2024 Actuarial report on the employment insurance premium rate

22 August 2023

Commissioners of the Canada Employment Insurance Commission

Dear Commissioners,

Pursuant to section 66.3 of the Employment Insurance Act, I am pleased to submit the 2024 report, which provides actuarial forecasts and estimates for the purposes of sections 4, 66 and 69 of the Employment Insurance Act.

The estimates presented in this report are based on the Employment Insurance provisions and proposed program changes as of 22 July 2023.

Yours sincerely,

Mathieu Désy, FCIA, FSA, CFA
Senior Actuary, Employment Insurance Premium Rate-Setting
Office of the Chief Actuary
Office of the Superintendent of Financial Institutions Canada

1 Executive summary

1.1 Main findings

2024 Employment Insurance Premium Rate Actuarial Report

blank	2024	2023
Maximum insurable earnings (MIE)	$63,200	$61,500
7-year forecast break-even rateMain findings table footnote 1	1.66%	1.74%
Québec Parental Insurance Plan (QPIP) reduction	0.34%	0.36%
Qualified wage-Loss plans: EI savings	$1,290 million	$1,322 millionMain findings table footnote 2
Qualified wage-loss plans: Employer premium reductions	Category 1: 0.23% Category 2: 0.37% Category 3: 0.37% Category 4: 0.41%	Category 1: 0.25% Category 2: 0.39% Category 3: 0.39% Category 4: 0.42%
Employer multiplier: Outside Québec Based on a premium rate of 1.66% in 2024 and 1.63% in 2023	Category 1: 1.263 Category 2: 1.175 Category 3: 1.177 Category 4: 1.155	Category 1: 1.249 Category 2: 1.160 Category 3: 1.163 Category 4: 1.140
Employer multiplier: Québec Based on a premium rate of 1.32% in 2024 and 1.27% in 2023	Category 1: 1.228 Category 2: 1.116 Category 3: 1.119 Category 4: 1.092	Category 1: 1.206 Category 2: 1.092 Category 3: 1.096 Category 4: 1.066
Main findings table footnotes Main findings table note The Employment Insurance (EI) premium rate for 2023 was increased by 0.05% to 1.63% (from 1.58% in 2022), which is the maximum yearly increase in accordance with the EI Act. Should the Commission set the EI premium rate for 2024 at the 7-year forecast break-even rate, it would be equal to 1.66%. Employers pay premiums at the rate of 1.4 times those of employees, prior to any premium reduction granted to employers who sponsor a qualified wage-loss plan. The reduced employer multipliers are shown above. Main findings table footnote 1 This is the rate that would generate sufficient premium revenue during the next 7-year period to pay for the expected expenditures over that same period and to eliminate the projected deficit/surplus that has accumulated in the EI Operating Account as of 31 December of the preceding year. The methodology is explained in Section 3. Return to main findings table footnote 1 Main findings table footnote 2 Revised from $1,345 million in the previous report as it is based on updated earnings data. Return to main findings table footnote 2

These estimates are based on the EI provisions as of 22 July 2023, on the information provided on or before 22 July 2023 by the Minister of Employment and Social Development and the Minister of Finance, and on the methodology and assumptions developed by the Actuary.

Accordingly, a premium rate corresponding to the 7-year forecast break-even rate (1.66%) from 2024 to 2030 would balance out the EI Operating Account at the end of 2030^{Footnote 1}.

Table 1 below shows the status of the EI Operating Account for 2022, as well as its projected evolution for 2023 and 2024. This is based on the capped premium rate of 1.63% for 2023 and on a premium rate for 2024 equal to the 7-year forecast break-even rate (1.66%).

Table 1 Summary of the EI operating account
($ million)

Calendar year	Premium rate	Premium revenue	Expenditures	Annual surplus (deficit)	Cumulative surplus (deficit) 31 December
2022	1.58%	26,798	25,595	1,204	(24,661)
2023	1.63%	28,691	24,268	4,422	(20,239)
2024	1.66%	30,056	28,599	1,458	(18,781)

It is important to note that the figures related to future expenditures and earnings base included in this report are projections, and eventual differences between future experience and these projections will be analyzed and considered in subsequent reports.

1.2 Purpose of the report

This Actuarial Report prepared by the Actuary, Employment Insurance Premium Rate-Setting, is the eleventh report to be presented to the Canada Employment Insurance Commission (Commission) in compliance with section 66.3 of the Employment Insurance Act (EI Act).

The Actuary is a Fellow of the Canadian Institute of Actuaries who is an employee of the Office of the Superintendent of Financial Institutions and who is engaged by the Commission to perform duties under section 66.3 of the EI Act. Pursuant to this section, the Actuary shall prepare actuarial forecasts and estimates for the purposes of calculating the maximum insurable earnings (MIE) under section 4 of the EI Act, the employment insurance (EI) premium rate under section 66 of the EI Act, and the premium reductions under section 69 of the EI Act for employers who sponsor qualified wage-loss plans, and for employees and employers of a province that has established a provincial plan. The actuary shall also, on or before 22 August of each year, provide the Commission with a report that sets out:

• the forecast premium rate for the following year and a detailed analysis in support of the forecast;
• the calculations performed for the purposes of sections 4 and 69 of the EI Act;
• the information provided under section 66.1 of the EI Act; and
• the source of the data, the actuarial and economic assumptions and the actuarial methodology used.

The purpose of this report is to provide the Commission with all the information prescribed under section 66.3 of the EI Act. The Commission shall, on or before 14 September, make available to the public this report along with the summary of this report. More information on the rate setting process along with the inherent deadlines can be found in Appendix A.

1.3 Scope of the report

Recent program changes and announcements are summarized in Section 2.

The methodology used in determining the 7-year forecast break-even rate, including the premium rate reduction for employees and employers of a province that has established a provincial plan such as Québec, and the reduction in employer premiums due to qualified wage-loss plans, is summarized in Section 3.

Section 4 provides an overview of the key assumptions used in projecting insurable earnings and EI expenditures, while Section 5 presents the main results, including the calculation of the 2024 EI 7-year forecast break-even rate and the projection of the EI Operating Account. Sensitivity tests on the main assumptions are outlined in Section 6.

A reconciliation between the 2023 and 2024 EI 7-year forecast break-even rates is presented in Section 7.

Concluding remarks and the actuarial opinion are presented in Section 8 and Section 9, respectively. The various appendices provide supplemental information on the EI program and on the data, assumptions and methodology employed. Detailed information on the calculation of the maximum insurable earnings (MIE) is presented in Appendix C.

1.4 Sensitivity of the 7-year forecast break-even rate

Two of the most relevant assumptions used to determine the 7-year forecast break-even rate are the unemployment rate, which is provided by the Minister of Finance, and the recipiency rate, which is projected by the Actuary.

Section 6 presents the sensitivity tests. They can be summarized as follows:

• a variation in the average unemployment rate of 0.5% over the period 2024-2030 would result in an increase/decrease between 0.06% and 0.07% in the 2024 EI 7-year forecast break‑even rate;
• a variation in the average recipiency rate of 5% over the period 2024-2030 would result in an increase/decrease of about 0.05% in the 2024 EI 7-year forecast break-even rate; and
• a variation in the premium rate of 0.01% of insurable earnings would result in a $1,534 million increase/decrease in the cumulative balance of the EI Operating Account at the end of the 7‑year forecast period.

1.5 Conclusion

This report was prepared by the Actuary in accordance with the relevant legislation.

In accordance with the methodology detailed in the EI Act and the relevant economic data, the 2024 MIE is $63,200.

Should the Commission set the 2024 premium rate at the 7-year forecast break-even rate, the 2024 premium rate would be equal to:

• 1.66% of insurable earnings for residents of all provinces except Québec; and
• 1.32% of insurable earnings for residents of Québec, after taking into account the QPIP reduction of 0.34%.

A reconciliation of the 7-year forecast break-even rate, from 1.74% in the 2023 Actuarial Report to 1.66% in the current report, is shown in Section 7. The decrease between the rate of 1.74% and 1.66% is mainly attributable to a lower initial deficit as of 31 December 2023, an increase in premium contributions due to a higher number of earners and a decrease in the average weekly benefits when compared to the projections from the previous report. These factors more than offset the expected impact from an increase in the unemployment rate in 2024.

The 2024 premium reduction for employers who sponsor qualified wage-loss plans is estimated at $1,290 million.

2 Recent program changes and announcements

2.1 Seasonal claimants

Budget 2023 extended the current temporary seasonal worker measure for a year until October 2024. This measure provides five additional weeks of EI regular benefits, for a maximum of 45 weeks, to eligible seasonal workers in 13 targeted EI economic regions.

2.2 Sickness benefits

Starting on 18 December 2022, the length of sickness benefits was enhanced from 15 to 26 weeks.

2.3 Training benefit

Employment and Social Development Canada indicated that the implementation of the new EI Training Support Benefit (part of the Canada Training Benefit) originally announced in Budget 2019 and proposed to be launched in late 2020 would be delayed. The benefit components are:

• The EI Training Support Benefit, designed to help workers cover their living expenses when they require time off work to pursue training; and
• The EI Premium Rebate for Small Businesses, designed to help offset the upward pressure on EI premiums resulting from the introduction of the new EI Training Support Benefit.

2.4 Other

Budget 2023 announced the following changes:

• Establishment of the EI Board of Appeal, originally announced in 2019, to replace the current EI appeals process under the Social Security Tribunal General Division; and
• Additional funding for the Labour Market Development Agreements (LMDA) for the fiscal year 2023-2024.

3 Methodology

In accordance with subsection 66(1) of the EI Act, the Commission shall set the premium rate each year in order to generate just enough premium revenue during the next seven years to ensure that at the end of this seven-year period, the total of the amounts credited to the EI Operating Account after 31 December 2008 is equal to the total of the amounts charged to that Account after that date. This calculated premium rate is referred to as the 7-year forecast break‑even rate.

Based on relevant assumptions, the 2024 EI 7-year forecast break-even rate is the premium rate that is expected to generate sufficient premium revenue to ensure that at the end of 2030, the EI Operating Account balance is $0. It is therefore based on:

• the projected balance of the EI Operating Account as of 31 December 2023; and
• the projection over a period of seven years of:
  • the earnings base;
  • the EI expenditures;
  • the amount of premium reductions granted to employers who sponsor a qualified wage-loss plan; and
  • the amount of premium reductions granted to employees and employers of a province that has established a provincial plan.

