Employment Insurance Reform, Key Election Trigger

22 Jul 2009

As you may know the Prime Minister and the leader of the Opposition have agreed to form a working group to develop proposals for Employment Insurance eligibility reform that would allow self-employed Canadians to participate voluntarily in the EI program and improve eligibility requirements in order to ensure regional fairness. The government members have already been announced. In addition, in budget 2009, the federal government provided additional fiscal stimulus by temporarily extending benefits by five weeks and freezing premiums.

In the meantime there have been numerous recommendations to add more benefits or take more away, few of which have been tested for efficiency or the cost impact to Canadian businesses. For that reason, the Canadian Chamber of Commerce in consultation with the London Chamber and others has developed the following policy position in an effort to assist the working group in its deliberations.

While there has been no announcements regarding public consultations on EI Reform, we believe that these recommendations can serve as a road map for the working group while at the same time stimulating economic recovery and job creation.

Background

In Budget 2009, the federal government provided additional fiscal stimulus by temporarily extending benefits by five weeks and freezing premiums. On June 17, 2009, Prime Minister Stephen Harper and Leader of the Official Opposition Michael Ignatieff agreed to form a working group to develop proposals for EI reform that would allow self-employed Canadians to participate voluntarily in the EI program and improve eligibility requirements in order to ensure regional fairness.

Position

As an automatic stabilizer, the EI Program has played a critical role in mitigating the severity of the economic downturn. The Canadian Chamber of Commerce believes that the program can be fundamentally improved to make it more relevant to the long-term needs of the Canadian economy.

Key Messages

1) Immediately and permanently make access to benefits equal wherever the unemployment rate is less than 10 percent by easing the variable entrance requirements from the current 560 to 700 hours to the lower floor of 560.

2) Refrain from eliminating the two-week waiting period as it serves to enhance the efficiency of the EI program.

3) Refrain from directly enhancing benefits by boosting the earnings-replacement rate presently EI benefits replace 55 percent of a claimants weekly insurable earnings.

4) Amend the present rate-setting formula so that deficits in the EI account are funded over a business cycle of up to 10 years.

5) Gradually phase in an employer-based experience rating system.

6) Gradually reduce the employer EI premium rate to equal that paid by employees.

7) Immediately implement a system that allows for over-contributions by employers to be refunded.

8) Operate the EI program as a true insurance program and one that provides income support for those who are temporarily unemployed through no fault of their own and who qualify for the program. Remove the social-program aspects of EI from the regular premium structure and place within general program spending.

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