http://www.cbc.ca/news/background/budget2008/issues-ei.html
Bracing for downturn?
For the past sixteen years, Canada has been having an uninterrupted job growth allowing $54 billion to be stored in the Employment Insurance account. The current Conservative government is preparing for the difficulties ahead caused by the recession in the United States by setting aside $2 billion to quickly help pay any surge in payouts caused by an economic downturn. Also, Ottawa is creating an independent Crown corporation called the Canada Employment Insurance Financing Board (CEIFB) to store future Employment Insurance account surpluses. This act is an attempt by the government to increase the predictability of setting EI premiums and benefits.
In chapter 8 we learn about automatic stabilizers which influence economic conditions. Employment insurance is one of them. The employment insurance takes out money from people’s paychecks and returns it to them in times of unemployment. Since Canada has been having a success in job growth, it is not surprising that Canada has accumulated $54 billion stored in the Employment Insurance account. This money is used as an economic stabilizer by giving money to the unemployed incase there is a sudden spike in job loss. This causes the GDP to decline less than if there were no aid at all.
I think that it is great to know that the Canadian government is prepared to help the country incase there is a downturn in the economy. With $54 billion stored away, any harm caused to the economy by a sudden spike in job reduction can become minimal or even negated. Now people do not have to worry as much about the events in the United States because if they lose their jobs, then they will receive Employment Insurance benefits to help cover them. In the end, it doesn’t affect me directly, but I can see how it will be a huge benefit to others.
1 comment:
I am glad that the Canadian government is working towards damage prevention, not only damage control once the spike in layoffs has already occurred. Not only will this assist those who have been caught in the crossfire of economic conditions, but it will also serve a double purpose in stabilizing the economy by serving as a buffer to the decrease in spending. Fortunately, these measures will also be in place to the workers experiencing mass layoffs in the currently floundering BC lumber industry.
I wonder how much (if not all) the accumulated EI contributions will be used up in this recessionary bout and what percentage of the population will benefit. This question is directly connected to the severity of the recession and will be answered sooner or later as the extent of the economic downturn is revealed.
I also wonder how effective the CEIFB will be in managing EI funds and ensuring that they perpetuate into the future.
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