The projected rebate amounts for small businesses related to the new EI Training Support Benefit expected to be launched in 2024 are also considered.

The earnings base represents the total insurable earnings on which salaried employees and their employers pay EI premiums, and the earnings on which self‑employed individuals that opted into the EI program pay EI premiums. Prior to an adjustment to reflect employee premium refunds, the employer portion of the earnings base is equal to 1.4 times the employee portion of the earnings base.

For purposes of determining the 7-year forecast break-even rate, the earnings base and EI expenditures are projected over a seven‑year period.

The base year for the earnings base is 2021, which is the most recent year for which fully assessed T4 slips (Statement of Remuneration Paid) data are available. However, for certain assumptions, the 2022 partially assessed information is used. Complete data for 2022 will not become available until January 2024.

EI benefits are projected from actual 2022 benefits paid (base year) but adjusted based on the first six months of known data for 2023.

The earnings base and EI expenditures are projected from the base year using:

• Data and assumptions provided by the Minister of Employment and Social Development (ESD), including prescribed information as set out in section 66.1 of the EI Act (presented in Table 24, Appendix D);
• Assumptions and forecasts provided by the Minister of Finance in accordance with section 66.2 of the EI Act (presented in Table 25, Appendix D);
• Additional data provided by Service Canada, Employment and Social Development Canada (ESDC) and the Canada Revenue Agency (CRA); and
• Methodology and other assumptions developed by the Actuary.

In accordance with section 69 of the EI Act and related regulations, premium reductions are granted to employers who sponsor a qualified wage-loss plan as well as to employees residing in a province that has established a provincial plan and their employers. In addition, Budget 2019 proposed a Small Business Premium Rebate (related to the new EI Training Support Benefit and expected to be launched in 2024). The expected amounts of these premium reductions and rebate over the next seven years are included in the EI expenditures for purposes of determining the 7-year forecast break-even rate.

EI premiums paid by the employer are equal to the employer multiplier times the premiums deducted by the employer on behalf of its employees. Generally, the employer multiplier is equal to 1.4. However, pursuant to subsection 69(1) of the EI Act, the employer premiums can be reduced through a lower employer multiplier when its employees are covered under one of four types of qualified wage-loss plans which reduce EI special benefits otherwise payable. The 2024 premium reductions for those employers are determined in accordance with subsection 69(1) of the EI Act and related regulations. They are based on the methodology and assumptions developed by the Actuary.

Québec is currently the only province that has established a provincial plan through the Québec Parental Insurance Plan (QPIP) which has been providing maternity and parental benefits to Québec residents since 1 January 2006. In accordance with subsection 69(2) of the EI Act and related regulations, a mechanism to reduce EI premiums paid by Québec residents and their employers was introduced. The 2024 reduction for Québec residents and their employers is determined in accordance with legislation and based on a methodology and on assumptions developed by the Actuary. The reduction is granted through a reduced premium rate. For 2024, this reduction is referred to as the 2024 QPIP reduction.

More information on the methodology used for calculating the 7-year forecast break-even rate and the premium reductions for 2024 is provided in Appendix B.

4 Assumptions

This section provides a brief overview of the main assumptions used in projecting the variables included in the calculation of the 7-year forecast break‑even rate. The section is broken down into two subsections: assumptions related to the projected earnings base and assumptions related to the projected expenditures. More detailed information and supporting data are provided in Appendix D.

4.1 Earnings base

The earnings base is detailed in the denominator of the formula for the 7-year forecast break-even rate and the QPIP reduction developed in Appendix B. The earnings base is comprised of:

• the total insurable earnings on which employers pay EI premiums prior to any adjustment for wage-loss plans or provincial plans;
• the total insurable earnings on which employees pay EI premiums adjusted to reflect employee premium refunds; and
• the earnings on which self‑employed individuals that opted into the EI program pay EI premiums.

The main assumptions used in determining the earnings base are presented in Table 2 below.

Table 2 Assumptions for earnings base

Assumptions	2022	2023	2024	2025	2026	2027	2028	2029	2030
Increase in maximum insurable earnings	7.10%	1.99%	2.76%	3.32%	3.06%	2.82%	2.89%	2.95%	2.73%
Increase in number of earners	6.47%	0.67%	-0.67%	-0.08%	0.14%	0.40%	0.73%	0.74%	0.78%
Increase in average employment incomeTable 2 footnote *	3.57%	3.32%	3.47%	3.24%	3.11%	2.96%	2.92%	2.89%	2.87%
Increase in total employment income	10.27%	4.01%	2.77%	3.16%	3.25%	3.37%	3.68%	3.65%	3.67%
Increase in total insurable earnings	11.75%	3.23%	2.29%	3.23%	3.22%	3.30%	3.66%	3.68%	3.59%
Net transfer of insurable earnings to Québec reflecting the province of residence	0.23%	0.23%	0.23%	0.23%	0.23%	0.23%	0.23%	0.23%	0.23%
Adjustment due to employee premium refunds (% of total insurable earnings)	2.55%	2.55%	2.55%	2.55%	2.55%	2.55%	2.55%	2.55%	2.55%
Increase in covered self-employed earnings
Total	14%	14%	10%	9%	9%	8%	8%	8%	7%
Out-of-Québec residents	15%	14%	10%	9%	9%	8%	8%	8%	8%
Québec residents	12%	12%	8%	8%	8%	7%	7%	7%	7%
Table 2 Footnote Table 2 footnote * Provided by the Minister of Finance. Return to table 2 footnote *

4.1.1 Maximum insurable earnings

The MIE represents the income level up to which EI premiums are paid and up to which EI benefits are calculated and is a key element in determining the earnings base. Section 4 of the EI Act provides details on how to determine the yearly MIE. In accordance with this section, the MIE increases annually based on increases in the average weekly earnings, as reported by Statistics Canada.

The 2024 MIE is equal to $63,200, which represents a 2.8% increase from the 2023 MIE of $61,500. The projected MIE for years 2025 to 2030 are calculated based on estimates of the average weekly earnings provided by the Minister of Finance. Detailed explanations and calculations of the 2024 MIE are provided in Appendix C.

4.1.2 Number of earners

The number of earners and their distribution across income ranges is used to determine the earnings base of salaried employees. The projected number of employees per year, which is based on an average of the number of employees per month, is provided by the Minister of Finance. The total number of earners for a year is higher than the number of employees provided given that the number of earners includes all individuals who had earnings at any time during the year rather than an average per month.

The preliminary number of earners for the year 2022 is set such that the resulting insurable earnings are in line with the expected assessed premiums for 2022, which are derived from the 2022 year-to-date assessed premiums and the 2022 increase in average employment income provided by the Minister of Finance. The projected number of earners from 2023 to 2030 is derived from a regression analysis based on the historical number of earners^{Footnote 2} and number of employees^{Footnote 3}.

The number of earners is expected to increase by 6.47% in 2022 and by 0.67% in 2023. The average annual increase for the following seven years is 0.29%. The projected distribution of earners as a percentage of average employment income is based on the 2021 distribution.

4.1.3 Average and total employment income

The increase in average employment income, combined with the increase in the number of earners, is used to determine the increase in total employment income. The 2021 distribution of the total employment income across income ranges is used to determine the future distribution of total employment income.

The increase in average employment income is provided by the Minister of Finance and is expected to be 3.57% and 3.32% in 2022 and 2023 respectively. The average annual increase for the following seven years is 3.07%.

Based on these increases in average employment income and the expected variations in the total number of earners, the total employment income is expected to increase by 10.27% in 2022 and by 4.01% in 2023. The variation in 2022 is mainly due to the economic recovery from the COVID-19 pandemic. The average annual increase for the following seven years is 3.36%.

4.1.4 Total insurable earnings

The total insurable earnings of salaried employees are equal to the total employment income, up to the annual MIE, earned by a person employed in insured employment. They are used to determine the earnings base for salaried employees^{Footnote 4}.

The earnings base for salaried employees is equal to 2.4 times the total insurable earnings since employee premiums are based on their total insurable earnings and employer premiums are generally equal to 1.4 times the employee premiums, for a combined total of 2.4.

Historical information regarding total insurable earnings is derived from aggregate assessed premiums gathered from T4 slips (provided by CRA) of all salaried employees. For employees with multiple employments in the year, this information is based on the combined total EI premiums. This means that, although insurable earnings of each employment are capped at the MIE, the combined total insurable earnings can exceed the MIE. The adjustment to insurable earnings and the earnings base reflecting multiple employments is captured in the employee premium refund section below.

The expected total employment income capped at the annual MIE for 2022 to 2030 is derived from:

• the 2021 distribution of the total employment income;
• the 2021 distribution of the total number of earners as a percentage of average employment income; and
• the expected increases in these variables.

Based on this methodology, the total insurable earnings, before any adjustment for premium refunds, are expected to increase by 11.75% in 2022 and by 3.23% in 2023. The average annual increase for the following seven years is 3.28%. For 2022, the resulting insurable earnings reflect the year-to-date assessed premiums and related total expected assessed premiums for 2022. The significant increase in 2022 is mainly attributable to the economic recovery from the COVID-19 pandemic.

4.1.5 Split of total insurable earnings due to provincial plan

For the purposes of determining the reduction that applies to residents of a province with a provincial plan, the earnings base for salaried employees must be split between residents of provinces with and without a provincial plan. The only province that currently has a provincial plan is Québec. Therefore, the earnings base for salaried employees must be split based on the province of residence (between out-of-Québec residents and Québec residents).

The information used to derive historical insurable earnings provided by CRA is on a T4 basis and is therefore based on the province of employment. The historical distribution of insurable earnings on a T4 basis shows that the proportion of insurable earnings that relates to employment in Québec generally decreased until 2015; between 2015 and 2021, a slight increase was observed. Based on the historical pattern, it is expected that the proportion of insurable earnings that relates to employment in Québec will reach 22.7% in 2022, and will slightly decrease over the 7-year projection period, but will remain close to 21.5%.

