Sweeping changes that are being recommended to modernize the federal government’s employment insurance program will cost employers billions of dollars if they are realized, said the commissioner for employers at the Canada Employment Insurance Commission. Nancy Healey is responsible for representing the views and positions of organizations and individuals that are clients of, or affected by, Employment and Social Development Canada programs and services, particularly employment insurance.
Healey is leading a series of discussions to prepare employers for the second round of consultation with labour, government officials and employer representatives in the coming weeks. She spoke with chambers of commerce in May in order to “arm employers” with the information they need to make informed decisions.
The federal government is consulting Canadians on future reforms such as allowing more Canadian workers to access EI as temporary income support, ensuring EI benefits are adequate to support Canadian workers during periods of unemployment or critical life events, promoting an efficient labour market that enables unemployed workers to return to work when possible, and ensuring the program is affordable and financially sustainable for the workers and employers who pay into it.
Healey said the 2022 federal budget suggests employment insurance premium rates could increase 15 cents (at five-cent increments) over the next three years (2023-2025). The impact would be significant for employers, and would be made worse by the anticipated increases in the Maximum Insurable Earnings, which is expected to go up by a few thousand dollars each year. In 2021, the MIE was $56,300. In 2022, it’s $60,300, representing a seven-per-cent increase. In 2023, the MIE will increase to $62,500. In 2024, it will increase to $64,600, and in 2025, it will increase to $66,700.
It may not seem like much, but when you multiply it by an increasing employer premium rate, it means an employer’s cost for employment insurance will increase from the current $1,332.63 to $1,574.12 in 2025.
These numbers are concerning for the employer community, said Healey. This is a significant amount and comes at a time when employers are struggling amidst record increases in inflation, labour shortages and supply chain uncertainty to resume full operations.
Other changes the federal government is looking at for employment insurance are decreasing the amount of time it takes to become eligible for employment insurance, as well as who qualifies for benefits, and the durations for which a person will receive benefits.
The federal government is also looking at increasing the replacement rate, which is currently at 55 Per cent. It’s the percentage of a claimant’s average weekly insurable earnings that is payable in benefits on a weekly basis. Currently, the rate amounts to $638 for workers making the MIE at $60,300.
Increasing this rate will add significant costs to the EI program, said Healey, which would need to be paid for through increased employer and employee premiums.
Healey said she has witnessed significant increases in average weekly earnings, a trend that is expected to continue for at least seven years. Phase 2 of the consultations opened on April 29, 2022, and will close to new input on July 29, 2022.
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