by Grant Schellenberg

In 1982, the federal Commission of Inquiry into Part-time Work was established. The Commission recommended that part-time workers be included on a prorated basis for Unemployment Insurance benefits, pension plans, fringe benefits and training programs available to full-time workers. The Commission said benefits should be extended to all workers in proportion to the number of hours worked and/or the amount of income earned. Individuals employed only a few hours each week or with modest earnings would not be excluded.

Since that time, other groups, such as the Economic Council of Canada, have made the same recommendation. Supporters argue that the prorated extension of benefits is necessary to ensure economic security and stability for the growing number of part-time workers, most of whom are women and young people.

However, critics maintain that the prorated extension of benefits would impose excessive costs on employers and taxpayers, discouraging investment and dissuading employers from hiring additional workers. This would, in turn, impose particular hardships on women and youth, the very people such policies are intended to help.

How many part-time jobs are excluded from benefits? What kinds of jobs are they: Who do they employ? How much would the prorating of benefits cost? The 1990 Labour Market Activity Survey (LMAS) provides some answers to these questions. This analysis focuses on part-time work excluded from Unemployment Insurance (UI) and Canada/Quebec Pension Plans (CPP/QPP). The situation of self-employed and unpaid workers is not covered here, but is the subject of ongoing research at the Centre for International Statistics.

Eligibility Requirements

To qualify for UI, applicants must have been laid off, and have worked a minimum number of weeks in the preceding 52-week period. Applicants must also have been employed for 15 hours or more per week with the same employer or have had a minimum level of weekly earnings ($156 in 1994).

To be eligible to contribute to CPP/QPP, a worker's annual earnings must exceed the "Year's Basic Exemption" (YBE), which was $3,400 in 1994. Workers with earnings below this amount are not eligible for the CPP/QPP program.

How many jobs do these conditions exclude? In 1990, 35 per cent of all part-time jobs involved less than 15 hours per week. Of these jobs, only a small proportion (14 per cent) paid weekly earnings in excess of the minimum necessary for inclusion in UI. Therefore, 30 per cent of all part-time jobs were not covered by Unemployment Insurance in 1990.

For CPP/QPP, the 1990 YBE was $2,800. Assuming part-timers worked all 52 weeks of the year, 14 per cent of these jobs fell short of the YBE.

Ineligibility - Which Workers? Which Jobs?

Women and youth fill many of the part-time jobs in Canada, and so are the most likely to be excluded from UI and CPP/QPP. Women occupy 63 per cent of the jobs ineligible for UI and 61 per cent of the jobs ineligible for CPP/QPP. The majority of these ineligible jobs are held by persons aged 16 to 24. However, ineligibility is not simply a "youth phenomenon." Forty-three per cent of the jobs excluded from UI and 36 percent of those excluded form CPP/QPP are held by workers aged 25 and over.

The data also indicate that excluded workers aged 25 years and over have much more than a passing attachment to the labour force. Many of them have occupied jobs that are ineligible for UI and CPP/QPP for several years. So despite extensive participation in the paid labour force, these workers are excluded from the economic security of these programs.

In terms of firm size, well over one-third of ineligible jobs are located in small businesses with fewer than 20 employees (see Table 1). However, almost one-third of ineligible jobs are located in large firms (500 or more employees). This may reflect the large number of part-time, low paying jobs in fast food and retail franchises. In terms of industry sector, the largest share of industry sector, the largest share of excluded jobs are located in personal services (such as laundries or home cleaning); community, food and accommodation services; and retail trade. This is not surprising since these industries employ a large proportion of part-time workers and pay relatively low wages.

The Costs of Extending Benefits

A major criticism of the extension of Unemployment Insurance and Canada/Quebec Pension Plan benefits to all part-time workers is the additional costs this would impose on employers. Contributions to UI and CPP/QPP are undertaken jointly by employers and employees. In 1994, employees contribute 3.07 per cent of their earning in UI contributions, to a yearly maximum of $1,245. Employers pay 1.4 times this amount (or 4.30 per cent of employee earnings) to a yearly maximum contribution per employee of $1,743. For CPP/QPP, employers and employees each contribute 2.6 per cent of eligible earnings (total earnings minus the YBE) for a combined yearly maximum contribution of $1,612.

If UI and CPP/QPP benefits were extended to those part-time workers now excluded, total aggregate premiums paid by employers would increase by less than on per cent (a 0.87 per cent increase in UI premiums and a 0.28 per cent increase in CPP/QPP premiums). However, these costs would fall more heavily on small businesses and employers in service industries. Aggregate UI costs for firms with fewer than 20 employees would rise by 1.65 per cent and aggregate CPP/QPP costs would rise by 0.67 per cent. UI costs for larger firms would increase 0.62 to 0.73 per cent, while CPP/QPP costs would increase 0.15 to 0.29 per cent. Employers in retail trades and personal services would also face the largest increases.

But what does this mean in dollars and cents? In 1990, employers paid approximately $6.55 billion in UI premiums, and an increase of 0.87 per cent would represent $57 million in additional premiums. In terms of CPP/QPP contributions, employers paid a total of approximately $5.46 billion in 1990. An increase of 0.28 per cent would represent and additional cost of $15.3 million. Table 2 shows the distribution of these increases across firm size and industry sectors. As with UI, cost increases would fall most heavily on small businesses and on employers in retail trades and various service industries.

Do these cost increases make the extension of UI and CPP/QPP benefits prohibitively expensive? By dividing these total additional costs by the estimated number of businesses in Canada, we can estimate the average cost increase per firm (see Table 3). The extension of UI benefits would raise costs an average of $25 per year for small firms and the extension of CPP/QPP benefits would raise costs an average of $8. Combining these, small firms would face, on average, $33 in additional UI and CPP/QPP expenses.

For medium-size firms (20 to 499 employees) average additional costs would be $300 per year, while Canada's largest firms would face an average additional cost of $13,600 per year. These figures are averages and some firms would face larger (or smaller) increases. But on the whole, the extension of UI and CPP/QPP is not prohibitively expensive.

Under current arrangements, the costs of these benefits are shared by employees. For every $100 of earnings, a low-wage worker would pay $5.13 in UI and CPP/QPP premiums (assuming the CPP/QPP YBE was not applied).

With continuing growth of par-time employment, contract and temporary jobs and other "non- standard" forms of work, the economic security and stability of Canadian workers are issues of concern. Many part-time jobs, including many occupied by women, are excluded from the labour market and social programs available to the rest of the paid labour force.

Debate over the extension of benefits to these workers has primarily revolved around costs. But as these data show, the extension of UI and CPP/QPP benefits to all workers would not be prohibitively expensive. The average additional costs faced by firms, even Canada's small firms, would be minimal.

For women, the extension of these benefits is particularly important. Most who are employed part-time are excluded from employer-pension plans. Their exclusion from CPP/QPP further deprives them of retirement income, despite their years of labour force participation.

Grant Schellenberg is a researcher with the Centre for International Statistics at the CCSD.

Canadian Council on Social Development, 190 O'Connor Street, Suite 100, Ottawa, Ontario, K2P 2R3