Another Big Employment Insurance Surplus

Under current rules, the EI premium rate is supposed to be set at the precise level anticipated by the Chief Actuary to match program revenues with program expenses. (The accumulated surplus of more than $50 Billion run up under the Liberals as a result of deep benefit cuts and slow premium reductions sits in a sort of accounting limbo in what the Minister of Finance calls a fictitious account. Notional interest on the EI surplus is credited to the EI account but has no impact on the premium-setting process and is not deemed by the government to be a potential source of funds for benefit improvements.)

As it turns out, the EI account ran another big annual surplus in fiscal 2006-07, to the tune of more than $1 Billion above and beyond what was forecast in the 2006-07 Budget. Revenues came in at $16,789 Million compared to a forecast of $16,125 Million – a difference of $664 Million; and EI benefits (including active labour market measures) came in at $14,084 Million compared to a forecast $14,580 Million, an under-shoot of $496 Million. Add the revenue overshoot to the spending undershoot, and the surplus is $1.1 Billion, assuming that program administration costs of $1.3 Billion came in as forecast. (These are charged to the EI account but not counted as benefits, so the break – even premium rate has to generate a small excess of revenues over benefits.)

One thing is clear – there is a lot of fiscal room to expand active labour market measures in the context of ongoing severe industrial adjustment, not to mention EI benefits. Meanwhile, employer cries for premium cuts will likely become even more insistent.

3 comments

  • so many resources (surpluses on many fronts, EI, budget) and so much adjustment needed.

    when will these financials and the political strings attached translate into active labour market adjustment policy beyond buying a bus ticket to the west.

    from the sounds out of the ruling parties and the current Ontario Election platforms, it’s as if there was no such thing as a manufacturing meltdown occurring in the heartland.

    I wish one of the candidates would step up to the plate and start raising some hell on the issue.

    it is quite appalling to see the number of issues that seem to be discussed in the Ontario election when one of the most imperative is rarely, if at all discussed.

    The E.I. fund should be targeted as a quite helpful resource for the adjustment aid that is severely required. It was almost criminal with what MArtin got away with in hijacking the EI fund and now the tories continue on with the ruse. I wonder where the federal surplus would be if they started paying back what was owed to the EI fund. This is not even clever accounting, it is just plain old double talk.

    pt.

  • The insistence on expanding so-called active labour market measures (a very disparaging expression for what it implies about the regular, “passive” unemployed) is a bit strange, given that the EI Commission’s annal monitoring reports show mixed, uncertain and often poor results from such measures.
    These findings are supported by international experience. We seem to be saying: “it doesn’t work, so let’s do more of it.”

  • The Public Accounts of Canada were issued on Oct. 17, 2007, and now show the EI surplus at $54.1 billion at March 31, 2007. See pages 93 and following at:
    http://www.tpsgc.gc.ca/recgen/pdf/v1pa07-f.pdf

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