The federal government is raising Employment Insurance (EI) premiums by $1.4 billion despite an earlier proposal that the rates would be “holding steady.”
The Canada Employment Insurance Commission confirmed the hike on Sept. 14, saying it will increase EI premium revenue by $1.4 billion to $30.1 billion starting 2024.
The new rate will be a three-cent increase from the 2023 rate of $1.63. The pre-pandemic rate was $1.58. Premiums for employers will rise to a maximum of $1,469 per worker with the latest change. Higher premiums are needed to cover an $18.8 billion pandemic deficit in the Employment Insurance fund, according to the summary.
‘Holding Steady’
The federal finance department had proposed in Budget 2023 to hold the EI rate at 1.63 percent at least until 2026.“Holding steady at $1.63 in 2024, the EI premium rate will be 15 cents lower than it was between 2013 and 2016 ($1.88),” said the budget, published on March 28.
“The EI premium rate reached its lowest levels in the last twenty-five years in 2019, 2020, and 2021 ($1.58).”
A briefing note obtained by Blacklock’s and published on Aug. 22 indicated that Finance Minister Chrystia Freeland knew that EI premiums would rise weeks before she announced the rates would be “holding steady.”
“Premium rates are expected to continue to increase in 2024 to reach a break even rate that will pay down the costs of the current cumulative deficit in the Employment Insurance Operating Account,” said the Briefing Binder dated Feb. 7, addressed to the deputy prime minister.
“Costs stemming from COVID-19 temporary measures total approximately $23.2 billion.”
As a pandemic relief measure, cabinet implemented a two-year freeze on premiums for both employers and workers.
In September 2022, premiums were raised from $1.58 per $100 of insurable earnings to $1.63.