The information on historical assessed premiums provided by CRA includes adjustment payments made between the Government of Canada and the Government of Québec each year to reflect the province of residence rather than the province of employment of each employee. These adjustment payments are the object of an administrative agreement between both parties and can be used as a basis to adjust the distribution of insurable earnings to reflect the province of residence.

The methodology used in adjusting the distribution of insurable earnings based on aggregated adjustment payments was validated against administrative data. The administrative data were provided by CRA and are part of the annual exchange of information between the Government of Canada and the Government of Québec.

Based on information provided by CRA, the net annual transfer of insurable earnings on a T4 basis to reflect the actual province of residence was on average 0.23% of total insurable earnings for the last three years of available data (2019 to 2021) with the transfer of insurable earnings on a T4 basis going to Québec from the rest of Canada. It is assumed to remain at 0.23% of total insurable earnings until 2030.

4.1.6 Employee premium refunds

In general, salaried employees contribute EI premiums on their total insurable earnings in a given tax year up to the annual MIE. However, when filing their tax returns, some employees may exceed the maximum contribution and receive a refund of all or a portion of the EI premiums paid in the year (e.g., employees with multiple employers in the same year and employees with insurable earnings below $2,000). The insurable earnings that are subject to any subsequent premium refund must be excluded from the earnings base.

Given that the data used for projection purposes (T4 slips) include insurable earnings for which premiums may later be refunded, an adjustment must be made to reduce the earnings base. It is important to note that the employer does not receive a refund. Thus, only the employee’s portion of the total earnings base is adjusted, which is reflected in the formulas presented in Appendix B.

The historical data provided by CRA show that the total insurable earnings subject to a subsequent employee refund as a percentage of total insurable earnings is relatively stable. Based on the average for the last five years of available data (2017 to 2021) this percentage is assumed to be 2.55% from 2022 to 2030.

4.1.7 Self-employed earnings

Since 31 January 2010, self‑employed workers may voluntarily opt into the EI program to receive EI special benefits for those who are sick, pregnant or have recently given birth, or are caring for their newborn or newly adopted child(ren) and for those caring for a critically ill or injured family member (family caregiver benefit) or at end-of-life (compassionate care benefit). Although self-employed residents of Québec can access maternity and parental benefits through their provincial plan, they may voluntarily opt into the EI program to access other special benefits.

Self-employed individuals who participate in the EI program contribute premiums based on their self-employed earnings, up to the annual MIE, at the employee rate that corresponds to their province of residence, and there are no employer premium contributions. Therefore, as with the insurable earnings of salaried employees, self-employed covered earnings must be split between out-of-Québec residents and Québec residents.

The increase in self-employed earnings reflects the expected increase in the number of participants and in the average earnings of self-employed individuals.

The projected number of participants is based on historical enrolment information, adjusted to reflect expected future changes in enrolment. The increase in average earnings is assumed to be the same as the one for salaried employees.

Based on this methodology, the covered earnings of all self-employed individuals are expected to increase on average by 8% per year from 2024 to 2030.

4.2 Expenditures

EI Part I benefits are projected from actual 2022 benefits paid (base year) but adjusted based on the first six months of known data for 2023.

Table 3 presents a summary of the key expenditure assumptions used in this report, followed by a short description for each of them. A detailed description of the methodology used to project all benefits is available in Appendix D.

Table 3 Assumptions for expenditures

Assumptions	2022	2023	2024	2025	2026	2027	2028	2029	2030
Increase in labour forceTable 3 footnote 1	1.5%	2.2%	0.9%	0.5%	0.3%	0.6%	0.9%	0.9%	0.8%
Unemployment rateTable 3 footnote 1	5.3%	5.4%	6.2%	6.0%	5.7%	5.7%	5.7%	5.7%	5.7%
Increase in average weekly earningsTable 3 footnote 1	3.1%	3.0%	3.1%	2.9%	2.9%	2.9%	2.9%	2.8%	2.8%
Increase in average weekly benefits	8.1%	3.2%	3.0%	3.1%	3.0%	2.8%	2.9%	2.9%	2.8%
Potential claimants (as a % of unemployed)	53.3%	54.3%	55.5%	57.0%	57.0%	57.0%	57.0%	57.0%	57.0%
Recipiency rate (as a % of potential claimants)	66.8%	62.8%	72.5%	72.5%	72.5%	72.5%	72.5%	72.5%	72.5%
Number of weeks	52.0	52.0	52.4	52.2	52.2	52.2	52.0	52.2	52.2
Percentage of benefit weeks for claimants with insurable earnings above the MIE	45.1%	47.0%	47.2%	47.2%	47.2%	47.2%	47.2%	47.2%	47.2%
Table 3 footnotes Table 3 footnote 1 Provided by the Minister of Finance. Return to table 3 footnote 1

4.2.1 Labour force

The labour force affects most of Part I benefits directly by increasing/decreasing the number of potential claimants. The labour force population is expected to increase from 20.8 million in 2022 to 21.2 million in 2023. The average labour force population between 2024 and 2030 is 21.8 million. This assumption is provided by the Minister of Finance.

4.2.2 Unemployment rate

The unemployment rate affects regular EI benefits directly by also increasing/decreasing the number of potential claimants. The average unemployment rate was 5.3% in 2022 and is expected to increase to 5.4% in 2023 and to 6.2% in 2024. The unemployment rate is then expected to decrease over the following years to reach an ultimate value of 5.7% in 2026. This assumption is provided by the Minister of Finance.

4.2.3 Average weekly earnings

The growth in average weekly earnings on a calendar year basis is used, in conjunction with the increase in the MIE, to project the average weekly benefits. The expected growth in average weekly earnings is 3.0% in 2023 and 3.1% in 2024. The average annual growth for years 2025 to 2030 is 2.9%. This assumption is provided by the Minister of Finance.

4.2.4 Average weekly benefits

The average weekly benefits growth affects EI expenditures directly through a corresponding increase/decrease in Part I expenditures. The average weekly benefits are equal to the benefit payments divided by the number of benefit weeks paid for Part I benefits.

The annual average weekly benefits growth rates are forecasted at 3.2% for 2023 and 3.0% for 2024. The average annual increase for years 2025 to 2030 is 2.9%. The growth rates are generally the same for all benefit types but the regular benefit was impacted differently by the COVID-19 pandemic recovery between years 2022 and 2023. As such, the assumed average weekly benefit growth for the regular benefit for the year 2023 was increased by an additional 3.8%, for a total of 7.0%.

4.2.5 Potential claimants

The EI Program is designed to provide temporary income support to eligible insured persons who have lost their jobs through no fault of their own, such as due to a shortage of work, or as a result of seasonal or mass lay-offs and are available for work. The potential claimants represent the number of individuals or the percentage of unemployed individuals that meet the basic coverage criteria of the EI program. The number of potential claimants as a percentage of unemployed decreased from 65.3% in 2021 to 53.3% in 2022. Based on the experience of the first six months of 2023, it is expected to increase to 54.3% in 2023. Afterwards, it is expected to continue to increase up to 57.0% by 2025. The increase of the ultimate assumption from 55.0% in the previous report to 57.0% in the current report is mainly due to a revision of the data from Statistics Canada. Appendix D presents additional information on the potential claimants’ calculation.

4.2.6 Recipiency rate

The recipiency rate represents the proportion of potential claimants in a given period who are receiving EI regular benefits. It is directly linked to the target population of the EI program (i.e., potential claimants) and does not consider individuals outside the target population of the EI program, such as the long-term unemployed and those who did not contribute to the program in the previous year. The recipiency rate is normally lower than 100% for multiple reasons, including that some potential claimants have not accumulated the required number of insurable hours, while other potential claimants do not apply for benefits, are serving the one-week waiting period, or have exhausted the number of weeks they were entitled to receive and remain unemployed.

The recipiency rate without emergency or temporary measures was estimated to be 91.2% in 2021 and 66.8% in 2022. People having benefited from measures are not considered in the recipiency rate since they were accounted for separately as recipients of these measures. Based on the experience of the first six months of 2023, the recipiency rate is assumed to decrease to 62.8% for the whole year 2023. From 2024 onwards, the recipiency rate is set at 72.5%. The reduction of the ultimate assumption from 75.0% in the previous report to 72.5% in the current report is mainly due to a revision of the data from Statistics Canada.

4.2.7 Number of weeks

EI expenditures are reported in the EI Operating Account on an accrual basis, that is, they are recorded in the period for which they should have been paid, regardless of the delay in processing the payment. Furthermore, EI benefits are paid on a weekly basis, but only weekdays that belong to a particular period are reported in that period.

The number of weeks affects Part I expenditures as benefits are payable for every weekday of the year, regardless of holidays. The number of workdays in a year ranges from 260 days to 262 days. Therefore, an adjustment is included to reflect the number of days benefits are paid in any year. The number of weeks for years 2022 to 2030 ranges between 52.0 and 52.4.

4.2.8 Percentage of benefit weeks for claimants with earnings above MIE

From analyses of administrative data provided by ESDC, 45.1% of benefit weeks for claims that accrued in 2022 were based on insurable earnings above the MIE compared to 37.9% in 2021. Based on partial data for 2023, the proportion of benefit weeks for claimants with insurable earnings above the MIE is assumed to increase to 47.0% in 2023. It is expected to further increase in 2024 up to 47.2% (observed average between 2017 and 2019) and to remain constant thereafter. The lower percentage of claims above the MIE for 2021 and 2022 is mostly due to the COVID-19 pandemic that caused greater unemployment for lower income Canadians.

4.2.9 Other expenditures

Additional information used to project expenditures such as pilot projects and temporary measures, the cost of new program changes, administration costs and employment benefits and support measures (EI Part II benefits) are provided by ESDC.

5 Results

5.1 Overview

This report provides actuarial forecasts and estimates for the purposes of sections 4, 66 and 69 of the EI Act. It has been prepared based on EI provisions as of 22 July 2023, on the information provided by the Ministers of ESD and Finance, and on the methodology and non-prescribed assumptions developed by the Actuary.

The key findings are as follows:

• The 2024 MIE is equal to $63,200, an increase of 2.8% from the 2023 MIE of $61,500.

