A recent article in the CEO¹ looked at the drop in people receiving social assistance in the 1990s, with particular emphasis on entry and exit rates by family type. This paper extends the results by province to 2003. One of the trade-offs of more timely data is the loss of detail on whether the changes originate through entry or exit and the type of family affected. The gain, however, is a comparison of which provinces have experienced the largest changes in social assistance among their population, and which had the highest and lowest rates of welfare use in 2003.

The analysis is largely descriptive. In particular, no attempt is made to differentiate between the two major forces at work in reducing social assistance use over the past decade—an improved economy and more stringent eligibility rules and lower benefits in every province.

The data on social assistance come from Social Development Canada². The rates of social assistance were calculated by dividing the number of people on social assistance by total population: rates based on the working age population showed virtually no difference for most provinces. Benefit levels refer to the maximum recipients could normally receive in a year, and were adjusted for inflation.

Overview

From 1993 to 2003, the drop in people on social assistance was more pronounced moving from east to west, with declines of 36% in the Atlantic region, 40% in Central Canada and 48% in the west. The largest changes in relative position were in central Canada. Quebec finished with the second highest social assistance rate in the country (7.3% of its population), behind only Newfoundland, after being equal to the Canada average in 1993. Conversely, Ontario dropped from the highest rate (12.1%) in 1993 to the national average of 5.5% in 2003. The relative positions of the Atlantic and western regions were little changed. The rate of social assistance in the Atlantic region was above average at 7.1% in 2003, while the west was below at 3.7%. Newfoundland had the highest rate of any province at 9.9%, while Alberta’s 1.8% was the lowest, partly because Newfoundland had one of the smallest drops in welfare rates since 1993 while Alberta was one of only two provinces (along with Ontario) with above-average declines. In recent years, British Columbia has had the largest decrease.

Ontario

Ontario saw the second fastest drop in people receiving social assistance after Alberta. At its peak in 1994, 1.4 million Ontarians received social assistance, equal to 12.8% of its population (and 1.1 percentage points above Newfoundland). Between 1993 and 2003, the number of welfare recipients fell nearly 50%, twice the rate of decline in Newfoundland (24.8%) and Quebec (26.6%) and greater than the 41.3% average for Canada. The largest drop in social assistance was between 1994 and 2000. Since 2000, Ontario’s welfare rate has about equalled the Canadian average. By 2000, the social assistance entry rate for couples with children was 0.4%, the lowest in the country. At the same time, Ontario also posted the largest declines in social assistance rates for couples without children and unattached individuals between 1992 and 2000.

The decline in social assistance was helped by the second strongest labour market in the country over this period, driven by export growth. The employment-to-population ratio rose particularly fast for men aged
20 to 24 (from 59.6% to 69.1%) and women in their fifties (from 54.9% to 67.3%).

Figure 1

For some groups, social assistance benefits fell the most of any province, albeit from relatively high levels. Benefits for couples with two children on social assistance fell 45%, single parents by 41% and single people by 34%, although they remained among the highest in the country.

Quebec

Quebec gradually moved away from the average of the other provinces. In 1993, its rate was the same as the Canada average of 10.4% (five provinces had lower rates – the four western provinces and Prince Edward Island). By 2003, with 7.3 out of every 100 persons on welfare, it was behind only Newfoundland. This growing divergence from the national average was driven largely by a much smaller drop in the number of people on social assistance than in most of Canada. Its 27% drop in welfare rolls was less than only Newfoundland and Saskatchewan. This left 544,200 people on social assistance, compared with 741,400 in 1993. This is nearly one-third of Canada’s total, up from one-quarter a decade earlier.

Alberta

Alberta was the polar opposite of Newfoundland in consistently having the lowest rate of social assistance. Its 70.5% drop in the number of people on social assistance between 1993 and 2003 drove the rate down to just 1.8%. In 1993, it was already the second lowest in Canada at 7.4% (only Saskatchewan was lower at 6.8%). The rate dropped abruptly in 1994 and 1995, to 5.2% and 4.2% respectively, followed by more gradual declines (in fact, it was the only province to post an increase in 2003).

While Alberta’s job growth for the whole period was by far the strongest in Canada, with jobs up by a third, the gains in 1994 and 1995 were unexceptional. Neither were the reductions in benefit levels markedly different from the other provinces, as Alberta had already made the largest cuts well before 1993, especially for single people. Their benefits were cut by half in 2003 compared to 1986, the biggest decline among provinces. Alberta did have the lowest rate of single people on social assistance from 1993 until 2000.

Figure 2

Manitoba

Manitoba’s 32% drop in people on social assistance was less than half Alberta’s decline. As a result, the number of people on welfare in Manitoba (59,900) exceeded Alberta (57,800) in 2003, despite its having a population only one-third of Alberta’s. In 1993, people on social assistance were twice as numerous in Alberta as in Manitoba. The labour market improved much less in Manitoba, which along with Saskatchewan had
the smallest job gains among the provinces. Still, Manitoba’s social assistance rate of 5.2% was below the Canadian average, as it was for the entire period under study.

