Business and labour groups are watching to see whether employment insurance (EI) rates will fall now that Ottawa is creating an arm's-length Crown corporation to manage EI funds.
But the Tories are showing no signs they will heed requests from the Canadian Taxpayers Federation (CTF), Canadian Federation of Independent Business (CFIB) and other groups to overhaul the often-criticized system.
"I can't imagine that rates are going to increase," says John Williamson, federal director of the Ottawa-based CTF. "The challenge is getting them down so employees and employers are not over-paying into the system."
During this era of increasing labour shortages, the EI system has generated a $54-billion surplus that flowed into federal government revenue. The new Crown corporation is designed to ensure EI funds remain within the program. In addition to setting up the new Crown corporation, the Tories have created a $2-billion EI reserve to make sure the program has sufficient funds in case of a severe economic downturn.
Employers contribute $1.40 for every dollar that employees pay in EI. But the CTF, CFIB and other groups want Ottawa to bring employer and employee contributions on par with each other.
"With these surpluses, this is a good chance to equalize those rates so it's dollar to dollar, and employers aren't being taxed at the higher level," says Williamson.
By law, Ottawa can only raise or lower insurance premiums by 15 cents. Canadian Auto Workers (CAW) union president Buzz Hargrove says premiums should not be lowered.
"Not a penny," says Hargrove. "They've already cut the rates several times. As they've cut benefits and caused workers not to qualify and they've cut the rates, it hasn't benefitted the workers at all."
CAW members have been hit hard by auto-plant closures and shift shutdowns. Many CAW members also work for Air Canada, which is expected to chop as many as 2,000 jobs later this year.
Hargrove says the $54-billion surplus that was generated from EI should be used to increase benefits and create training programs for workers who have to change careers. The union boss also wants employers to continue to pay higher premiums than employees.
"Employers have been laying people off," says Hargrove. "They should pay the lion's share."
But CTF's Williamson says "payroll taxes" like EI are "a job killer" that deter employers from hiring more experienced workers or training new ones.
Meanwhile, the CFIB wants employers to be reimbursed for EI overpayments the way employees are.
"We're looking for more fairness in the way the system is administered," says Laura Jones, the CFIB's Western Canadian vice-president.
"EI premiums have been coming down. That's a good start. But there needs to be a better balance between what employers pay and what employees pay, and the money that goes into EI should be strictly for EI-related programs - core programs - and not getting into other things."
Mark Startup, president and CEO of Retail BC, says he supports the CFIB's call for employers to be eligible for EI benefits.
"I've heard independent retailers complain for years that it seems business owners are not eligible when they work so hard to make contributions and they work very hard on their businesses both as owners and as workers," says Startup.
"When their companies fail or are in transition, it's one of those issues where many of them would scratch their heads a bit and wonder: 'Why is this the case?' " The CTF's Williamson and union leader Hargrove both agree business owners should receive EI benefits, as long as they pay premiums.
"For them, if they run a small business and go out of business, then they don't have any EI, because they're not allowed to pay for themselves," says Hargrove. "If they pay their share and their employees' share, then they should be entitled to EI in case of bankruptcy or going out of business."
But Williamson says he does not believe EI eligibility is a big concern for small-business owners, because they prefer to reduce their payments to government. Like a self-employed professional, a small-business owner would have to pay both the employer and employee portions of EI premiums.
Human Resources and Social Development Minister Monte Solberg was not available for comment on revising the rate scheme, but a ministry spokeswoman referred Business Edge to his statements during his appearance before a standing committee on human resources, social development and the status of persons with disabilities in May.
"Our plan is one that looks to the future and ensures independent decision-making regarding the management of EI funds and making sure that these funds are used only to pay for EI benefits, that premium rates reflect actual program costs and take into account investment returns so that Canadians pay the right premium rates, just sufficient to cover the cost of benefits received; and ensures that the program is on a firm financial footing going forward, well-positioned to withstand changing economic conditions," Solberg told the committee, which includes MPs from all parties.
Business groups and Opposition parties have welcomed the creation of the new Crown corporation. But the CAW's Hargrove opposes it.
"It's a major attack on our support system for workers without a job," says Hargrove. "It takes the responsibility away from the government and gives business too much say in paying EI benefits and rules and regulations."
B.C. Small Business Minister Rick Thorpe, who recently announced his Liberal government will set a zero-net increase on regulations until 2012, says he is willing to lobby Ottawa on EI rate reductions - but says so far, nobody has asked him to.
(Monte Stewart can be reached at monte@businessedge.ca)
