Harper’s Strange EI Parental Leave Plan
Harper today announced that he would include self-employed workers in EI for purposes of paid maternity and parental leave. Extending such EI coverage is a good idea, and Quebec has already done this through a provincial adaptation of the EI program which requires a separate provincial premium rate.
In Quebec, partcipation by the self-employed is mandatory so they all contribute to the cost of the benefit. However, participation in Harper’s plan by the self employed would be voluntary, and they could opt in to the plan just in six months in advance of collecting benefits. No rational self employed person would contribute in advance of knowing that they would soon collect.
Harper’s plan would seem to entail a large cross subsidy from employees and employers to the self employed and higher EI premiums.Â Conservative language on this issue – which follows – is not very precise.
If there were no cross subsidy, the cost of benefits would greatly exceed premiums, unless the cost of premiums in the six month eligibility period was extraordinarily high.
Here are the bare bones:
- The system will be voluntary. Self-employed Canadians can opt in to EI premiums and, in return, will be able to receive maternity and parental benefits.
- Self-employed Canadians would have access to the same type of maternity and parental benefits available to regular EI participants.
- Self-employed entrepreneurs would be required to opt-in to EI premiums at least six months prior to making a claim.
- Exact premium amounts and required payments post-claim will be set upon implementation, following a review by the newly created Canada Employment Insurance Financing Board.
- Once this measure is fully implemented, rates will be set so that costs are fully offset by received premiums, just as with regular EI.
- The annual cost of this benefit is estimated to be $147 million, based in part on the take-up of a self-employed maternity and paternal benefits plan that is already offered by the Quebec Government. When implemented, the benefit would be fully funded by premiums within the EI plan; it would not affect the federal governmentâ€™s budget.