Reforms to Canada’s Employment Insurance (EI) program are necessary to advance the fundamental goals of promoting employment and productivity.
The original goal of the EI program was to provide insurance against unintended periods of unemployment. Over the past three decades, however, items such as earning supplements, family-related benefits and training grants to provinces have grown in importance. Since 1995, regular benefits paid to laid-off workers have averaged less than half of total premium revenues collected. Because the EI program has been used to support government spending in a variety of areas completely unrelated to the original purpose, EI premiums have been kept at unnecessary high levels. The break-even level (i.e. – the EI premium rate that would general revenue equal to the cost of funding the entire EI program on a yearly basis) has been artificially raised.
Winnipeg Chamber of Commerce Recommendations:
- Phase-in an employer-based experience rating system, reducing premiums for firms that generate fewer claims, thereby making the EI system more efficient and conducive to job creation and stability.
- Facilitate further reductions in EI premium rates by operating the EI program as a true insurance program, reducing real wage costs to employers, thereby making it more attractive to hire more workers and increase real wages.
- Reduce the employer EI premium rate (currently 1.4 times higher than the employee premium rate) to equal the employee premium level.
- Devise and implement a system that allows for over-contributions by employers to be refunded.
Adopted by The Winnipeg Chamber of Commerce board of directors, September 2007