Feds Wary of Measures That Could Raise EI Premiums: Report

The employment insurance section of the Government of Canada website is shown on a laptop in Toronto on April 4, 2020. Jesse Johnston/The Canadian Press

The federal Department of Employment is wary of any proposed measures that could raise Employment Insurance premiums amid ongoing plans to modernize the program, according to a briefing note.

The April 18 memo included a question asking why the federal government has yet to announce “a plan for modernizing the Employment Insurance (EI) program.”

“Given the current and near-term inflationary pressures, the Government is taking a cautious approach to putting in place new EI measures that could increase EI premiums and make it harder for workers and employers to make ends meet,” said the note, titled “EI Modernization,” obtained by Blacklock’s Reporter.

At present, the maximum amount an employee must pay per year in EI premiums is currently fixed at $1,002.54 whereas an employer has to pay $1,403.43. The note did not elaborate on what the new measures would be.

In a ministerial mandate letter in December 2021, the Liberal cabinet promised to “modernize the EI system for the 21st century, building a stronger and more inclusive system that covers all workers.”

‘Not Higher Premiums’

Employment Minister Carla Qualtrough was tasked by Prime Minister Justin Trudeau last year to consult stakeholders including employers, workers, unions, and industry groups on “the future” of EI.

On Sept. 29, 2022, Qualtrough’s department published the views of the various stakeholders.

“Worker groups continued to express the need to prioritize increasing access to EI and noted that benefits are currently not adequate for meeting the needs of recipients, in particular for lower income workers,” said the report, titled “Modernizing Canada’s Employment Insurance (EI) Program: Consultations – The What we heard report (Phase 2).”

“Employers cautioned that there should not be additional financial burden on businesses, in particular during the pandemic recovery period.”

In 2021, the Canadian Federation of Independent Business (CFIB) argued that small businesses want a “fairer EI system, not higher premiums,” especially since they have been paying 1.4 times their employees’ premiums.

“Eighty-four per cent of small business owners want to see EI premiums split 50:50 between employers and employees,” the CFIB said in a news release at the time.

Unions have sought an increase in benefits from the current 55 percent of average weekly earnings under the Employment Insurance Act. Businesses have opposed an increase as costly.

“[Many participants] expressed that the current replacement rate is at a historical low and provides insufficient weekly benefit amounts for low- and middle-income unemployed individuals,” said Qualtrough’s department in its 2022 report.

The report added that labour groups and some academics suggested increasing the replacement rate to 66.67 percent or 75 percent for all claimants.

“Employers cautioned that increasing and varying the replacement rate would increase program costs, which could result in higher premiums for employers and employees,” the department noted.

No deadline has been fixed for any amendments to the Act.