• The 2024 EI 7-year forecast break-even rate is 1.66% of insurable earnings for residents of all provinces except Québec. The 2023 EI 7-year forecast break-even rate was 1.74% in the previous actuarial report. The decrease between the rate of 1.74% and 1.66% is mainly attributable to a lower initial deficit as at 31 December 2023, an increase in the contributions due to a higher number of earners and a decrease in the average weekly benefits when compared to the projections from the previous report. These factors more than offset the expected impact from an increase in the unemployment rate in 2024.

• The 2024 premium reduction for residents of Québec due to its provincial plan is 0.34%.

• The 2024 premium reduction for employers who sponsor qualified wage-loss plans is estimated at $1,290 million. This translates in premium reductions for employers who sponsor a qualified wage-loss plan corresponding to about 0.23%, 0.37%, 0.37% and 0.41% of insurable earnings for categories 1 through 4 respectively^{Footnote 5}.

• The total earnings base is expected to grow each year from $1,875 billion in 2022 to $2,426 billion in 2030.

• Total expenditures are expected to decrease from $26 billion in 2022 to $24 billion in 2023 before increasing to $29 billion in 2024 and to $33 billion in 2030.

• The EI Operating Account shows a cumulative deficit of $24.7 billion as of 31 December 2022. The projected cumulative deficit as of 31 December 2023 is $20.2 billion.

5.2 Earnings base

EI premiums, prior to any adjustment for wage-loss plans, are determined by the product of the premium rate and the earnings base. The national earnings base is required to determine the 7‑year forecast break-even rate while the earnings base of provinces not offering a provincial plan is required to determine the reduction due to those plans. Since Québec is the only province offering a provincial plan, the earnings base is split between Québec and out-of-Québec residents.

Based on the methodology and assumptions presented in Section 4, Table 4 shows the earnings base for Québec and out-of-Québec residents as well as the total number of earners.

Table 4 Earnings base and number of earners

Calendar year	Earnings base ($ million)			Number of earners (thousands)
	Out-of-Québec	Québec	Total
2021	1,291,411	383,883	1,675,295	20,066
2022	1,445,229	429,454	1,874,683	21,364
2023	1,502,644	432,705	1,935,349	21,507
2024	1,541,117	438,680	1,979,798	21,363
2025	1,594,829	448,978	2,043,807	21,345
2026	1,649,838	459,865	2,109,703	21,374
2027	1,707,541	471,765	2,179,306	21,460
2028	1,772,528	486,545	2,259,073	21,618
2029	1,839,959	502,365	2,342,323	21,778
2030	1,907,988	518,464	2,426,453	21,947

These results are used in the calculation of the 2024 EI 7-year forecast break‑even rate and the 2024 QPIP reduction. A detailed explanation of the methodology and assumptions used to derive the results is available in Appendix D.

5.3 Expenditures

This section examines the expenditures side of the 7-year forecast break-even rate. EI expenditures include Part I (income benefits), Part II (Employment Benefits and Support Measures), administration costs, benefit repayments and bad debts. EI benefits may also include temporary spending initiatives, such as pilot projects and special measures announced by the Government of Canada. A detailed explanation of the methodology and assumptions used to derive the results is available in Appendix D.

For the purposes of the 7-year forecast break-even rate calculation, penalties and interest on overdue accounts receivable are included on the expenditures side of the equation.

Table 5 shows the breakdown of the 2022 EI expenditures, as well as a projection up to 2030.

Table 5 Expenditures
($ million)

Calendar year	Part ITable 5 footnote 1	Part II	Admin costs	Benefit repayments	Bad debt	Penalties	Interest	Total
2022	20,818	2,488	2,691	(406)	47	(20)	(24)	25,595
2023	19,446	2,425	2,681	(255)	70	(62)	(36)	24,268
2024	24,362	2,208	2,499	(431)	82	(78)	(43)	28,599
2025	25,228	2,101	2,092	(437)	87	(81)	(36)	28,955
2026	25,405	2,101	1,969	(434)	89	(81)	(35)	29,015
2027	26,106	2,101	1,953	(444)	91	(84)	(36)	29,688
2028	27,011	2,101	1,949	(460)	94	(86)	(37)	30,573
2029	28,217	2,101	1,949	(482)	98	(90)	(38)	31,755
2030	29,220	2,101	1,949	(499)	102	(94)	(40)	32,740
Table 5 footnotes Table 5 footnote 1 Includes temporary measures between 2020 and 2023 aimed at reducing the impact of the COVID-19 pandemic. Return to table 5 footnote 1

Table 6 shows the breakdown of Part I EI expenditures.

Table 6 Part I expenditures
($ million)

Calendar year	Regular	Fishing	Work-Sharing	Training benefitTable 6 footnote 1	Special benefits
					MP	Sickness	Compas-sionate	Family caregiver benefit	Sub-total	Total
2022	13,223	378	38	nil-	4,996	2,017	53	113	7,179	20,818
2023	11,255	388	23	nil-	5,003	2,581	54	143	7,780	19,446
2024	15,492	402	19	22	5,160	3,066	55	147	8,428	24,362
2025	15,688	413	19	285	5,437	3,179	56	150	8,823	25,228
2026	15,551	426	20	294	5,602	3,299	58	155	9,114	25,405
2027	15,920	438	21	296	5,784	3,428	60	160	9,432	26,106
2028	16,482	448	21	296	5,973	3,564	62	165	9,763	27,011
2029	17,256	463	22	296	6,218	3,726	64	172	10,180	28,217
2030	17,856	476	23	296	6,441	3,883	67	178	10,568	29,220
Table 6 footnotes Table 6 footnote 1 In Budget 2019, the Government of Canada announced a new EI Training Support Benefit. It is expected to be launched in 2024. Return to table 6 footnote 1

5.4 Premium reductions and rebate

The employer premiums can be reduced through a lower employer multiplier when its employees are covered under a qualified wage-loss plan that reduces EI special benefits otherwise payable, provided that at least 5/12 of the reduction is passed on to employees. Premiums paid by employees and their employers can also be reduced when employees are covered under a plan established under provincial law that reduces EI maternity and parental benefits otherwise payable. An agreement must be in place between the Government of Canada and the province to establish a system for reducing premiums paid by residents of that province and their employers.

Budget 2019 announced an EI Small Business Premium Rebate to offset the upward pressure on EI premiums resulting from the EI Training Support Benefit (originally expected to be launched in late 2020, but now postponed to 2024). This rebate is proposed to be available to any business that pays employer EI premiums equal to or less than $20,000 for the 2024 calendar year. Using forecasted calendar year expenditures received from the Minister of ESD, the cost of the EI Training Support Benefit in 2024 (including the administration costs related to this benefit) is expected to represent 1.5 cent (1.45 cents unrounded, or 0.0145%). This cost is included in the 7‑year forecast break-even rate of 1.66%.

Table 7 shows the projection of the expected premium reductions and rebate up to 2030 taken into account in the determination of the 7-year forecast break-even rate. Temporary and permanent measures recently announced are considered in the projection of the premium reductions for qualified wage-loss plans and provincial plans.

Table 7 Premium reductions and rebate
($ million)

Calendar year	Qualified wage-loss plans	Provincial plans	SBPRTable 7 footnote 1
2024	1,290	1,492	26
2025	1,408	1,527	27
2026	1,486	1,564	28
2027	1,737	1,604	29
2028	1,934	1,654	29
2029	2,066	1,708	29
2030	2,184	1,763	29
Table 7 footnotes Table 7 footnote 1 Small Business Premium Rebate; the details of the rebate were not confirmed at the time the report was produced and will still need to be approved through legislation. The projected amounts of the rebate were provided by the Minister of ESD. Return to table 7 footnote 1

5.5 7-year forecast break-even rate

The 7-year forecast break-even rate is the rate that, based on relevant assumptions, is expected to generate sufficient premium revenue during the next seven years to ensure that, at the end of that seven-year period, the amounts credited and charged to the EI Operating Account (EIOA) after 31 December 2008 are equal.

This rate is expected to generate sufficient premium revenue during the 2024-2030 period to pay for the expected EI expenditures over that same period and to eliminate the projected deficit that has accumulated in the EI Operating Account as of 31 December 2023.

The expected amounts of the premium reductions over the next seven years for qualified wage‑loss plans (WLP) and for provincial plans (PP), as well as the Small Business Premium Rebate related to the EI Training Support Benefit expected to launch in 2024 are included in the EI expenditures for purposes of determining the 7-year forecast break-even rate. This ensures that in the absence of wage-loss plans, provincial plans and Small Business Premium Rebate, a premium rate set at the 7-year forecast break-even rate would generate enough revenues to cover all EI expenses for employees of every employer residing in any province.

Table 8 shows the projection of the variables used to determine the 7-year forecast break-even rate. The annual expected pay-as-you-go rates (PayGo) are the rates required to cover the expected expenditures of that year. The 7-year forecast break-even rate is higher than the average PayGo rates since the projected deficit as at 31 December 2023 is considered.

Table 8 Calculation of the 7-year forecast break-even rate
($ million)

Calendar year	Expenditures covered by the 7-year forecast break-even rate					Surplus (deficit) in the EIOA as at 31 December 2023	Earnings base	Annual PayGo rate / 7-year forecast break-even rate (%)
	EI expenditures	Reduction for WLP	Reduction for PP	SBPRTable 8 footnote 1	Total expenditures before reductions and rebate
2024	28,599	1,290	1,492	26	31,407	nil-	1,979,798	1.59%
2025	28,955	1,408	1,527	27	31,917	nil-	2,043,807	1.56%
2026	29,015	1,486	1,564	28	32,093	nil-	2,109,703	1.52%
2027	29,688	1,737	1,604	29	33,058	nil-	2,179,306	1.52%
2028	30,573	1,934	1,654	29	34,190	nil-	2,259,073	1.51%
2029	31,755	2,066	1,708	29	35,558	nil-	2,342,323	1.52%
2030	32,740	2,184	1,763	29	36,716	nil-	2,426,453	1.51%
2024-30	211,325	12,106	11,311	198	234,939	(20,239)	15,340,463	1.66%Table 8 footnote 2
Table 8 footnotes Table 8 footnote 1 Small Business Premium Rebate (related to the EI Training Support Benefit announced in Budget 2019 and proposed to be launched in 2024). Return to table 8 footnote 1 Table 8 footnote 2 The deficit in the EIOA as at 31 December 2023 is used in the calculation of the 7-year forecast break-even rate: (234,939 + 20,239) / 15,340,463 = 1.66%. Return to table 8 footnote 2

Table 9 shows the projection of revenues, EI expenditures, and the account balance using the 7‑year forecast break-even rate and the premium reductions.

