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The Progressive Economics Forum

EI Premium Freeze Leaves Unemployed Canadians in the Cold

Today, finance minister Jim Flaherty announced a three-year freeze on Employment Insurance (EI) premiums, ostensibly because a stronger job market has alleviated the need for additional premium revenue.

Under the current policy, employee premiums were rising each year by 5 cents per $100 earned. Flaherty had announced this policy on September 30, 2010, when 1.5 million Canadians were officially unemployed. Since then, that figure has edged down to 1.4 million, hardly a breathtaking reduction in unemployment.

The number of Canadians receiving regular EI benefits has declined more sharply, from 709,990 to 512,280 between September 2010 and June 2013 (the most recent EI figures available). But the falling number of EI recipients reflects not only the slight reduction in unemployment but also government policy changes that make benefits less accessible. Freezing premiums effectively locks in those benefit cuts.

The losers from this freeze are unemployed Canadians who are more likely to be left out in the cold without benefits given limited funding for EI. The winners are employers, who will pocket significantly more than their employees.

A worker making up to the year’s maximum insurable earnings will save only a nickel for every $100 earned next year. Meanwhile, employers will pocket almost $400 million of the $660 million in estimated savings for “job creators and Canadian workers in 2014.” (As Finance Canada highlights in its own release, employers pay 60% of total EI premiums.)

UPDATE (Sept. 10): Quoted in The Globe and Mail (A3), National Post (FP4), Toronto Star (B1) and other newspapers via Canadian Press and Postmedia.

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Comments

Comment from Bill Prouten
Time: September 10, 2013, 12:43 pm

Not only does it lock in a “new normal” for the EI budget, making future increases to help people less likely, but the “savings” are practically non-existent to the average worker.
My understanding is that the max EI dues payable to the fund is based on a $48,000 salary. The normally scheduled increase of 5 cents per $100 earned therefore only works out to $24 a year for someone making $48,000 or more. Peanuts. 6 lattes. A year.
If you’re one of the increasing number of people working minimum wage service industry jobs, say at a generous $12/hour, that regularly scheduled increase amounts to $12.48, assuming you work full time, 5 days/week, with no vacations.
And so, Flaherty has said “I’ll buy you 2 lattes this year, and in exchange you will forego the ability to claim a reasonable amount to live on should you find yourself out of work.”

Nice. Why isn’t anyone publicizing this?

It’s the same stupid ploy the Conservatives used on the daycare issue; they cancelled plans to expand daycare at reasonable rates to working people, and instead gave people something that amounts to about $1200 (?) year…..which amounts to $100 month to spend on childcare…..awesome.

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