October 4, 2010
Canadian Construction Association board meeting
EI increase will help construction industry: CCA
Federal Finance Minister Jim Flaherty’s announcement of a limited increase in employment insurance premiums next year will help the construction industry, says the Canadian Construction Association.
“Most construction businesses are small business and we are very pleased that the government has been listening and will reduce the amount of the increase,” said Bill Ferreira, director of government relations and public affairs at CCA. “We believe it is good for the economy and good for small business.”
The new Employment Insurance (EI) rate increase for employees will be five cents for every $100 of earnings, while the employer increase will be seven cents. The federal government estimates that this will save employers and employees $1.2 billion in 2011.
Also, the premium rate cannot exceed $1.78 per $100 insurable earnings, one of the lowest levels since 1982.
Andre Piche, EI commissioner for employers, recently noted at CCA’s board meeting in P.E.I. that EI increases can impact job creation and company competitiveness. CCA concurred that payroll increases can have a detrimental effect on small businesses and business on the whole.
“As we transition away from stimulus, there still is a lot of uncertainty as to what kind of private-sector rebound we are looking at,” explained Ferreira. “Clearly, any type of taxes or payroll taxes, in particular in our industry, could make it more difficult for employers to hold on to staff during that period of uncertainty.”
The maximum increase in subsequent years will be 10 cents per $100 of insurable earnings, a $600 million savings relative to a 15 cent increase. The five cent limit in 2011 followed by the 10 cent limit “strikes a balance” between supporting economic recovery and ensuring the EI program eventually breaks even, noted the federal government.
Flaherty also announced that the government will hold consultations with Canadians concerning how to establish a new EI rate-setting regime. The federal Tories froze EI premiums for 2009 and 2010 to help “maintain the momentum” of Canada’s economic recovery as the country climbed out of the 2008 global recession.
Piche explained to CCA in P.E.I that among the challenges facing the EI program are the demands for more benefits, which include no waiting period, a flat entrance requirement of 360 hours, an increase in income replacement from 55 per cent and an increase in the sickness benefit period from 15 to 52 weeks. He added that a significant cost crunch is ahead and a refocus of the program’s public agenda is needed.
Piche also noted that in 2007 construction paid $1.1 billion in premiums and received $1.4 billion in benefits.
The EI program in 2008-2009 carried an $18.1 billion price tag, of which $14.2 billion went to income benefits. Regular benefits cost $9.5 billion, followed by parental at $2 billion, sickness at $1 billion and maternity at $876.2 million.
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