Table 9 Projection of the EI Operating Account using the 7-year forecast break-even rate
($ million)

Calendar year	Premium rate (%)	Revenues					Net premiums	Expend- itures	Annual surplus (deficit)	Cumul- ative surplus (deficit) 31 December
		Gross premiums after refunds	Reduction for WLP	Reduction for provincial plans	SBPRTable 9 footnote 1	Other adj.Table 9 footnote 2
2022	1.58%	29,620	(1,186)	(1,632)	nil-	(4)	26,798	25,595	1,204	(24,661)
2023	1.63%	31,546	(1,322)	(1,558)	nil-	24	28,691	24,268	4,422	(20,239)
2024	1.66%	32,865	(1,290)	(1,492)	(26)	nil-	30,056	28,599	1,458	(18,781)
2025	1.66%	33,927	(1,408)	(1,527)	(27)	nil-	30,966	28,955	2,011	(16,771)
2026	1.66%	35,021	(1,486)	(1,564)	(28)	nil-	31,943	29,015	2,928	(13,843)
2027	1.66%	36,176	(1,737)	(1,604)	(29)	nil-	32,806	29,688	3,118	(10,724)
2028	1.66%	37,501	(1,934)	(1,654)	(29)	nil-	33,883	30,573	3,311	(7,414)
2029	1.66%	38,883	(2,066)	(1,708)	(29)	nil-	35,080	31,755	3,325	(4,089)
2030	1.66%	40,279	(2,184)	(1,763)	(29)	nil-	36,303	32,740	3,563	(526)
Table 9 footnotes Table 9 footnote 1 Small Business Premium Rebate. Return to table 9 footnote 1 Table 9 footnote 2 Adjustments for the timing of premium assessment. Return to table 9 footnote 2

The 2024 EI 7-year forecast break‑even rate is 1.66%. This rate would balance out the EI Operating Account at the end of 2030. The cumulative balance in the EI Operating Account at the end of 2030 is not exactly $0 since the 7-year forecast break-even rate is rounded to the nearest cent.

5.6 Québec Parental Insurance Plan (QPIP) reduction for 2024

EI maternity and parental (MP) benefits included in Part I special benefits, as well as direct EI administrative costs incurred to provide MP benefits (variable administrative costs (VAC)), are required to determine the QPIP reduction. VAC represent the direct operating costs incurred by the EI program associated with the administration of EI MP benefits outside Québec. They are determined each year by ESDC in accordance with the agreement between Canada and Québec, which stipulates a minimum VAC amount.

EI MP benefits are projected from the base year 2022 and reflect the impacts of program changes and special measures. The projected EI MP expenditures used to determine the 2024 QPIP reduction are shown in Table 10. They include the cost estimates provided by ESDC for temporary measures.

Table 10 MP expenditures
($ million)

blank	Actual 2022	Forecast
		2023	2024
EI MP benefits	4,996	5,003	5,160
Variable administration costs	37	37	38
MP expenditures	5,033	5,040	5,198

The QPIP reduction is equal to the ratio of EI MP expenditures (EI MP benefits and VAC) to the earnings base of residents of all provinces without a provincial plan, that is, residents of all provinces except Québec. It is the premium reduction for Québec residents as it relates to the savings to the EI Program resulting from the QPIP.

Table 11 shows the estimates of the variables that are required in the calculation of the 2024 QPIP reduction, as well as the resulting 2024 QPIP reduction.

Table 11 Calculation of the QPIP reduction
($ million)

Calculation parameters	2024 Forecast
MP expenditures	5,198
MP earnings base (out-of-Québec residents)	1,541,117
Unrounded QPIP reduction	0.3373%
QPIP reduction	0.34%

Consequently, the premium rate applicable to residents of all provinces except Québec for 2024 would be 1.66%^{Footnote 6}. The premium rate applicable to residents of Québec would be 1.32% (1.66% minus 0.34%).

5.7 Qualified wage-loss plan reductions for 2024

Based on the methodology developed in Appendix B and on the 2024 projected insurable earnings of employees covered by a qualified wage-loss plan, the 2024 estimated reduction in employer premiums due to qualified wage-loss plans is $1,290 million, compared to $1,322 million for 2023.

EI premiums paid by the employer are equal to the employer multiplier times the premiums deducted by the employer on behalf of its employees. Generally, the employer multiplier is equal to 1.4. However, the employer premiums can be reduced through a lower employer multiplier when its employees are covered under one of four types of qualified wage-loss plans.

Table 12 shows the main results. A detailed explanation of the data and methodology used to derive the results is available in Appendix E.

Table 12 Reduction in employer premiums due to qualified wage-loss plans

Wage-loss plan category	Unrounded rate of reduction	Rounded rate of reduction	Employer multiplier (out-of-Québec)Table 12 footnote 1	Employer multiplier (Québec)Table 12 footnote 1	2024 Estimated insurable earnings ($ million)	2024 estimated premium reduction ($ million)
Category 1	0.2268%	0.23%	1.263	1.228	65,560	149
Category 2	0.3743%	0.37%	1.175	1.116	30,939	116
Category 3	0.3706%	0.37%	1.177	1.119	241,377	895
Category 4	0.4065%	0.41%	1.155	1.092	32,282	131
Total	N/A	N/A	N/A	N/A	370,158	1,290
Table 12 footnotes Table 12 footnote 1 The Employer Multipliers shown are based on a 2024 premium rate of 1.66% (1.32% for Quebec residents). Return to table 12 footnote 1

6 Uncertainty of results

The 7-year forecast break-even rate and the subsequent impact on the EI Operating Account (EIOA) depends on different demographic and economic factors. As actual experience over the next seven years will likely deviate from the assumptions presented throughout this report, this section presents individual tests, combined tests, and alternative scenarios for illustration purposes.

6.1 Individual tests

The individual tests illustrate the sensitivity of the 7-year forecast break-even rate to changes in the unemployment rate and the recipiency rate assumptions. Afterwards, the effect of a variation in the premium rate on the EIOA is examined.

6.1.1 Unemployment rate

The unemployment rate is closely related to the state of the economy and the supply of labour. The following table shows that a variation in the average unemployment rate of 0.5% over the period 2024-2030 would result in an increase/decrease between 0.06% and 0.07% in the 2024 EI 7‑year forecast break-even rate (assuming all other assumptions remain constant).

Table 13 Sensitivity of the 7-year forecast break-even rate to the unemployment rate (UR)

Variation in average UR (2024-2030)	Average UR (2024-2030)	Resulting 7-year forecast break-even rate
(1.0%)	4.8%	1.53%
(0.5%)	5.3%	1.60%
Base	5.8%	1.66%
0.5%	6.3%	1.73%
1.0%	6.8%	1.80%

6.1.2 Recipiency rate

The volatility shown by the recipiency rate in the past can be attributed to several factors, such as the decision of those eligible for EI to apply (or not) for the benefit. The following table shows that a variation in the average recipiency rate of 5% over the period 2024-2030 would result in an increase/decrease of about 0.05% in the 2024 EI 7-year forecast break-even rate (assuming all other assumptions remain constant).

Table 14 Sensitivity of the 7-year forecast break-even rate to the recipiency rate (RR)

Variation in average RR (2024-2030)	Average RR (2024-2030)	Resulting 7-year forecast break-even rate
(10.0%)	62.5%	1.56%
(5.0%)	67.5%	1.61%
Base	72.5%	1.66%
5.0%	77.5%	1.71%
10.0%	82.5%	1.76%

6.1.3 Premium rate

As shown in the following table, a variation in the premium rate of one‑hundredth percentage point (0.01% of insurable earnings) from the 7-year forecast break-even rate would result in a $1,534 million increase/decrease in the cumulative balance of the EIOA at the end of the 7‑year forecast period.

Table 15 Sensitivity of the EIOA balance to the 7-year forecast break-even rate

Variation in EI 7-year forecast break-even rate	Resulting EI 7-year forecast break-even rate	Cumulative EIOA balance as at 31 Dec. 2030 ($ million)	Variation in EIOA cumulative balance as at 31 Dec. 2030 ($ million)
(0.05%)	1.61%	(8,196)	(7,670)
(0.01%)	1.65%	(2,060)	(1,534)
Base	1.66%	(526)	- nil
0.01%	1.67%	1,008	1,534
0.05%	1.71%	7,144	7,670

6.2 Combined tests

The combined tests illustrate the sensitivity of the 7-year forecast break-even rate to simultaneous variations in the unemployment rate and the recipiency rate. Increases/decreases in the average unemployment rate and the average recipiency rate, of 0.5% and 5% respectively over the period 2024-2030, would result in a increase/decrease between 0.11% and 0.13% in the 2024 EI 7-year forecast break-even rate (assuming all other assumptions remain constant). If the unemployment rate increases by 0.5% while the recipiency rate decreases by 5% (or vice-versa) it results in a variation of about 0.02% in the 2024 EI 7-year forecast break-even rate.

Table 16 Sensitivity of the 7-year forecast break-even rate to the unemployment rate (UR) and the recipiency rate (RR)

Variation in average UR (2024-2030)	Average UR (2024-2030)	Variation in average RR (2024-2030)	Average RR (2024-2030)	Resulting 7-year forecast break-even rate
(0.5%)	5.3%	(5.0%)	67.5%	1.55%
(0.5%)	5.3%	5.0%	77.5%	1.64%
Base	5.8%	Base	72.5%	1.66%
0.5%	6.3%	(5.0%)	67.5%	1.68%
0.5%	6.3%	5.0%	77.5%	1.79%

6.3 Scenarios

Canada’s macroeconomic outlook remains uncertain and may results in different outcomes than the base scenario assumptions that were used to determine the EI 7-year forecast break-even rate.

Two alternative scenarios are presented in this section to demonstrate some possible impacts from different economic environments relative to the base scenario. These scenarios are for illustration purposes only and might not be considered as internally consistent. As such, the likelihood of these scenarios occurring was not considered.

These scenarios are created by changing various assumptions. For comparison purposes, Table 17 below presents the key assumptions that vary in the alternative scenarios.

