Human Resources and Social Development Canada

Human Resources and Social Development Canada
Government of Canada

Government of Canada

November 06, 2006 15:41 ET

Canada Employment Insurance Commission Sets Employment Insurance Premium Rate for 2007

GATINEAU, QUEBEC--(CCNMatthews - Nov. 6, 2006) - 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 that as of January 1, 2007, the employee rate per $100 of insurable earnings will be adjusted to $1.80, a reduction of 7 cents from its current level of $1.87. The corresponding employer rate will be adjusted to $2.52, a reduction of 10 cents from its current level of $2.62. The 2007 EI rate represents a 3.7 per cent decline from the 2006 rate and the thirteenth consecutive rate reduction since 1994, when the employee rate was $3.07. As noted in the Chief Actuary's Report, the maximum insurable earnings will rise from $39,000 to $40,000 for 2007.

The EI premium rate for Quebec will be $1.46 for employees and $2.04 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.

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.

The attached backgrounder provides further details on the role of the EI Commission and the EI premium rate setting.

BACKGROUNDER

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

The 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, each commissioner develops and maintains consultative mechanisms to ensure that they fulfill this mandate. The Commission's chair and vice-chair 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 permanent rate-setting mechanism introduced in 2005, the EI Commission has the legislative authority to set the EI premium rate. On October 13, 2006, the EI Commission made public the Chief Actuary's Report as a first step in this mechanism. The legislative authority requires the EI Commission to set the rate by November 14th.

In determining the rate under the new measures, the EI Commission took 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 2007;

- the Chief Actuary's Report ; and

- any public input.

In addition, there is a legislative requirement that the 2007 employee rate not exceed $1.95. 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 (this equates to a maximum shift in the employer premium of 21 cents).

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 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.

Contact Information

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