Employment Insurance Update by Judith Andrew, EI Commissioner (Employers) Presentation to Canadian Home Builders Association National Education and Training Advisory Committee Ottawa October 28, 2011
Agenda Overview of the EI program, with emphasis on measures used by the construction industry Streamlining employer EI red tape EI Finances, including rate-setting Near term opportunities to have input and key challenges ahead 2
Overview of EI Program Agencies 1940s UI overseen by the Commission, in later years operations mostly delegated to the department (HRSDC) Named EI in 1996, with new focus on promoting employment, work attachment 2008 financing board CEIFB-- established to: 1) set EI premium rates such that revenues and expenditures balance over time and 2) manage a separate account to hold and invest excess premiums 2010 EI Operating Account set up in the accounts of Canada to record all EI credits and charges since 2009 3
Overview of the EI program EI Part 1 benefits EI Part 1 covers regular benefits (temporary financial assistance for job loss through no fault of the employee) and special benefits (sickness, maternity, parental, compassionate) Regular Benefits--need between 420 and 700 insurable hours in the last 52 weeks to qualify; entitlement varies between 14 and 45 weeks, depending on qualifying hours and regional unemployment rate 4
Overview of the EI Program Covering Self-employed The Fairness for the Self-Employed Act: Bill C-56 Effective January 2010, self-employed individuals can opt in for special benefits (maternity, parental, sickness, and compassionate care) Claimant needs one year of premiums (at the employee rate) and $6,000 in self-employed earnings in the calendar year preceding the claim. May need medical certificate for certain claim types. Once benefits have been collected, claimant must continue paying premiums as long as he is self-employed 5
EI Part II--Roles and responsibilities GoC provides the legislative framework and funding for labour market programs and facilitates national labour market policy priorities The Canada Employment Insurance Commission has a legislated mandate to annually monitor and assess: the impacts of changes made by the 1996 EI Act whether expected savings are realized the effectiveness of benefits and assistance provided HRSDC: represented on LMDA Management Committees with P/T officials to ensure the coordination of programs, and reviews P/T annual plans to ensure they meet requirements established under LMDAs produces the Employment Insurance Monitoring and Assessment Report demonstrating results achieved, and monitors effectiveness through evaluations delivers Pan-Canadian programming to support the federal role in labour market policy 6
2011/12 Funding for activities under EI Part II EI Part II Total: $2.17B LMDAs: $1.95B Labour Market Development Agreements have received $1.95B in annual funding since 2000/01* * Under the Economic Action Plan $1B was added over 2 years (2009/10 and 2010/11) Legislated cap of 0.8% of insurable earnings: o EI Part II expenditure authority of $2.17B for 2011/12 represents 0.4% of total insurable earnings Four streams of funding $206.4M: o o o o Pan-Canadian: $222.27M Aboriginal programming Investments in Workplace Skills Supporting Agreements Labour Market Information $15.87M for systems development 7
EI Part II--Employment Benefits for EI eligible clients Programming for current or recent (former) claimants: Skills Development - provides financial assistance to individuals to make their own arrangements to obtain skills for employment Targeted Wage Subsidies - encourage employers to hire persons they would not normally hire Self-Employment - helps individuals start their own businesses Job Creation Partnerships - provide individuals with opportunities to gain work experience leading to ongoing employment Targeted Earning Supplements - encourage unemployed persons to accept employment by offering them temporary financial incentives 8
EI Part II- Support Measures Employment Assistance Services - enable organizations to provide services (e.g. counselling, job search skills) to any unemployed Canadian to support job entry or re-entry Labour Market Partnerships - assist employers, associations and communities to develop strategies to deal with labour force adjustments and to meet human resource requirements Research and Innovation - support activities to identify better ways of helping persons prepare for or keep employment and be productive participants in the labour force 9
What are the impacts of EI Part II? Evaluations of EBSMs required under the terms of LMDAs Summative evaluations have been completed for all P/Ts Findings are in line with international experience in active labour market programs EBSM participation resulted in high levels of client satisfaction and increased skill levels Evidence of modest positive impacts on participants (findings not consistent across all jurisdictions) Skills Development was the most effective in increasing earnings for active claimants Targeted Wages Subsidies was the most effective for increasing employment and earnings for former claimants 10
