Temporary employment insurance measure for long-tenured workers

On September 5, 2025, the government announced new temporary Employment Insurance (EI) measures in response to the trade environment. Among the measures announced is the provision of an additional 20 weeks of benefits for long-tenured workers whose claims are filed between June 15, 2025, and April 11, 2026.[^1]

The PBO estimates that the net cost of this measure, after accounting for personal income tax (PIT) paid on the additional benefits, will amount to $853 million over a five-year horizon. Although EI program revenues and expenditures are recorded in the Government of Canada’s Public Accounts, this measure will not result in any additional net costs for the government. The amounts paid come from the Employment Insurance Operating Account, which is funded through EI contributions from employees and employers participating in the program.

The EI contribution rate is set so that the Operating Account balances over a seven-year horizon. The PBO estimates that this measure should result in an increase in the EI premium rate of less than one cent per $100 of insurable earnings.

• Estimates are presented on an accrual basis as would appear in the budget and public accounts.
• A positive number implies a deterioration in the budgetary balance (lower revenues or higher spending). A negative number implies an improvement in the budgetary balance (higher revenues or lower spending).
• Totals may not add due to rounding

The estimated cost of the measure is based on the combined effects of the extensive margin (the number of new claims established) and the intensive margin (the amount and duration of additional benefits).

The projection of the total number of new claims established for regular benefits is based on ESDC historical data, adjusted to reflect the economic scenario presented in our Economic and Fiscal Outlook – September 2025. To identify beneficiaries who will use additional weeks, two key ratios are applied: the proportion of long-tenured workers and the exhaustion rate (the share of beneficiaries who have exhausted their initial entitlement). These two ratios were estimated using ESDC historical data related to a similar measure implemented in 2009–2010, then adjusted to the current economic conditions.[^2]

The PBO made assumptions regarding the average and distribution of both initial entitlement weeks and additional weeks. An annual growth rate of 2.5% in the average weekly benefit rate was applied, which approximately reflects the historical trend observed among long-tenured workers.

Since EI benefits are included in the calculation of taxable income, a weighted federal marginal effective tax rate was estimated using Statistics Canada’s SPSD/M for the population receiving regular EI benefits, in order to calculate the PIT amounts paid on the additional benefits.

A truncated normality assumption is used to model the distributions of initial entitlement weeks and additional weeks. The calibration of parameters is based on information available in the EI Monitoring and Assessment Report and on the 2009–2010 experience, although the information available on dispersion is limited. The actual shape of the distribution could therefore influence the timing of projected costs.

The estimate also includes uncertainty related to the projected number of beneficiaries who will use additional weeks, and the average number of additional weeks actually used, which depend on macroeconomic dynamics and the stability of seasonal trends.

The estimate excludes any interaction with other measures, as well as any additional administrative costs that may be incurred. Finally, no behavioural effects were explicitly considered. These uncertainties could affect both the overall level of costs and their distribution over time.