Employment Insurance – A Double Win for the Chamber

As the biggest and most important businesses constituency in the country, the Canadian Chamber of Commerce and its network across the country issued a resounding call to action in the wake of proposed changes to the Employment Insurance (EI) program, and plans to increase EI premiums by the maximum allowed under federal legislation. Our voice was heard loudly.

Last night, members of Parliament defeated Bill C-308 — a bill that would have added over $2 billion to the costs of the EI Program, increased work disincentives, hindered labour force mobility and constrained job creation.

Today, the government announced it will be scaling back planned increases in EI premiums. For 2011, EI premiums will rise 5 cents per $100 in insurable earning for employees and 7 cents for employers instead of the maximum 15 cents and 21 cents, respectively. For 2012, premiums will be increased by 10 cents per $100 in insurable earnings for employees and 14 cents for employers instead of the maximum amount.

“As a result of this decision, Canada’s businesses will save over $640 million in 2011 and $320 million in 2012. A business with 100 employees will save as much as $6,100 next year and $3,100 in 2012. This is the right thing to do at the right time,” said Perrin Beatty, President and CEO of the Canadian Chamber of Commerce. “The Canadian economy went into reverse in July, the first monthly decline in 11 months. Additionally, the breadth of negative indicators indicates ebbing economic momentum going forward. The jobless rate will be hard pressed to break below 8 percent on a sustained basis for some time,” concluded Beatty.

Gradual increases in EI premiums will give the Canadian economy traction. Employers will have a greater incentive to keep workers and add to payrolls. Workers will have more take-home pay and will be more inclined to spend. With prospects for an export-driven recovery fading, businesses and consumers will propel economic growth.

Over time, premium rates must be stabilized so that the EI program counteracts, or mitigates the negative effects of economic cycles. It is for this reason that the Canadian Chamber is calling on the federal government to smooth out premium increases by amending the rate-setting formula with a view of balancing the EI Account over the business cycle of up to 10 years instead of year-by-year.

Securing the economic recovery and building a more competitive Canada requires proactive leadership, vigilance and collaboration. Our success on the EI file indicates that together we can make it happen. We thank our dedicated national chamber network for their ongoing support and efforts.

Regards,
Perrin Beatty
President and CEO
The Canadian Chamber of Commerce
360 Albert Street, Suite 420
Ottawa, Ontario K1R 7X7