Insuring Prosperity : SME Perspectives on the Employment Insurance System
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Insuring Prosperity
SME Perspectives on the Employment Insurance System
September 2009
Ian Dawkins, Policy Analyst (National Affairs)
Introduction
Canada, employing about 55 per cent of Canadians (based on Statistics Canada’s Survey of Employment, Payrolls and Hours 2008). When you take into account the fact that they contribute 1.4 times the premiums their employees do, this makes them the single largest employer-stakeholder group in the EI system today. SMEs employ Canadians in every province and in every sector of the economy, from the retail and service sectors to manufacturing and primary industries. This broad range of industries and employee requirements make SME owners an excellent judge of the efficacy of the EI system.
EI is becoming a more and more important issue for SMEs. In fact, EI is one of the top priorities for CFIB members across the nation. This was highlighted in a survey conducted in the first half of 2009, which found that 48 per cent of CFIB members listed EI reform as a priority for their business, behind only the total tax burden and regulations and paper burden, both of which are also directly related to the EI system.
But why do SMEs care about EI? First, most small- and medium-sized companies are on the smaller end of the size scale. For example, CFIB members employ approximately 12 employees on average. This means that a majority of Canadians are employed in a small business, and likely experience direct, face to face interaction between the business owners and their employees, and this factor cannot be overlooked when talking about employment issues such as the EI system.
Second, when asked to rate which forms of taxation affect the growth of their business the most, SMEs cited payroll taxes as having the biggest impact. This shows the importance of an effective and well-managed EI system to SMEs, and to the wider economy as a whole. Every dollar that comes out of a business for payroll taxes like EI adds a direct cost to employment and growth, which in turn can hurt job creation. As such, every dollar collected in EI premiums must be used as prudently as possible.
