The Department of Employment has announced that employment insurance (EI) premiums must be increased to cover pandemic cost overruns and said that premiums are currently at a “historic low.”
The new premium rates are due to be detailed by the end of August, according to Blacklock’s Reporter.
“Premium rates are expected to continue to increase in 2024 to reach a break-even rate that will pay down the costs of the current cumulative deficit in the Employment Insurance Operating Account,” said a briefing binder for the deputy employment minister, Jean-François Tremblay. “Costs stemming from COVID-19 temporary measures total approximately $23.2 billion.”
As a pandemic relief measure, cabinet implemented a two-year freeze on premiums for both employers and workers.
In September 2022, premiums were raised from $1.58 per $100 of insurable earnings to $1.63. A previous employment insurance actuarial report estimated premiums need to be $1.74 to balance the account.
The government says it aims to keep the EI program affordable for businesses and their employees, but that it also needs to be sustainable long-term.
The previous $1.58 rate was frozen over the pandemic period. According to the report, workers at or above the maximum insurable earnings threshold are paying $49.71 more in premiums than in 2022.
The report said the 2024 rate—to be determined by the employment insurance actuarial report—will be released later in August. Figures from the 2022 fall economic statement suggest the new “break-even” EI rate will increase from $1.58 to $1.66 per $100 of insurable earnings.
“If premiums were held at this rate, the Employment Insurance Operating Account would be brought to near cumulative balance by 2030,” researchers said.
In an earlier 1-800-O-Canada briefing note, the employment department said EI claimants have caused call volumes to “skyrocket” and said that present funding levels only support 1.6 million calls per year. Calls to the department were up by more than one-third.
“When compared to the pre-pandemic level of demand, call volume has increased by 35 percent from 1.6 million calls in 2019 compared to 2.1 million calls in 2022 and 2.2 million calls in 2023,” said the June 28 note.
The government hotline note did not provide a reason for the increase in EI inquiries.
