Back to Work: Canada

Improving the Re-employment Prospects of Displaced Workers

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report looks at how this challenge is being tackled in Canada. While the Canadian government uses several measures to prevent unnecessary layoffs, the focus is placed on assisting workers after they have lost their job via the Employment Insurance system and the core labour market programmes operated by the Provinces. Re-employment assistance tailored to meet the specific needs of displaced workers also plays a useful role, but needs to be reinforced so as to start the adjustment process earlier for workers receiving advance notice or a large severance payment and to reach  workers affected by small-scale displacements. Targeted programmes for older displaced workers with long-tenure who are hardest hit have yet to reach a large share of this group.

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Access to and adequacy of income support for displaced workers in Canada

Income loss is one of the major costs borne by workers following job displacement. How to compensate displaced workers whilst improving their transition back into employment is one of the most critical challenges facing policy makers. In Canada, most displaced workers with stable work histories have relatively good access to income support through Employment Insurance (EI) whilst they look for new jobs. However, the severance payment provisions and the relatively short duration of EI benefit entitlements result in delayed coverage and re-employment support among older and long-tenured displaced workers, precisely the group who suffer the greatest barriers in returning to the labour market and income losses post displacement. A major challenge is to expedite re-employment support to workers in receipt of severance payments and boost incomes for older long-tenured workers whilst ensuring adequate incentives for them to find new jobs.

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