Ottawa to scale back EI premium increase

Employer rates set to increase by just 7 cents per $100 in 2011, not 21 cents
||Last Updated: 10/26/2010

The federal government is reducing the increase to employment insurance premiums it announced in mid-September.

The Harper government froze EI premiums for two years as an economic stimulus measure during the recession. The freeze will expire on Jan. 1, 2011, and the government was set to increase premiums by the maximum amount allowed.

This would have seen employee premiums increase by 15 cents on every $100 earned, an 8.7-per-cent increase from the current $1.73. Employers would have had to pay an extra 21 cents per $100.

However, in light of warnings such an increase would cost Canadian jobs, Finance Minister Jim Flaherty has announced the increases will be just five cents for employees and seven cents for employers, saving employers and employees about $1.2 billion in 2011.

"While not a complete freeze, we are pleased to see the government take a major step on this critically important issue to help lessen the impact on small businesses and thereby the economy overall," said Catherine Swift, president and CEO of the Canadian Federation of Independent Business.

The government will also limit future employee-paid increases to a maximum of 10 cents per $100 of insurable earnings and 14 cents per $100 for employers, said Flaherty.

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

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