in October, Ontario was the only province alongside Alberta and BC to experience a higher-than-average increase in EI recipients: Canada’s average increase was 36.2%, compared to slightly more than 40% Ontario, 131% in Alberta, and 80.5% in British Columbia. PEI and Newfoundland and Labrador saw the smallest increases, while Saskatchewan – one of the provinces with remarkable economic performance in recent years – saw an increase in the number of EI recipients that was similar to Canada’s average.

Men were more likely to end up on EI benefits than women. The increase – at 56.1% since October – was also particularly sharp among youth younger than 25 (i.e., those with supposedly less experience).

The full report can be found here: http://www.statcan.gc.ca/daily-quotidien/090526/dq090526a-eng.htm

Does this mean that the economy – and the job market situation – are still deteriorating? Not necessarily. The number of recipients of EI benefits lags behind other metrics because planning and executing layoffs takes some time, and because EI recipients need to go through a waiting period of typically at least 1 month before they start receiving benefits. Our report on hiring demand in suburban Toronto (view the full report here) released recently found that hiring demand stopped deteriorating in December 2008, but we found no signs of it improving in the first quarter of 2009. So we expect to see the pace of the increase in the number of EI recipients slow down somewhat, but it will likely take some time until the trend turns around and the number of EI recipients starts declining. For this to happen, hiring demand must pick up first – something we are not seeing quite yet, and which might not occur on a convincing scale until the fall of this year (because the summer months are historically a slow period when it comes to hiring).

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