Small-business group calls for lower employment insurance premiums

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Canada's influential small-business lobby group is calling on federal parties to support lower employment insurance premiums as a way to boost hiring and support on-the-job training.

In a report to be released Wednesday, the Canadian Federation of Independent Business (CFIB) argues that existing programs like the Canada Job Grant don't help businesses with the cost of informal training. The CFIB recommends that lower EI premiums would be the best way to address the issue.

Canada's sluggish economy is playing a major role in the election campaign so far, as the Conservatives warn against a risky change of course, while the NDP and Liberals say it is time for voters to reject the government's failed policies. Small-business owners are a key source of employment in Canada and also represent a highly coveted block of voters.

While all major federal parties are pledging in the campaign to support small business, they are bitterly divided over the best way to manage the EI program, which is meant to support Canadian workers during temporary periods of unemployment and also funds a wide range of training programs in co-operation with the provinces.

The Conservative government announced a two-year, $550-million Small Business Job Credit in September, 2014, that effectively meant small businesses would have to contribute only $1.60 per $100 of insurable earnings for each employee, rather than the set rate of $1.88.

While the CFIB welcomed that policy and hopes something similar will be extended, critics accused the government of keeping premiums artificially high for workers and larger businesses in order to help Ottawa show a surplus in an election year. Opposition parties criticized the fact that Finance Minister Joe Oliver announced the credit without any government analysis of how many jobs would be created.

CFIB president Dan Kelly said payroll taxes like EI premiums and pension contributions are frequently cited as a main concern of small-business owners. The feedback he's received is that the new Canada Job Grant launched last year is not much use to many small businesses.

The job grant helps to fund off-site training such as a short college course that teaches a specific skill to a new employee. But for small businesses in such sectors as retail or restaurants, training normally involves having a new hire shadow an existing employee for a few days as they learn skills like working the cash register or managing inventory.

Businesses with fewer than 100 employees accounted for 70 per cent of the more than 11 million Canadians who work in the private sector, while only about 10 per cent of private-sector employees work in firms with more than 500 staff, according to a 2013 report by Industry Canada.

"If you've got three employees and you're adding one more, hiring a consultant to come in and do that coaching doesn't make practical sense and sending them to a school also doesn't make sense," said Mr. Kelly, who hopes Wednesday's report will lead to more specific promises from federal parties to support on-the-job training.

"I have no evidence that any of them are going to take us up on that, but we are hoping to have some influence as these plans are shaped," he said. "We pump a ton of money into the formal postsecondary education system and we spend precious little in on-the-job training. The Canada Job Grant has moved us part of the way there, but we think that there's a more comprehensive measure that's needed."

A Conservative party spokesperson noted that the government has promised to cut EI premiums by more than 20 per cent in 2017, and also pointed out that the CFIB praised the Conservatives' 2015 budget. Neither the NDP nor the Liberals have yet made campaign policy announcements on EI. New Democrat MP Malcolm Allen said the party will look at the CFIB report but noted that he has questions as to how informal training would be defined and measured. He also said his party is concerned that fewer and fewer Canadians qualify for EI when they find themselves out of work.

"Why are so few people actually being protected by a system they pay into?" he said. "That's why they call it an insurance program. You pay insurance premiums so that if you need your insurance, you collect it."

Liberal Leader Justin Trudeau said in 2014 that he would support an EI cut for small businesses that make new hires. A Liberal spokesperson would only say Tuesday that the party is committed to keeping business taxes low.