Table 17 Assumptions for base scenario

Calendar year	Labour force increase	Unemployment rate	Increase in average employment income	Recipiency rate
2024	0.9%	6.2%	3.5%	72.5%
2025	0.5%	6.0%	3.2%	72.5%
2026	0.3%	5.7%	3.1%	72.5%
2027	0.6%	5.7%	3.0%	72.5%
2028	0.9%	5.7%	2.9%	72.5%
2029	0.9%	5.7%	2.9%	72.5%
2030	0.8%	5.7%	2.9%	72.5%

6.3.1 Moderate shock scenario

Under this scenario, each of the assumptions shown in Table 17 are changed to create pressure over a short-term period on the 2024 7-year forecast break-even rate. This would represent a hypothetical scenario where there is a moderate economic downturn starting in the year 2024 (regardless of the reason for the economic change). As shown in Table 18, the alternative assumptions are assumed to gradually return to the base scenario.

Table 18 Alternate assumptions for the moderate shock scenario

Calendar year	Labour force increase	Unemployment rate	Increase in average employment income	Recipiency rate
2024	(2.3%)	7.0%	2.7%	75.0%
2025	0.4%	6.5%	2.7%	75.0%
2026	0.3%	6.0%	2.9%	74.0%
2027	0.5%	5.7%	2.7%	73.0%
2028	0.9%	5.7%	2.9%	72.5%
2029	0.8%	5.7%	2.9%	72.5%
2030	0.8%	5.7%	2.9%	72.5%

The results of this scenario on the 2024 7-year forecast break-even rate are illustrated in Table 19. The 7-year forecast break-even rate calculated for 2024 would increase from 1.66% in the base scenario to 1.72% in this scenario.

Table 19 Impact of the moderate shock scenario on the 7-year forecast break-even rate
($ billion)

Calendar year	7-year break-even rate (%)	Net premiums	Expenditures	Annual surplus / Deficit on EIOA	Cumulative surplus / Deficit on EIOA (31 Dec.)
2023	N/A	N/A	N/A	N/A	(20.2)
2024	1.72%	30.0	30.2	(0.3)	(20.5)
2025	1.72%	30.8	29.9	0.9	(19.6)
2026	1.72%	31.8	29.0	2.8	(16.9)
2027	1.72%	32.6	28.8	3.9	(13.0)
2028	1.72%	33.7	29.5	4.2	(8.8)
2029	1.72%	34.9	30.5	4.3	(4.5)
2030	1.72%	36.1	31.5	4.6	0.1

6.3.2 High shock scenario

Under this scenario, each of the assumptions shown in Table 17 are changed to create pressure over a short-term period on the 2024 7-year forecast break-even rate. This would represent a hypothetical scenario where there is a severe economic downturn starting in the year 2024 (regardless of the reason for the economic change). As shown in Table 20, the alternative assumptions are assumed to gradually return to the base scenario.

Table 20 Alternate assumptions for the high shock scenario

Calendar year	Labour force increase	Unemployment rate	Increase in average employment income	Recipiency rate
2024	(6.9%)	9.5%	2.0%	77.5%
2025	0.4%	8.5%	2.2%	77.5%
2026	0.2%	7.5%	2.6%	76.5%
2027	0.5%	7.0%	2.5%	75.5%
2028	0.8%	6.5%	2.9%	74.5%
2029	0.8%	6.0%	2.9%	73.5%
2030	0.8%	5.7%	2.9%	72.5%

The results of this scenario on the 2024 7-year forecast break-even rate are illustrated in Table 21. The 7-year forecast break-even rate calculated for 2024 would increase from 1.66% in the base scenario to 1.94% in this scenario.

Table 21 Impact of the high shock scenario on the 7-year forecast break-even rate
($ billion)

Calendar year	7-year break-even rate (%)	Net premiums	Expenditures	Annual surplus / Deficit on EIOA	Cumulative surplus / Deficit on EIOA (31 Dec.)
2023	N/A	N/A	N/A	N/A	(20.2)
2024	1.94%	31.5	35.4	(3.9)	(24.1)
2025	1.94%	32.4	34.0	(1.6)	(25.7)
2026	1.94%	33.5	31.9	1.7	(24.0)
2027	1.94%	34.5	31.1	3.3	(20.7)
2028	1.94%	35.8	30.5	5.3	(15.4)
2029	1.94%	37.2	30.0	7.2	(8.2)
2030	1.94%	38.7	29.9	8.8	0.6

7 Reconciliation of changes in the 7-year forecast break‑even rate

The main elements of change in the 7-year forecast break-even rate since the 2023 Actuarial Report are presented in Table 22.

Table 22 Reconciliation of changes in the 7-year forecast break-even rate

blank	7-Year Forecast Break-Even Rate (%)
2023 Actuarial Report - After Rounding	1.74
2023 Actuarial Report - Before Rounding	1.7433
Higher than Projected EI Operating Account as at 31 December 2022	(0.0176)
Change in Unemployment Rate Assumptions	0.0130
Changes in Economics - Earnings Base	(0.0222)
Changes in Economics - Expenditures	(0.0328)
Updated Cost for Program Changes	(0.0004)
Change in 7-year period (2023-2029 to 2024-2030)	(0.0196)
2024 Actuarial Report - Before Rounding	1.6636
2024 Actuarial Report - After Rounding	1.66

The actual 2022 expenditures were lower than projected in the 2023 Actuarial Report. This resulted in a decrease in the cumulative deficit of the EI Operating Account, i.e., $24,661 million compared to the projected deficit of $27,255 million. This decreased the 7‑year forecast break-even rate by almost 2 cents.

As shown in the sensitivity test section, the unemployment rate assumption has a significant impact on the 7-year forecast break-even rate. In comparison with the 2023 Actuarial Report, the unemployment rate assumption was revised upward, from 5.7% to 5.8% on average for the 2023-2029 period. This increased the 7-year forecast break-even rate by about 1 cent.

The higher projected earnings base, mainly due to a higher expected increase in the number of earners than previously estimated in the 2023 Actuarial Report, decreased the 7-year forecast break-even rate by about 2 cents.

The lower projected expenditures, mainly due to lower projected average weekly benefits than previously estimated in the 2023 Actuarial Report, decreased the 7-year forecast break-even rate by about 3 cents.

Finally, revisions to the expenditures estimates for program changes (i.e., Pilot Projects/Special Temporary Measures and Permanent Measures) did not significantly impact the 7-year forecast break-even rate.

Overall, the 7-year forecast break‑even rate decreased from 1.74% in 2023 to 1.66% in 2024.

8 Conclusion

This report was prepared by the Actuary in accordance with the relevant legislation and provides to the Commission the forecasts and estimates for the purposes of sections 4 (MIE), 66 (EI premium rate) and 69 (employers who sponsor qualified wage-loss plans and premium reductions for Québec residents and their employers) of the EI Act.

In accordance with the methodology detailed in the EI Act and the relevant economic data, the 2024 MIE is $63,200. In addition, the 2024 estimated employer premium reduction due to qualified wage-loss plans is $1,290 million, and the 2024 QPIP reduction is 0.34%.

Based on the assumptions of the relevant economic and demographic variables provided by the Minister of Finance, on the expenditure estimates provided by the Minister of ESD, and on the methodology and other assumptions developed by the Actuary, the 7-year forecast break-even rate that would generate sufficient premium revenue to cover the expected cost of the EI program for the period 2024-2030 and eliminate the projected $20.2 billion cumulative deficit in the EI Operating Account as of 31 December 2023, is 1.66% of insurable earnings.

Should the Commission set the 2024 premium rate at the 7-year forecast break-even rate, the 2024 premium rate would be equal to:

• 1.66% of insurable earnings for residents of all provinces except Québec; and
• 1.32% of insurable earnings for residents of Québec, after taking into account the QPIP reduction of 0.34%.

9 Actuarial opinion

In our opinion, considering that this report was prepared pursuant to the Employment Insurance Act:

• the data on which this report is based are sufficient and reliable for the purposes of this report;
• the assumptions are appropriate for the purposes of this report; and
• the methods employed are appropriate for the purposes of this report.

Based on the results of this valuation, we hereby certify that the 7-year forecast break-even rate required to generate sufficient premium revenue to cover the expected cost of the EI program over the period 2024-2030 and eliminate the projected cumulative deficit in the EI Operating Account as of 31 December 2023, is 1.66% of insurable earnings.

This report has been prepared, and our opinions given, in accordance with accepted actuarial practice in Canada.

The estimates presented in this report are based on prescribed information provided by the Minister of Employment and Social Development and the Minister of Finance.

As of the date of the signing of this report, we have not learned of any subsequent events that would have a material impact on the 2024 7-year forecast break-even rate presented in this report.

Mathieu Désy, FCIA, FSA
Senior Actuary, Employment Insurance Premium Rate-Setting

Marie-Pier Bernier, FCIA, FSA

Thierry Truong, FCIA, FSA

Ottawa, Canada
22 August 2023

Appendix A Summary of EI legislation

The Unemployment Insurance program was first implemented in 1940, with the last major reform occurring in 1996. At that time, the name of the program was changed from “Unemployment Insurance” to “Employment Insurance” to reflect the program’s primary objective of promoting employment in the labour force and to better emphasize that individuals’ access to the program is linked to significant workforce attachment.

The EI program provides temporary income support to individuals who have lost their employment through no fault of their own or are unable to work due to specific life circumstances. This Appendix provides a brief overview of the EI program.

Temporary measures, as well as future permanent changes, if any, not yet in effect are not shown in this Appendix; they are summarized in Section 2 and considered in the results presented in this report. It is important to note that the temporary measures currently in place take precedence over some of the normal program provisions described below.

A.1 EI Part I benefits

Although access and entitlement to benefits vary depending on each benefit type, the calculation of weekly benefit rates is the same for most benefit types. Weekly benefits are generally equal to 55% of the claimants’ average weekly insurable earnings, during their variable best weeks over the qualifying period (generally 52 weeks), up to a maximum amount. The number of best weeks taken into account is determined by the regional unemployment rate and varies from 14 to 22 insurable earnings weeks. The maximum amount payable is determined by the MIE.

