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.