EI financing turns around, surplus forecast for next year
A man looks through jobs at a Resource Canada offices in Montreal, Thursday, April 9, 2009. (Ryan Remiorz / THE CANADIAN PRESS)
Published Friday, September 14, 2012 11:27AM EDT
OTTAWA -- The Crown Corporation that oversees employment insurance says its financing is looking healthy and will show a surplus next year.
The Canada Employment Insurance Financing Board predicts that its revenues will exceed expenditures by $1.3 billion next year and its operating account deficit will fall to $7.6 billion.
The corporation says its premiums for 2013 will rise by five cents to $1.88 for every $100 of insurable earnings for everyone outside Quebec. The Quebec rate will also go up by a nickel to $1.52 for every $100 in insurable earnings.
Meanwhile, the Canada Employment Insurance Commission announced Friday that maximum insurable earnings for 2013 will increase to $47,400 from $45,900.
The adjustments for the premium rates and maximum insurable earnings offset the impact of inflation, which has been running below two per cent in recent months.
The cap on insurable earnings means higher-paid employees will finish paying their annual premiums before the year ends, but EI will cover a smaller portion of their lost income if they become unemployed and begin to draw benefits.
The financing board's report welcomes changes proposed in the Harper government's economic action plan 2012, saying they will improve the stability and predictability of EI rates.
The measures will also limit the tendency to create significant deficits and surpluses in the EI operating account, the report says.
The changes limit annual EI premium rate increases to five cents until the operating account is balanced. Once that account has returned to balance, the premium rate will be set annually on a seven-year break-even rate to ensure that premiums are no higher than needed to pay for the EI program.
After the seven-year rate is set, annual adjustments to the rate will also be limited to five cents.
The report says net expenditures for EI have dropped significantly since 2009 as the number of jobless people shrank.
"2012 marks a turning point in EI financing," said David Brown, chairman of the financing board. "The balance in the EI operating account has turned around and the cumulative deficit is firmly on a downward path. The reduction is estimated at $1.3 billion for 2013."
Brown said the action plan measures will be a boon for the system.
"We believe that the new, seven-year horizon break-even rate, once it will be implemented, will improve the stability and predictability of the EI premium rates," he said.