Streamlining employer EI red tape In support of the government agenda to reduce red tape, Service Canada is working to reduce the burden of completing E-ROEs: Simplifying ROE Web including interactive questionnaire (e.g. wizard) to make the system usage easier for small employers Developing a user-friendly and streamlined online registration solution new online agreement (October 2011) eliminating need for in-person employer visit to Service Canada Centre (2012-13) Improving Employer Services Creation of Employer Contact Centre as a single window for serving employers (June 2011) Strengthen relationships with the employer community Participation in federal government s Red Tape Reduction exercise Build on the successful implementation of Regulation 19(3) which aligned ROE with payroll cycles and eliminated the need to provide employee a paper copy of the ROE 11
EI Finances Program Spending Overview The EI program acts as an economic stabilizer and performs a redistributive role In 2009-10, the EI program provided injected some $22 billion in temporary assistance. Fishing, $0.3 Worksharing, $0.3 Part II, $2.6 Special, $4.3 Regular, $14.5 12
EI Finances Premium Rate History Premium Rate History 13
EI Finances- Premium Reduction Program (PRP) Employers who provide wage-loss replacement coverage to their employees through a short-term disability plan may be eligible to receive a reduction in their EI premiums through the PRP The existence of such coverage reduces the demands on the EI program, and the corresponding premium reduction reflects the savings generated to the EI Operating Account. In 2011, $879 million in premiums are being returned to employers through the PRP Premium reductions under the PRP range from 0.28% to 0.43% 14
EI Finances-Hiring Credit for Small Business Announced in Budget 2011, the Hiring Credit for Small Business is a one-time credit of up to $1,000 based on the increase in an employer's EI premiums paid for 2011 over those paid for 2010 A small business whose total employer's EI premiums paid for 2010 was $10,000 or less and whose total premiums increased in 2011 will be eligible for a credit New credit available to approximately 525,000 employers, reducing their 2011 payroll costs by about $165 million The Canada Revenue Agency will automatically calculate the credit when an eligible employer's 2011 T4 information return is filed, before January 1, 2015 15
EI Finances--Recent Premium Rate Initiatives The Economic Action Plan freeze of premium rates for 2009 and 2010 at $1.73, the lowest level since 1982, provided relief of $9.2 billion to employers and workers over what would have been the case with break-even premiums In the Fall of 2010, the Government acted to limit premium rate changes to 5 cents in 2011 and 10 cents in subsequent years, saving premium payers $1.2 billion in 2011 compared to what the rate would have been The CEIFB is to set the premium rate for the coming year to ensure that at the end of that year: EI revenues and expenditures from January 1, 2009, onwards, balance; and, The $2B reserve is maintained at its target level 16
EI Finances--Projected Premium Rates EI Premium Rate & Cumulative Balance 2.40 24.0 Premium Rate (per $100 earned) 2.20 2.00 1.80 1.60 1.40 18.0 12.0 6.0 0.0-6.0 Cumulative Balance ($ Billions) 1.20 2010 2011 2012 2013 2014 2015 2016 Calendar Year -12.0 Cumulative Balance (Bars) Premium Rate Break-even Rate 17
EI Financing Rate-setting Consultations The Government committed to undertake consultations with individuals and stakeholders on how the EI rate setting mechanism can be further improved to ensure more stable, predictable rates, while also maintaining several key principles: Ensure the program breaks-even over-time; Avoid large cumulative surpluses or deficits; and Maintain transparency in the rate setting process Interested parties can provide submissions to the Parliamentary Secretaries of the Minister of Finance and the Minister of Human Resources and Skills Development Canada until November 30, 2011 at the following address: ei-consultations-ae@fin.gc.ca 18
Near Term Opportunities To Have Input Rate-setting consultations to November 30 Three Pilot Projects sunset Summer 2012 Mandatory EI economic region boundary review in 2013 19
Key challenges ahead Demographic changes (population aging) is a factor in employers shortage of qualified labour (Challenge of integrating all policy levers to encourage work attachment). Demands for more benefits (Calls to eliminate the 2-week waiting period; flatten the entrance requirement at a low 360 hours; increase income replacement from 55%; increase sickness benefit period from 15 to 52 weeks) Addressing inappropriate/overuse of the system (Experience Rating divisive between frequent user sectors, regions, etc.) 20
For additional information Labour Market Development Agreements: http://www.hrsdc.gc.ca/eng/employment/partnerships/labour_mark et_development/index.shtml Employment Insurance Monitoring and Assessment Reports: http://www.hrsdc.gc.ca/eng/employment/ei/monitoring_assessm ent/index.shtml EI Employer Commissioner s site (see also links at left): http://www.hrsdc.gc.ca/eng/employment/ei/ceic/employers.shtml 21