OTTAWA - Employment Insurance (EI) premiums will be cut by 5 cents to $2.20 in 2002. The move won't be much of a benefit to employers though as Canada Pension Plan (CPP) premiums will go up by 40 cents. Overall payroll taxes will increase by 35 cents per employee.

Catherine Swift, President of the Canadian Federation of Independent Business (CFIB), calls the increase an employment creation killer. She went on to say that the current economic downturn would compound the problem further.

"Small business employs half the labour force in this country. Because the nature of the work tends to be more labour intensive, they will be harder hit than big businesses."

Swift also pointed out that while employers and workers will see a gain of about $400 million from the EI cuts, it is small when compared to the EI surplus, which is headed towards $36 billion.

The decision to lower EI premiums, which have been lowered eight times since 1994 when they were $3.07 per $100 of earnings, was part of the 2000 federal Budget. Maximum insurable earnings will remain at $39,000 for 2002.

"The EI program is responding to the needs of Canadians," said Human Resources Development Minister Jane Stewart. "This reduction in premiums, along with recent changes such as enhancing parental benefits, making small weeks a permanent national feature and repealing the intensity rule, make the program even more responsive."

 

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