WATCHDOG’S WARNING /Report slams policy on EI /Inflated fees said to cost jobs, pad books/ PAUL MCLEOD OTTAWA BUREAU [email protected] @pdmcleod OTTAWA — Artificially high employment insurance premiums will cost thousands of jobs while temporarily padding Ottawa’s books by billions of dollars, ac¬cording to a new report by Canada’s financial watchdog. The Conservative government already knew it was facing an EI fund surplus and will lower premi¬ums for some employers through the small business job credit. Parliamentary budget officer Jean-Denis Frechette found the credit will create only 200 jobs next year and 600 in 2016. But keeping premiums artificially high will cost 2,000 jobs next year and 8,000 jobs in 2016, Frechette found. The budget officer says these jobs created or lost in the short term will eventually be offset by premium rate cuts that start in 2017. But keeping EI premiums higher than the break-even rate in the short term adds billions of dollars to the government books in an election year. The higher rates add $6.4 billion to the books between this year and 2016-17. Lower rates for the next two years bring the total five-year surplus down to $5 billion. That figure becomes $4.4 billion when you factor in the small business job credit. The NDP called on the government to expand EI benefits, while the Liberals are pushing their own plan of EI premium holidays for employers who hire new positions. Both parties pounced on the report Thursday. “The parliamentary budget officer says the government could easily afford to expand coverage to another 130,000 unemployed Canadians,” Dartmouth-Cole Harbour New Democrat MP Robert Chisholm said. “But instead the Conservatives have chosen to raid the EI account for a program that is clearly designed to fail.” Kings-Hants Liberal MP Scott Brison accused the government of inflating the books in an election year at the cost of Canadian jobs. But the Conservatives stood behind their plan and pointed to their own set of numbers. The Canadian Federation of Independent Business calculated that the job credit will create the equivalent of 25,000 jobs over the next two years. “Perhaps the opposition should listen to the groups that actually create the jobs,” said Kevin Sorenson, the minister of state for finance. The huge difference between the projections — 800 jobs created versus 25,000 — couldn’t be easily explained because the budget office report didn’t break down its full methodology. “You make a couple of different assumptions and you get wildly different outcomes,” CFIB president Dan Kelly said. The EI premiums for employers and employees are now set at $1.88 for every $100 of employable earnings. That figure is 13 cents higher than it needs to be next year, says Frechette’s report. The gap between the rate and the break-even point grows to 28 cents in 2016. Starting in 2017, the EI premium rate will be cut to $1.47. The report says this rate is actually 13 cents below the break-even point, and 12 cents below it the following year. Starting in 2017, the rate will be set with the target of balancing the fund over a seven-year period. Kelly said his group wants to see EI premiums set at a stable rate, rather than having dips and spikes that create and wipe out jobs. The cause of the EI surplus is that fewer people are qualifying for insurance. The budget office found that this is because of an increase in temporary workers who do not qualify for EI and long-term unemployed who have already exhausted their benefits.
Posted on: Fri, 10 Oct 2014 13:51:10 +0000
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