The EI family supplement provides additional benefits to low-income families with children. The family supplement rate is based on the net family income up to a maximum of $25,921 per year and the number of children in the family and their ages. The family supplement may increase benefits up to 80% of average weekly insurable earnings.

Benefits are not paid until claimants have served a waiting period of one week of unemployment.

To stay connected to the labour market and earn some additional income, EI claimants can work while they are on claim. This measure is available to those collecting regular, fishing, maternity, parental, sickness, compassionate care, or family caregiver benefits. Claimants can keep 50 cents of their EI benefits for every dollar they earn, up to a maximum of 90 per cent of the weekly insurable earnings used to calculate their EI benefit amount.

A.1.1 Regular benefits

EI regular benefits are provided to eligible insured persons who have lost their jobs through no fault of their own (for example, due to a shortage of work, seasonal or mass lay-offs) and are available for and able to work but can’t find a job.

To qualify for regular benefits, individuals must have been without work and without pay for at least seven consecutive days. Claimants must have worked at least the minimum required hours of insurable employment, between 420 and 700 hours, as determined by the regional unemployment rate, in the last 52-week qualifying period or since their last claim, whichever is shorter. The number of insurable hours required to qualify is increased in cases of violations regarding prior EI claims. Claimants must also be available and actively looking for work in order to maintain eligibility.

The maximum number of regular benefit weeks varies from 14 to 45 weeks, depending on the number of insurable hours accumulated in the qualifying period and the regional unemployment rate. In certain circumstances, the maximum duration of benefits can be extended through temporary special measures.

A.1.2 Fishing benefits

EI provides fishing benefits to qualifying self-employed fishers who are actively seeking work. Unlike regular EI benefits, eligibility for EI fishing benefits is determined by the claimant's insurable fishing earnings accumulated during the qualifying period, not the number of hours worked. A self‑employed person engaged in fishing who has earned a minimum of between $2,500 and $4,200 (depending on the regional unemployment rate) during the maximum 31‑week qualifying period is eligible to receive up to 26 weeks of EI fishing benefits.

A.1.3 Work-Sharing benefits

To avoid lay-offs due to a temporary reduction in the normal level of business activity that is beyond the control of the employer, employers and employees can enter into a Work-Sharing agreement with the Commission through Service Canada to provide EI benefits to eligible workers willing to work a temporarily reduced work week. This enables employers to retain staff and adjust their work activity during temporary work shortages, as well as avoid the expenses of hiring and training new staff once business levels return to normal. Employees are able to retain their skills and jobs while receiving EI benefits for the days that they do not work.

Work-Sharing agreements have a minimum duration of 6 weeks and a maximum of 26 weeks, with a possible extension of up to 12 weeks for a maximum duration of 38 weeks. From time to time, the maximum duration of Work-Sharing agreements may be extended through temporary special measures.

A.1.4 Special benefits

To qualify for special benefits, the claimant's normal weekly earnings must be reduced by over 40% for at least one week. In addition, special benefits require a minimum of 600 hours of insurable employment in the 52-week qualifying period. Special benefits include:

• Maternity benefits, for people who are away from work because they are pregnant or have recently given birth. These benefits can be paid for a maximum of 15 weeks. They can start as early as 12 weeks before the expected date of birth and can end as late as 17 weeks after the actual date of birth.

• Parental benefits, for a parent to take care of their newborn or newly adopted child(ren). Parents may share the available weeks of parental benefits. There are two options available:

  • Standard parental benefits can be paid for a maximum of 40 weeks at 55% of the claimant’s average weekly insurable earnings (up to a maximum) and must be claimed within a 52-week period (12 months) after the week the child was born or placed for the purpose of adoption. As no parent can access more than 35 weeks, sharing parental benefits is required to access the additional weeks.

  • Extended parental benefits can be paid for a maximum of 69 weeks at 33% of the claimant’s average weekly insurable earnings (up to a maximum) and must be claimed within a 78-week period (18 months) after the week the child was born or placed for the purpose of adoption. As no parent can access more than 61 weeks, sharing parental benefits is required to access the additional weeks.

• Sickness benefits, for people who are unable to work due to illness, injury or quarantine. These benefits can be paid for a maximum of 26 weeks (on or after 18 December 2022).

• Compassionate care benefits, for people who take a temporary leave from work to provide end-of-life care or support for a family member who has a significant risk of death in the next 6 months. These benefits can be paid for a maximum of 26 weeks, which can be shared among eligible family caregivers.

• Family Caregiver Benefit for Children, for family members who must be away from work to care for or support a critically ill or injured person under 18. This benefit can be paid for a maximum of 35 weeks, which can be shared among eligible family caregivers.

• Family Caregiver Benefit for Adults, for family members who must be away from work to care for or support a critically ill or injured person 18 or over. This benefit can be paid for a maximum of 15 weeks, which can be shared among eligible family caregivers.

Since 2006, the Province of Québec has been responsible for providing maternity and parental benefits to residents of Québec through the QPIP. All other types of EI benefits remain available to residents of Québec.

Self-employed fishers can qualify for special benefits with fishing earnings of $3,760 or more during the 31-week qualifying period.

Self-employed Canadians voluntarily enter into an agreement with the Commission through Service Canada to contribute EI premiums and access EI special benefits. They must be registered for at least one year prior to claiming benefits and their self-employment earnings must meet the minimum self-employment eligibility threshold in the year preceding the claim.

Self-employed residents of Québec entering into an agreement with the Commission cannot access EI maternity and parental benefits, as maternity and parental (including adoption) benefits are already payable through QPIP, but can access sickness, compassionate care, and family caregiver benefits.

A.2 EI Part II benefits

Part II of the EI Act includes Employment Benefits and Support Measures, which are labour market programs and services established to help Canadians find and keep employment and to develop a labour force that meets the current and emerging needs of employers. These programs are delivered mostly by provincial and territorial governments through Labour Market Development Agreements.

A.3 Financing

The EI program is financed by contributions from employees and employers, via premiums paid on insurable earnings up to the MIE. Employee premiums apply to insurable earnings, up to the MIE. However, the EI program has specific provisions for contributors who are unlikely to qualify for benefits, e.g., employees with insured earnings of less than $2,000 are entitled to a refund of their EI premiums when they file an income tax return.

In addition, in accordance with subsection 69(2) of the EI Act and related regulations, a mechanism to reduce EI premiums paid by Québec residents and their employers was introduced. The reduced premium rate reflects the savings to the EI program due to the existence of the QPIP.

Since 31 January 2010, self-employed individuals may voluntarily opt into the EI program to receive EI special benefits. Self-employed individuals pay the same EI premium rate as salaried employees but are not required to pay the employer portion of premiums, as they do not have access to EI regular benefits.

Employers pay premiums at the rate of 1.4 times those of employees. Employers bear a higher overall share of program costs based on the principle that they have more control over layoffs. However, in accordance with subsection 69(1) of the EI Act, employers who sponsor a qualified wage-loss plan which reduces the EI special benefits otherwise payable receive a premium reduction if they meet the requirements set out by the Commission. In such cases, the employer pays premiums at a rate that is lower than 1.4 times those of employees, and a portion of those savings must be returned to their employees.

A.4 Premium rate

In accordance with subsection 66(1) of the EI Act, the Commission shall set the premium rate for each year in order to generate just enough premium revenue to ensure that, at the end of the seven-year period that commences at the beginning of that year, the total of the amounts credited to the EI Operating Account after 31 December 2008 is equal to the total of the amounts charged to that Account after that date. This calculated premium rate is referred to as the 7-year forecast break-even rate. In accordance with subsection 66(7), the premium rate is limited to an annual increase or decrease of 0.05%.

Legislative framework

The EI Act includes the following dates by which various responsibilities related to the setting of the EI premium rate must be met.

22 July

The Minister of Employment and Social Development (ESD) shall provide to the Actuary and the Commission the information prescribed in subsection 66.1(1) of the EI Act.

The Minister of Finance shall provide to the Actuary and the Commission the information prescribed in subsection 66.2(1) of the EI Act.

22 August

In accordance with section 66.3 of the EI Act, the Actuary shall prepare actuarial forecasts and estimates for the purposes of sections 4, 66 and 69 of the EI Act, and shall provide the Commission with a report that sets out:

• the forecast premium rate for the following year and a detailed analysis in support of the forecast;
• the calculations performed under sections 4 and 69 of the EI Act;
• the information provided under section 66.1 of the EI Act; and
• the source of the data, the actuarial and economic assumptions and the actuarial methodology used.

31 August

The Commission shall provide the Ministers of ESD and Finance with the report referred to in section 66.3 and a summary of that report.

14 September

The Commission shall set the premium rate for the following year and make available to the public the report referred to in section 66.3 of the EI Act and a summary of that report. After the premium rate is set and the report and its summary are made available to the public, the Minister of ESD shall cause them to be laid before each House of Parliament on any of the next 10 days during which that House is sitting.

30 September

The Governor in Council may substitute a premium rate for the following year that is different from the one set by the Commission, if it is considered to be in the public interest. Additionally, it may set the premium rate for the following year if the Commission has not done so by September 14. The Governor in Council must set the premium rate based on the joint recommendation of the Ministers of ESD and Finance.

Appendix B Premium calculation methodology

B.1 Premium rate

Based on relevant assumptions and prior to any limit to the annual change in the premium rate, the 7-year forecast break-even rate for 2024 is the premium rate that is expected to generate sufficient premium revenue to ensure that at the end of 2030 the amounts credited and charged to the EI Operating Account after 31 December 2008 are equal. It is therefore based on the projected balance of the EI Operating Account as of 31 December 2023 and the projection over a period of seven years (2024-2030) of both the earnings base and EI expenditures.

The earnings base represents the total insurable earnings on which salaried employees and their employers pay EI premiums, and the earnings on which self‑employed individuals that opted into the EI program pay EI premiums. The employer portion of the earnings base for salaried employees is equal to 1.4 times the employee portion of the earnings base for salaried employees, prior to the adjustment to reflect employee premium refunds.

Premium reductions are granted to employers who sponsor a qualified wage-loss plan as well as to employees residing in a province that has established a provincial plan and their employers. The expected costs of these premium reductions over the next seven years are included in the EI expenditures for purposes of determining the 7-year forecast break-even rate. More information on these premium reductions as well as the methodology used for calculating the applicable reductions for 2024 are provided in subsections B.2 (wage-loss) and B.3 (provincial plan).

