Employers and workers concerned about EI program debt as premiums set to rise – National

With EI premiums set to rise in the new year, employers and workers are calling on the federal government to step in and save the program from the massive debt it has run into since the COVID-19 pandemic.

The program, which is funded entirely by premiums paid by workers and employers, had accumulated $25.9 billion in debt by the end of 2021, according to the Office of the Chief Actuary.

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The increase in debt comes after a staggering number of Canadians were unemployed during the pandemic and eligibility rules for the program were relaxed to make it easier to access unemployment benefits.

Since then, the labor market has rebounded and temporary changes to the employment insurance program have been reversed. However, the question that lingers is: who should take over the accumulated debt?

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Employers and workers hope the federal government will.

“The current deficit arose because of the pandemic, and it is no employee’s fault and it is no employer’s fault,” said Jasmin Guenette, vice-president of national affairs at the Federation. Canadian Independent Business.

After a two-year freeze, EI premiums are set to increase by five cents per $100 of income in 2023, the maximum increase allowed in one year by law.

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However, the increase is less than what the Office of the Chief Actuary has recommended for the program to break even by 2029.

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Nancy Healey, the employers’ representative on the Canadian Employment Insurance Commission, said “businesses (and) workers are concerned about the amount of debt that currently sits in the EI account” .

The EI system is overseen by a commission that regularly reviews issues and the appeals system and its funding. Commissioners make the voices of workers and businesses heard, often consult their constituents and raise their concerns with permanent civil servants.

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Workers’ representative on the commission, Pierre Laliberté, said the federal government has not indicated whether it intends to repay some of the debt.

“Everyone was surprised that at the budget level there was no compensation or partial compensation for the costs incurred during the pandemic,” he said.

When asked if there were plans for the federal government to repay some of the debt, a spokeswoman for Jobs Minister Carla Qualtrough said in a statement that “these debts are settled on many years, with premium rates determined on the basis of a seven-year break – even projections.

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“With the 5-cent increase, the rate will drop to $1.63 in 2023, which remains one of the lowest rates in Canadian history,” said Jane Deeks, the minister’s director of communications. .

Who should pay the accumulated debt is part of a larger discussion about EI reform.

In 2021, the Liberals campaigned on a promise to modernize EI and pledged to expand the program to cover the self-employed and close gaps, including those highlighted by COVID-19.

Miles Corak, an economics professor at the City University of New York and a longtime EI researcher, said reform should include changes to how the program is funded.

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In a note released by the CD Howe Institute earlier this week, Corak argued for tripartite funding of the program, where employers, workers and government contribute.

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He argues that workers and employers should not be burdened by unexpected economic shocks like the pandemic that cause a spike in “involuntary” unemployment.

“Sometimes workers are ready to work, are in the right place, and have the required skills, but the jobs just aren’t available,” Corak wrote in the memo to Qualtrough.

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Corak suggests that the federal government should cover increased program costs caused by unexpected economic shocks. At the same time, it should collect any surpluses accumulated during periods of low unemployment.

Corak, who took part in the public consultations held on EI reform, said both employers’ and workers’ groups seemed to react positively to his proposal.

“I’m kind of looking between the tea leaves here thinking, OK, this could be a way to get federal government funding for the program,” Corak said.

Although the Liberals did not give a timetable for the implementation of the reform, they should present their plan by the end of the year.

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The idea of ​​having the government contribute to the program is not new. Before the 1990s, employment insurance was financed by contributions from workers, employers and the federal government.

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Unifor President Lana Payne said the union wants to see federal contributions restored “to alleviate the program’s accumulated deficit and support long-term program improvements for workers.”

However, Jennifer Robson, associate professor of political management at Carleton University, said she would be surprised if there was much enthusiasm from the federal government to contribute financially.

“I feel like the current mood in the Treasury is much more one of fiscal restraint,” Robson said.

© 2022 The Canadian Press

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John A. Bogar