What methodological approach would you take? ∙ What data would you use? ∙ What assumptions would be required?Costing government’s Work-Sharing program for those affected by COVID-19.
QUESTION
Case Study: Costing government’s Work-Sharing program for those affected by COVID-19.
Suppose, to mitigate the economic impact of COVID-19, the Government of Canada announced a
temporary measure of the Work-Sharing (WS) program to support employers and employees affected
by COVID-19. Effective April 1, 2020 to March 31, 2021, and not limited to one specific sector or
industry, employees who agree with their employers for temporary work hour reductions are entitled to
receiving Employment Insurance (EI) payment of 55% of their weekly insurable earnings prorated to
percentage reductions in work hours. The EI benefits employees receive are subject to an effective
personal income tax rate of 13%. Empirical evidence suggests that work hour reductions will be about
the average of reductions in Finance, Real Estate, Education (except university), Construction and
Resources industries.
Estimate the WS program cost for the fiscal year 2020 – 2021.
∙ What methodological approach would you take?
∙ What data would you use?
∙ What assumptions would be required?
ANSWER
Estimating the Cost of the Government’s Work-Sharing Program for COVID-19 Relief
Introduction
The COVID-19 pandemic has caused severe economic disruptions globally, including in Canada. To alleviate the financial impact on employers and employees, the Government of Canada introduced the Work-Sharing (WS) program. This temporary measure allows employees and employers to agree on work hour reductions, with affected employees receiving Employment Insurance (EI) payments. In this essay, we will explore the methodological approach, data sources, and assumptions required to estimate the cost of the WS program for the fiscal year 2020-2021.
Methodological Approach
Estimating the cost of the WS program requires a comprehensive methodological approach that considers various factors. One such approach is a combination of quantitative analysis and statistical modeling. By utilizing available data and statistical techniques, we can project the number of employees participating in the WS program and calculate the associated costs.
Data Sources
To estimate the program’s cost, reliable and relevant data sources are essential. Key data sources would include government records, such as employment and payroll data, as well as industry-specific information. Government databases, such as those from Employment and Social Development Canada (ESDC) and Statistics Canada, can provide valuable insights into employment trends, average earnings, and workforce composition across sectors.
Assumptions
Several assumptions would be necessary to estimate the WS program cost accurately. Firstly, we assume that the program’s eligibility criteria and payment rates remain consistent throughout the fiscal year 2020-2021. Additionally, we assume that the work hour reductions experienced by employees will align with the average reductions observed in sectors such as Finance, Real Estate, Education (except university), Construction, and Resources.
Conclusion
In conclusion, estimating the cost of the Government of Canada’s Work-Sharing program for COVID-19 relief requires a thoughtful and rigorous approach. By employing a methodological approach that combines quantitative analysis and statistical modeling, utilizing reliable data sources, and making appropriate assumptions, we can provide an estimation of the program’s cost. This information is crucial for budgetary planning and decision-making to ensure effective allocation of resources during these challenging times.
