Employment insurance debt: the government will have to step in

A staggering number of Canadians have been out of work during the pandemic, and eligibility rules for the program have been relaxed to make it easier to access benefits. But since then, the labor market has rebounded and temporary changes to the employment insurance program have been reversed.

“The current deficit occurred because of the pandemic, and it’s no employee’s fault, and it’s no employer’s fault,” said Jasmin Guénette, vice-president of national affairs at the Canadian Federation. of Independent Business (CFIB).

After a two-year freeze, EI premiums are set to increase by $0.05 per $100 of income in 2023, the maximum increase allowed in one year by law. However, the increase is less than what the Office of the Chief Actuary has recommended for the program to reach by 2029.

Nancy Healey, the employers’ representative in the Canadian Employment Insurance Commission, assures that “companies (and) workers are concerned about the amount of debt that is currently in the employment insurance account”.

The EI system is overseen by a commission that regularly reviews issues and the complaints system and its funding. Commissioners make workers and businesses heard, often consult their constituents and raise their concerns with tenured officials.

The labor representative on the commission, Pierre Laliberté, reports that the federal government has not indicated whether it intends to repay part of the debt. “Everyone was surprised that at the budget level there was no compensation or partial compensation for the costs incurred during the pandemic. »

Asked if there were plans for the federal government to repay some of the debt, a spokeswoman for Jobs Minister Carla Qualtrough said in a statement: “This debt is settled over many years and premium rates are determined on the basis of seven years of profitability forecasts.”

“With the $0.05 increase, the rate will drop to $1.63 in 2023, which remains one of the lowest rates in Canadian history,” said Jane Deeks, the minister’s director of communications.

In 2021, the Liberals campaigned on a promise to modernize EI, pledging to expand the program to cover the self-employed and close gaps, including those highlighted by COVID-19.

Miles Corak, an economics professor at the City University of New York and a longtime EI researcher, said reform should include changes to how the program is funded.

In a memo released by the CD Howe Institute earlier this week, Miles Corak argued for tripartite funding of the program, with employers, workers and government contributing. In his view, workers and employers should not be burdened by unexpected economic shocks such as the pandemic, which causes an increase in involuntary unemployment.

“Sometimes workers are ready to work, are in the right place and have the necessary skills, but the jobs just aren’t available,” Miles Corak wrote in the memo to Minister Carla Qualtrough.

It suggests that the federal government is covering increased program costs caused by unexpected economic shocks. At the same time, it should collect any surpluses accumulated during periods of low unemployment.

Although the Liberals did not give a timetable for the implementation of the reform, they had to present their plan before the end of the year.

The idea of ​​having the government contribute to the program is not new. Before the 1990s, employment insurance was funded by contributions from workers, employers and the federal government.

Unifors union president Lana Payne wants federal contributions reinstated “to alleviate the program’s accumulated deficits and support long-term program improvements for workers.”

However, Jennifer Robson, an associate professor of political leadership at Carleton University in Ottawa, would be surprised if there was much enthusiasm from the federal government to contribute financially. “My impression is that the current state of mind in the Ministry of Finance is much more about budgetary restraint”.

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