10 . Rate Setting

Rate setting is the process by which employer and employee contributions to EI are set by government.

There is a formal body charged with setting the EI premium rate, the Canada Employment Insurance Financing Board (CEIFB), but Parliament can and does intervene in the process.

Right now the EI program is required to break even on a year-to-year basis. The problem with this system is that premiums have to increase during periods of high unemployment (periods of economic downturn) to ensure that the program always collects as much as it spends. This makes EI premium collection “pro-cyclical”. It would be much better if rate setting were counter-cyclical—more money collected in good times for use during the bad—rather than the reverse. This would require a truly forward looking, independent body to guide the rate setting process.

Related to this Issue

EI Task Force Consultation Report Back
This report outlines the central themes that emerged through the Task Force’s consultation process.
EI Task Force Consultation Workbook
The workbook is a tool for having your say. It is a fillable pdf document with space to type in answers to questions about how the EI system should work. The deadline for submissions is March 31.
Making EI Work: EI Task Force Discussion Paper
This discussion paper is intended as a general resource for framing the EI Task Force’s work. It begins by describing how the current EI program works.
Take the politics out of Employment Insurance
Right now, despite the creation of the new Canada Employment Insurance Financing Board (CEIFB), the setting of premium rates is still vulnerable to political and partisan influence.
Watch: Rate Setting
TD Economics' Grant Bishop discusses problems with EI entrance requirements and the ways in which the EI program is funded.