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Minister of Finance Jim Flaherty is seen as he stands at the podium during an announcement in Ottawa, Friday October 21, 2011. (Adrian Wyld/Adrian Wyld/The Candian Press)
Minister of Finance Jim Flaherty is seen as he stands at the podium during an announcement in Ottawa, Friday October 21, 2011. (Adrian Wyld/Adrian Wyld/The Candian Press)

Ottawa to slash EI premium hike Add to ...

The Harper government is scaling back plans to raise Employment Insurance premiums on Jan. 1, 2012, responding to public concern that Ottawa needs to change course in the face of rising unemployment.

Under a plan announced last fall by Finance Minister Jim Flaherty, payroll premiums for E.I. were set to rise by 10 cents per $100 of insurable earnings for employees and 14 cents for employers.

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Instead, Mr. Flaherty will announce today in Calgary that the increase will be lowered to five cents for employees and seven cents for employers. That is the same level of increase that the government approved last year that took effect Jan. 1, 2011.

The Harper government has been under pressure for months by opposition parties and the Canadian Federation of Independent Business to act this fall to encourage employment rather than waiting until the budget. The CFIB called Monday on the government to freeze rates at current levels.

Mr. Flaherty’s speech in Calgary will serve as the release of the government’s fall economic update. An embargoed technical briefing for reporters in Ottawa is scheduled to take place Tuesday at Finance Canada.

Statistics Canada reported last week that the Canadian economy lost 54,000 jobs in October, the most since the depths of the recession in February 2009. The news raised Canada’s unemployment rate to 7.3 per cent.

Parliamentary Budget Officer Kevin Page’s latest fiscal forecast predicted the unemployment rate will rise to 8 per cent for 2012 and 2013 before gradually falling back to 7 per cent by 2016.

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