Study: CFIB fears EI rates will skyrocket in 2011

Small businesses want greater restraint

OTTAWA , Sept. 14 /CNW/ - With Employment Insurance (EI) rates expected to face massive pressure for increases once the current freeze on premium rates is lifted in 2011, the Canadian Federation of Independent Business (CFIB) today issued Insuring Prosperity: SME Perspectives on the Employment Insurance System, a report recommending significant reforms to the system.

"While freezing the EI rate was a very important response to a global recession, it was based on an unemployment rate of 6.5 per cent," said Catherine Swift , president of CFIB, explaining that "unemployment rates could be as high as 9 or 10 per cent by 2011, creating pressure for an immediate rate increase to bridge the gap." Furthermore, there remain some questions as to whether the EI premium rate freeze, now estimated to cost about $10 billion for 2009 and 2010, will ultimately be financed through general government revenues or passed back to the EI system requiring even higher rates in the future.

"Employers and employees have paid over $57 billion in extra EI dollars in good economic times, and this money went into general government revenues. It would be extremely offensive to see premiums go up just as the economy begins to recover to fund higher EI usage today," Swift said. CFIB believes there should be no increase in premiums until the government has returned the entire $57 billion surplus back to the EI fund.

"Selective changes to enhance EI benefits such as reducing or eliminating the waiting period are unlikely to result in a successful restructuring of the program and will probably only harm the overall financial balance of the system. If government wants to make effective changes to EI, it should put a greater emphasis and incentives on workplace training as this will be much more effective in getting people back to work and will better prepare Canada's workforce for the economy of tomorrow," concluded Swift.

CFIB's Insuring Prosperity: SME Perspectives on the Employment Insurance System, is based on the perspective of small- and medium-sized enterprises (SMEs) and examines immediate and future challenges such as helping people get properly trained and back to work as quickly as possible, demographic shifts that will once again result in labour shortages, as well as the potential for substantial premium rate increases once the current freeze on premium rates is lifted in 2011.

To view the full report visit www.cfib.ca.

For further information: To arrange an interview with Catherine Swift, contact Marie-danielle Davis at [phone]