Saskatchewan

Saskatchewan saw the smallest declines in people on social assistance, down 22% between 1993 and 2003. But compared with its peak in 1995, its drop of 35% is closer to the Canada average. Saskatchewan posted the slowest job growth (8.7%) over this period, only one-third the national increase. With one-third of its population in rural areas, Saskatchewan suffered from low grain prices and poor crop conditions since 1997. After rising 1.2% a year between 1993 and 1998, employment levelled off into 2003. As a result, its ratio of people on social assistance to the employed, which was well below the Canadian average until 2000, was only marginally below average by 2003. At 5.3%, the rate of social assistance was much closer to Manitoba than Alberta. The level of benefit payments closely followed the Canada average.

British Columbia

Social assistance fell by 44% over the last 10 years, slightly more than the national average. British Columbia posted the largest drop in welfare recipients after 2000, falling by one-quarter in 2003 alone. This contrasts with the other provinces, which recorded most of their declines prior to 2000. The percentage of the population in British Columbia on social assistance was slightly below the national average throughout most of the period. Still, Prince Edward Island, Ontario, Manitoba and Saskatchewan had lower rates in 2001. By 2003, its rate of 4.4% was the second lowest in the country, after Alberta.

The drop in the social assistance rate after 2000 accompanied a sharp slowdown in population growth compared with the 1990s, when British Columbia led all provinces. Immigration to British Columbia tailed off sharply after the Asian economic crisis in the late 1990s. After 2000 its population growth rate was half that of Alberta and Ontario, who held more appeal for immigrants from abroad. At the same time, job growth in British Columbia fell below the Canada average after 2000, after surpassing it in the 1990s.

Real benefit rates in British Columbia were reduced in line with the Canada average between 1993 and 2003. British Columbia was the only province to cut off benefits after a certain time elapsed, under a rule adopted in 2002³.

Newfoundland and Labrador

Newfoundland had the second-smallest drop in people on social assistance, just behind Saskatchewan. Its welfare rolls fell 25%, from 68,100 in 1993 to 51,200 in 2003. Most of the drop occurred between 1997 and 2002, the best five years for employment growth in a generation. Jobs were boosted by the Hibernia mega-project, which dramatically raised energy output to 15% of provincial GDP in 2000.

The social assistance rate fell from 11.7% in 1993 to 9.9% in 2003. The drop was even more marked relative to the employment, from 38% in 1997 to 23% in 2003 (although this was still the highest in Canada). The sharper drop relative to employment reflects a steady out-migration of people and more jobs: the province’s population shrank by 6.6%, by far the most of any province over this period, while its job growth surpassed the national average (exceeded by only Ontario and Alberta). Social assistance benefits fell gradually between 1993 and 2003, matching the drop in average real weekly wages. Compared to other provinces, however, benefits fell much less. Benefits actually increased 38% for single people between 1993 and 2003 due to a sharp hike in 2002 and 2003. Newfoundland is the only province where benefits were raised for this group. As a result, in 2003, the province ranked first in the level of benefits paid to single people and single-parent families.

New Brunswick

New Brunswick’s welfare recipients fell by 37% between 1993 and 2003, the second slowest in the Atlantic region after Newfoundland. Its social assistance rate of 6.6% in 2003 was also the second highest of the Atlantic provinces, after Newfoundland. In 1993, Nova Scotia and Newfoundland had higher rates, while Prince Edward Island generally had the lowest. New Brunswick’s job growth trailed all the Atlantic provinces. At the same time, its population levelled off, while Nova Scotia and Prince Edward Island continued to grow. New Brunswick was the only province to record stable benefits for single-parent families and couples with two children. Benefits for single people fell at a much slower rate that the other provinces.

Figure 3

Nova Scotia

In absolute terms, the numbers on social assistance were higher in Nova Scotia than all the other Atlantic provinces, partly because of a larger population of 900,000. Still, welfare rolls tumbled 41% from 98,700 people in 1993 to 58,300 in 2003. The incidence of social assistance remained slightly above the national average, moving from 10.7% in 1993 to 6.2% in 2003. Jobs in Nova Scotia grew 17.5% over this period, slightly below Canada’s average.

Prince Edward Island

Prince Edward Island most resembles the Canadian average of all the provinces for both the level and the trend of social assistance. Its social assistance rate was 5.1% in 2003, the lowest on the Atlantic coast and only half that of Newfoundland. Its employment growth of 22.3% over the whole period essentially matched the Canada average. The cuts to benefits paid to couples with children and single-parent families also were close to the national average: benefits for unattached individuals fell more.

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Notes

* Current economic analysis (613) 951-3627.

¹ R. Finnie “Social Assistance use”, August 2004.
² The data are based on people drawing social assistance in March of each year: employment and population data are from the Labour Force Survey.
³ Under the Employment and Assistance Act of 2002, employable persons without children can have their benefits terminated after they have been on welfare for a total of two years in any five-year period, and families with children can have their benefits reduced after two years in any five-year period.