Publications, opinions, and speeches

Caledon

EI Financing: Reset Required

Published on 14/09/2010

In mid-November 2010, the Canada Employment Insurance Financing Board will likely recommend a 15-cent increase in Employment Insurance employee premiums from $1.73 to $1.88 per $100 of insurable earnings for 2011.  The contribution for employers is 1.4 times the employee premium so the cost for employers will rise as well.  The Cabinet has until November 30 to act on the Board’s recommendation.  The Cabinet could decide to reject the proposal and continue the current EI premium freeze for another year.  Either way, it faces a tough dilemma.  Failure to raise the EI premium rate will diminish the government’s fiscal credibility and the pace at which it reduces the deficit.  But raising payroll taxes in the midst of an economic downturn is a bad idea for both workers and employers.  Beyond the immediate problem of whether to increase or freeze premiums in 2011, Ottawa faces a longer-term challenge: What to do about Employment Insurance financing?  Caledon has argued over the years that Canada needs a counter-cyclical financing regime for EI that can be established in law and maintained with some reliability through economic ups and downs.  This commentary calls upon the federal government to initiate a serious review of EI financing, involving labour and business, in order to formulate clear rules and accounting procedures that are both operable and sensible.

ISBN – 1-55382-486-5

Summary

In mid-November 2010, the Canada Employment Insurance Financing Board will likely recommend a 15-cent increase in Employment Insurance employee premiums from $1.73 to $1.88 per $100 of insurable earnings for 2011. 

Topic(s)

Employment and labour, Government spending and tax, Income security