Employment Insurance

November 20, 2009

Between 1998 and 2005, the unemployment rate was low and hence fewer Employment Insurance benefits were paid out by the government. The EI premiums were not lowered to reflect the fewer claims and a surplus began to grow until in 2005 the surplus in the EI fund was over $50 billion. Yes that is correct, over $50 billion! 

Through the Economic Action Plan, the Government of Canada has also implemented measures to support all unemployed Canadians.  These measures include providing nationally five extra weeks of EI regular benefits, increasing the maximum duration of benefits, from 45 t0 50 weeks in regions of high unemployment, protecting jobs through the Work-Sharing program, and freezing EI premiums for 2010 at the same rate as 2009 to provide economic stimulus.  For more information on these measures, please visit:  www.acctionplan.gc.ca

Unlike the previous Liberal government, we recognize that high EI premiums are not good for the economy.  While the Liberals used EI surpluses for political pet projects, our government passed legislation to ensure that EI payments go only where they are supposed to – unemployed workers.  Our law guarantees that EI premiums will not exceed the amount necessary to properly fund EI, because unnecessarily high premiums impede job creation.

The EI program is now running significant deficits, not only due to our decision to temporarily freeze rates, but also because EI claims are naturally increasing during a recession and because of our economic action plan measures to temporarily expand support for the unemployed such as adding an extra five weeks of EI.  We also ensured that EI premiums will never be used as a ‘cash cow’ to fund political priorities as was disgracefully done under the Liberal government. 


In Budget 2008, we passed into law changes that will ensure the following:

1. EI premiums and the EI account can only be used for the EI program;
2. Premiums are not higher than required to pay for benefits over time;
3. That any change in annual EI premiums will be capped at 15 cents per $100 of insurable earnings, preventing wild fluctuations from year-to-year and providing certainty for employers and employees;
4. An independent arm’s-length Crown Corporation – the Canada Employment Insurance Financing Board – would set premiums in support of that mandate.

When our temporary freeze of EI premiums is lifted in 2011, the legislated system approved by Parliament in the Budget will be allowed to work.  The independent board will work to fulfil its mandate, balancing the EI account over time, paying back the deficits incurred by the EI program during the recession.  Again, EI premiums will only be used to cover the benefits and the costs of administering the EI program – nothing else. 

This is why we are spending $12 billion on infrastructure, to make certain our country’s infrastructure is first class, that jobs are created for the unemployed, resulting in increased tax revenues from that new employment. Our current estimates show our “Stimulus Funding” has created or sustained 200,000 jobs resulting in about $2 billion less in EI benefits paid out and billions in tax revenue for government.

The spending by our government is good but it still is a false economy.  As the economy recovers our government will back away and return to balanced budgets and our debt reduction plan.

Colin Mayes MP Okanagan Shuswap