The Harper Government announced last month that it will freeze the Employment Insurance (EI) premium rate for employees at the 2013 level of $1.88 per $100 of insurable earnings for 2014, and additionally that the rate will be set no higher than $1.88 for 2015 and 2016.
“While Canada has seen steady job creation since the end of the global recession with over one million net new jobs, significant challenges remain in the global economy. Our Government is freezing EI rates and leaving $660 million in the pockets of job creators and Canadian workers in 2014 alone which will help provide the certainty and flexibility employers, especially small businesses, need to keep growing,” said the Honourable Jim Flaherty, Minister of Finance, at an event hosted by Ottawa Camping Trailers Ltd. “This tax relief will help support Canada’s continued economic recovery and sustained, business-led, long-term growth.”
Since July 2009 employment has increased by more than one million jobs, the strongest job growth among Group of Seven (G-7) countries over the recovery. Close to 90 per cent of all jobs created since that time have been full-time positions, with more than 80 per cent in the private sector and two-thirds in high-wage industries.
The OECD recently projected Canada to lead the G-7 in economic growth for 2013 and the World Economic Form ranked Canada’s financial system as the safest and soundest in the world for a sixth year in a row.
Falling unemployment over the recovery means the EI Operating Account is on track to return to balance, and the premium rate increases previously projected are no longer necessary.
“As payroll taxes like Employment Insurance are particularly challenging for small business, today’s announcement of an EI rate freeze is fantastic news for Canada’s entrepreneurs. This move will keep hundreds of millions of dollars in the pockets of employers and employees which can only be a positive for the Canadian economy. As employers pay 60 per cent of the cost of the EI system, small firms can use these savings to hire, improve wages or help grow their businesses,” said Dan Kelly, President and CEO of the Canadian Federation of Independent Business.
Starting in 2017, as announced in Economic Action Plan 2012, the EI premium rate will be set annually at a seven-year break-even rate. This will ensure that EI premiums are no higher than needed to pay for the EI program over that seven-year period, and will result in sustainable funding, affordable rates, and ongoing predictability and stability.