Good News for Employers on EI and WSIB Premiums
Federal Government Lowering Employment Insurance Premiums
The federal government has just announced that it will be lowering Employment Insurance (EI) premiums for small businesses, paid by employers and employees, in an effort to boost hiring at a time of sluggish growth. The government is referring to this premium reduction as the Small Business Job Credit. The freeze is expected to save small businesses more than $550 million over the next two years.
The move comes shortly after Statistics Canada reported a decline of 11,000 jobs in August. Last year, the Parliamentary Budget Officer accused the government of keeping premium rates “higher than necessary” in an effort to balance the books in the short-term.
What does this mean for business? According to the Department of Finance, businesses that pay EI premiums up to $15,000 will be eligible for the break, which reduces the premium from $1.88 to $1.60, per $100 of payroll. That is a drop of 15 percent in EI costs for eligible businesses.
Close to 90 percent of all EI premium-paying businesses in Canada will be eligible for the break. The Canada Revenue Agency will automatically calculate the credit on a business’ return, in an effort to reduce paper burden.
The OCC applauds the federal government’s decision, but continues to advocate for reforms to the EI program, particularly in how benefits are distributed regionally. Because of the program’s current structure, Ontario employers and employees end up subsidizing industries and workers in other provinces, despite the fact that Ontario’s unemployment rate is above the national average. For more information on the OCC’s proposed reforms to the EI program, read the OCC’s report A Federal Agenda for Ontario.
WSIB Premiums Unchanged for Second Year
The Government of Ontario announced that Workplace Safety Insurance Board (WSIB) premium rates would be frozen for a second consecutive year. Only one rate group, Local Government Services, will see an increase in premium rates as a result of expanded coverage for firefighters–an issue that the OCC is tracking closely.
The WSIB also announced that their compensation system is more than 64 percent funded, and will be 80 percent funded by 2022 and 100 percent by 2027. The funding ratio has improved significantly, up from 56.9 percent in 2012.
The OCC is repeating its calls for more competitive business premiums. Despite a steady decline in the frequency of work-related injuries in the province, Ontario’s average employer premium rate is still one of the highest in Canada. This is due largely to the surcharge associated with paying off the WSIB’s unfunded liability, which employers have been forced to absorb as a legacy cost.
For more information, read the OCC’s agenda for WSIB reform, Are We There Yet?.