Government of Canada

Government of Canada

October 29, 2007 19:16 ET

Canada Employment Insurance Commission Sets Employment Insurance Premium Rate for 2008

GATINEAU, QUEBEC--(Marketwire - Oct. 29, 2007) - Acting under legislative authority introduced in 2005 that gives the Canada Employment Insurance (EI) Commission responsibility for setting the EI premium rate, the Commission today announced the 2008 premium rate.

As of January 1, 2008, the employee rate per $100 of insurable earnings will be adjusted to $1.73, a reduction of 7 cents from its current level of $1.80. The corresponding employer rate will be adjusted to $2.42, a reduction of 10 cents from its current level of $2.52. The 2008 EI rate represents a 3.9 per cent decline from the 2007 rate and the fourteenth consecutive rate reduction since 1994, when the employee rate was $3.07. The Maximum Insurable Earnings will rise from $40,000 to $41,100 for 2008 according to the formula prescribed by the Employment Insurance Act and described in the Chief Actuary's Report. The Maximum Insurable Earnings represents the ceiling up to which EI premiums are collected and therefore also the maximum amount considered in an application for EI benefits.

For 2008, the maximum amount a worker earning the maximum insurable earnings or more would contribute for that year would be $711.03 (a reduction of $8.97 from 2007). The maximum amount an employer would contribute related to that employee would be $995.44 (a reduction of $12.56 from 2007). Because EI benefits replace 55 per cent of a claimant's average weekly insurable earnings, up to the Maximum Insurable Earnings, the maximum amount of EI benefits payable also increases to $435 per week from $423 in 2007.

The EI premium rate for Quebec will be $1.39 for employees and $1.95 for employers. Starting in January 2006, this province began offering its own parental benefits, resulting in a saving for the EI program and explaining the difference with the rate for the rest of Canada. This means that in Quebec, the maximum amount a worker earning the maximum insurable earnings or more would contribute for that year would be $571.29 (a reduction of $12.71 from 2007) and the maximum amount an employer would contribute related to that employee would be $799.81 (a reduction of $17.79 from 2007). The maximum amount of EI benefits payable is the same as in the rest of Canada.

The EI Commission is a tripartite organization with representation from business, labour and the Government of Canada that has a series of responsibilities pertaining to the delivery and administration of the EI program, including the setting of the EI premium rate.

This news release is available in alternative formats upon request.

BACKGROUNDER

Role of the Canada Employment Insurance Commission and the Employment Insurance premium rate-setting process

The Employment Insurance (EI) Commission is a tripartite organization with representation from business, labour and the Government of Canada that has a number of responsibilities pertaining to the delivery and administration of the EI program, including setting the EI premium rate.

The Commissioner for Workers and the Commissioner for Employers are appointed by the Governor-in-Council for terms of up to five years. They are mandated to represent and reflect the views of their respective constituencies. Accordingly, both Commissioners develop and maintain consultative mechanisms to ensure that they fulfill this mandate. The Commission's chair and vice-chair positions are held by the Deputy Minister and Associate Deputy Minister of Human Resources and Social Development Canada, and represent the interests of the Government of Canada on issues brought before the Commission.

Under the premium rate-setting mechanism introduced in 2005, the EI Commission has the legislative authority to set the EI premium rate. On October 12, 2007, the Commission made public the Chief Actuary's Report as a first step in the 2008 rate-setting process. The legislative authority requires the EI Commission to set the rate by November 14.

In determining the rate, the EI Commission took the following into account:

- the principle that the premium rate should generate just enough premium revenue during the year to cover the payments expected to be made during 2008;

- the Chief Actuary's Report; and

- public input.

To ensure premium rate stability and limit any negative impact on the business cycle, the maximum yearly change in the employee premium rate is limited to 15 cents per $100 of insurable earnings. This equates to a maximum shift of the employer premium of 21 cents per $100 of insurable earnings, as employers contribute 1.4 times the employee premium.

Under the rate-setting process, the Chief Actuary is required to annually calculate, on a forward-looking basis, the estimated break-even rate for the coming year based on the most current forecast values of the relevant economic variables provided by the Minister of Finance. The forward-looking basis means that surpluses, deficits, and the notional interest credited to the EI Account do not enter into the calculation of the "break-even" premium rate. The Chief Actuary also calculates the Maximum Insurable Earnings for the coming year based on average weekly earnings and in accordance with the formula prescribed in the Employment Insurance Act.

The Government of Canada has the authority to substitute a new rate if it is in the public interest to do so, through an Order-in-Council issued no later than November 30, within the 15 cent-limit specified in the legislation.

Contact Information

  • Human Resources and Social Development Canada
    Media Relations Office
    819-994-5559