IRPP COMMENTARY - Building a Package of Compromise Solutions for EI Reform

1.1.2 Generosity Another relatively easy adjustment to make in the near term would be to increase the earnings replacement rate from the current 55 percent to a level closer to the median rate used by industrialized countries (65 percent) or the level previously in place in the EI program (67 percent). [...] 1.2 EI financing To address concerns regarding the increase in premiums associated with the deficit in the EI account and additional costs from modernization, the government could adjust 3 Building a Package of Compromise Solutions for EI Reform the premium-rate-setting formula and inject federal funding into the EI account to cover COVID-related costs. [...] It would: (1) shift the target time frame for the break-even rate from seven to 10 years; (2) limit the decrease in premium rates while the EI account remains in deficit; and (3) inject federal funding into the account to cover the $23.6 billion in pandemic-related extended benefits. [...] 2.2 EI financing Building on the Phase 1 proposal of having the federal government contribute to the EI account to cover the costs of pandemic-related extended benefits, the feder- al government could outline a framework for its ongoing role in contributing to the EI account during periods of recession. [...] These proposals are meant to kickstart a discussion on a broader reimagining of the program that would be more responsive to the changing nature of work and the transition to a low-carbon economy.