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Feds back down on Employment Insurance premium increase for 2011; increase now limited to five cents

By Workplace Staff

The Honourable Jim Flaherty, Minister of Finance, has announced that the Government of Canada will take further action to support Canada’s economic recovery by limiting the potential increase in Employment Insurance (EI) premiums. Specifically, the increase in EI premiums for 2011 will be limited to 5 cents per $100 of insurable earnings and 10 cents for subsequent years.

“To help Canadian workers and employers overcome the challenges posed by the 2008 global financial crisis, the Harper Government acted in Canada’s Economic Action Plan to freeze EI premiums for 2009 and 2010 at their lowest level since 1982. To maintain the momentum of Canada’s economic recovery, our Government will reduce the recommended EI rate increase by two-thirds,” said Minister Flaherty in making the announcement. “At a time when every dollar counts to individual families, this could mean almost $75 extra in the budget of the average Canadian family next year. Canada-wide, it will amount to $1.2 billion back in the pockets of workers and job creators.”

The Canada Employment Insurance Financing Board (CEIFB) is required to set the rate by November 14, 2010. Without today’s limit in place, the CEIFB would have raised premiums by the full legislative limit of 15 cents. Under the new limit, the employee rate per $100 of insurable earnings can rise to no higher than $1.78, starting January 1, 2011. Employers contribute 1.4 times the employee’s premiums. The rate is different in Quebec than in the rest of Canada because Quebec has assumed responsibility for maternity and parental benefits.

The government will also undertake consultations with Canadian individuals and businesses on how the EI rate-setting mechanism can be further improved to ensure more stable, predictable rates going forward. Details on these consultations will be announced shortly.

“Canadians want to be certain that EI premiums are only used to pay for the EI program, which we have already accomplished. They also don’t want to see rapid increases in premiums, and our Government is listening and acting on those concerns by limiting EI premium increases to protect Canadian jobs,” Flaherty said. “Our plan balances the genuine importance of preventing large EI rate increases, which would jeopardize our fragile economic recovery, and the unavoidable need to bring the EI account back to balance over time.”

Click here for further information on the EI increase.

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