For purposes of determining the 7-year forecast break-even rate, the earnings base and EI expenditures are projected over a seven-year period using the expected growth rates in the relevant economic and demographic variables applied to the base year, i.e., the last year for which complete data are available. The base year for the earnings base is 2021, which is the most recent year for which fully assessed T4 data are available. However, for certain assumptions, the 2022 partially assessed information is used. Complete data for 2022 will not become available until January 2024. EI benefits are projected from actual 2022 benefits paid (base year) but adjusted based on the first six months of known data for 2023.

The earnings base and EI expenditures are projected from the base year using:

• Data and assumptions provided by the Minister of ESD, including prescribed information as set out in section 66.1 of the EI Act;
• Assumptions and forecasts provided by the Minister of Finance in accordance with section 66.2 of the EI Act;
• Additional data provided by Service Canada, ESDC, and the Canada Revenue Agency (CRA); and
• Methodology and other assumptions developed by the Actuary.

The 7-year forecast break-even rate is calculated such that the sum of expected revenues from insurable and self-employed covered earnings over the next seven years and the EI Operating Account balance as of 31 December 2023 are equal to the expected EI expenditures over the same period. For this purpose, the expected EI expenditures include the expected amount of premium reductions granted to employers who sponsor a qualified wage-loss plan as well as to employees residing in a province that has established a provincial plan and their employers.

The expected EI expenditures are comprised of:

• Direct program expenditures, including:
  • EI Part I benefits, net of benefit repayments that apply in certain situations (e.g., if a claimant’s income for a tax year exceeds 1.25 times the annual MIE, the claimant may be required to repay a portion of benefits received);
  • EI Part II benefits, that is, employment benefits and support measures;
  • Additional benefits paid through various pilot projects and special measures;
  • Administration costs; and
  • Other costs such as bad debt expense, net of penalties and interests recovered from claimants.
• Premium reductions granted to employers who sponsor qualified wage‑loss plans;
• Premium reductions granted to employees residing in a province that has established a provincial plan and to their employers; and
• Premium rebate granted to small businesses related to the new EI Training Support Benefit expected to be launched in calendar year 2024. The details of the rebate still need to be confirmed through legislation.

The expected revenues are comprised of:

• Employer premiums paid on behalf of salaried employees over the next seven years prior to premium reductions and rebate;
• Employee premiums over the next seven years for earnings included in insured employment of salaried employees, net of refunds that apply in certain situations (e.g., insurable earnings below $2,000, over contributions due to multiple employments in the year) and prior to premium reductions for provincial plans; and
• Employee premiums over the next seven years for self-employed individuals who voluntarily opted into the EI program prior to premium reductions for provincial plans.

Depending on the projected cumulative balance in the EI Operating Account as at 31 December 2023, the 7-year forecast break-even rate could either increase or decrease. For 2024, given that the projected EI Operating Account as of 31 December 2023 is projected to be in deficit, the amortization of the projected EI Operating account balance increases the 7-year forecast break-even rate.

The formula for calculating the 7-year forecast break-even rate is developed as follows:

A description of the assumptions used in projecting the variables included in the above formulas is provided in Section 4 of the main report, with additional supporting information provided in Appendix D.

B.2 Reduction in employer premiums due to qualified wage-loss plans

Generally, EI premiums paid by the employer are equal to 1.4 times the premiums deducted by the employer on behalf of the employee, referred to as the employer multiplier. However, pursuant to subsection 69(1) of the EI Act, the employer premiums can be reduced through a lower employer multiplier when its employees are covered under a qualified wage-loss plan which reduces EI special benefits otherwise payable, provided that at least 5/12 of the reduction is passed on to the employees.

In accordance with sections 63, 64, 65 and 66 of the Employment Insurance Regulations (EI Regulations), there are four distinct categories of qualified wage-loss plans, and a separate rate of reduction, expressed as a percentage of insurable earnings, is calculated annually for each category. These rates of reduction are then converted into reduced employer multipliers for each category and applicable premium rate. The principle in determining the rates of reduction is that the EI program is paying lower sickness benefits due to the presence of qualified wage-loss plans, and that these savings to the EI program should be passed on to the employers who sponsor these plans and their employees. For administrative simplicity, the full premium reduction is provided to the employer who is then responsible for returning the employees’ portion of the reduction to them.

As discussed in the previous subsection, the projection over seven years of the reduction in employer premiums due to qualified wage-loss plans is taken into account in the determination of the 7-year forecast break-even rate. For this purpose, it is viewed as a cost to the EI program and included in the numerator of the 7-year forecast break-even rate calculation. However, the cost to the EI program of granting premium reductions to employers with qualified wage-loss plans is offset by the savings to the EI program generated by lower EI sickness benefits due to the existence of qualified wage-loss plans. In addition to determining the 7-year forecast break-even rate, one of the purposes of this report is to determine the reduction in employer premiums due to qualified wage‑loss plans that will apply for 2024. The remainder of this subsection provides summarized information on this.

The methodology to calculate the rates of reduction applicable for 2024 is prescribed in section 62 of the EI Regulations. Pursuant to this section, the employer’s premium rate shall be reduced by the percentage by which the first payer cost ratio in respect of all insured persons exceeds the experience cost ratio in respect of insured persons covered by a qualified wage-loss plan of that employer’s category. The formula used in determining the rate of reduction of each category is provided below:

First-payer cost (FPC) ratio

The FPC ratio, which is identical for all insured persons and categories, represents the average estimated job-attached^{Footnote 7} EI sickness benefits that would have been paid if benefits payable under a group sickness or disability wage-loss indemnity plan or paid sick leave plan were disregarded for purposes of determining benefits otherwise payable to persons under the EI Act. It is expressed as a percentage of average insurable earnings for all insured persons. The FPC for each year is determined by multiplying the hypothetical number of first payer job-attached EI sickness benefit weeks by the average weekly sickness benefits that would apply in such circumstance.

For the purposes of calculating the 2024 rates of reduction, the FPC ratio is equal to the average of the FPC for the years 2020 to 2022, divided by the average insurable earnings of all insured persons for the years 2020 to 2022. The formula used in determining the FPC ratio is provided below:

Experience cost (EC) ratio

The EC ratio is different for each category and reflects the actual average job‑attached EI sickness benefits paid for each category. It is expressed as a percentage of average insurable earnings for the insured persons in that category.

The EC for each year and category, as well as the allocation of insurable earnings amongst categories are based on an analysis of administrative data provided by Service Canada and ESDC.

Similarly to the calculation of the FPC ratio, for the purposes of calculating the 2024 rates of reduction, the EC ratio of each category is based on the years 2020 to 2022. The formula used in determining the EC ratio of each category is provided below:

Rates of reduction and amount of premium reduction

The resulting uniform FPC ratio applicable to all categories and the EC ratio of each category are used to determine the 2024 rates of reduction per category. The 2024 estimated insurable earnings per category are then used to estimate the 2024 employer premium reduction due to qualified wage-loss plans. The estimated employer premium reductions due to qualified wage-loss plans for years 2025 to 2030 reflect the enhancement of sickness benefits from 15 to 26 weeks that started on 18 December 2022.

Additional supporting information on the calculation of the 2024 employer premium reduction due to qualified wage-loss plans and of each separate component is provided in Appendix E.

B.3 Reduction in premiums due to provincial plan

In accordance with subsection 69(2) of the EI Act and related regulations, premiums paid by employees and their employers can be reduced when employees are covered under a plan established under provincial law which reduces EI maternity and parental benefits otherwise payable, provided that an agreement has been entered into between the Government of Canada and the province to establish a system for reducing premiums paid by residents of that province and their employers.

As discussed in the previous subsection, the projection over seven years of the reduction in premiums due to the presence of provincial plans is taken into account in the determination of the 7-year forecast break-even rate. For this purpose, it is viewed as a cost to the EI program and included in the numerator of the 7-year forecast break-even rate calculation. However, the cost to the EI program of granting these premium reductions is offset by the savings to the EI program generated by lower EI MP benefits due to the existence of provincial plans. In addition to determining the 7-year forecast break-even rate, one of the purposes of this report is to determine the reduction in premiums due to provincial plans that will apply for 2024. The remainder of this subsection provides more information on this.

Since 1 January 2006, the province of Québec has been responsible for providing maternity and parental benefits to the residents of Québec through the QPIP. Pursuant to subsection 69(2) of the EI Act and related regulations, a mechanism to reduce EI premiums paid by Québec residents and their employers was introduced. The reduced premium rate reflects the savings to the EI program due to the existence of the QPIP. To date, the QPIP is the only provincial plan established in Canada.

Pursuant to the agreement signed between the Government of Canada and the Government of Québec and in accordance with Part III.1 of EI Regulations, the 2024 premium reduction for the MP provincial plan in the province of Québec, also referred to as the QPIP reduction, is equal to the ratio of the 2024 EI MP expenditures, including EI MP benefits and the variable administrative costs related to administering EI MP benefits, to the 2024 earnings base of residents outside the province of Québec. Accordingly, the formula for the QPIP reduction is as follows:

Appendix C Maximum insurable earnings (MIE)

Section 4 of the EI Act provides details on how to determine the yearly MIE, the income level up to which EI premiums are paid and up to which EI benefits are calculated.

Based on the EI Act, the annual MIE is set at $39,000, beginning in 1996, until this threshold is surpassed by 52 times the product obtained by multiplying:

1. the average for the 12-month period ending on April 30 in the preceding year of the Average Weekly Earnings (AWE), according to the latest revision of Statistics Canada^{Footnote 8}, for each month in that period

   by

2. the ratio that the average for the 12-month period ending on April 30 in that preceding year of the AWE for each month in that 12-month period bears to the average for the 12-month period ending twelve months prior to April 30 of that preceding year of the AWE for each month in that 12-month period ending twelve months prior to April 30 of that preceding year.

In the year in which the threshold is surpassed, the MIE is equal to the amount calculated as described above and is rounded down to the nearest multiple of $100.

For subsequent years, the MIE before rounding is equal to the previous year’s MIE before rounding, multiplied by the average of the AWE for each month for the twelve-month period ending on April 30 of the previous year divided by the average of the AWE for each month for the twelve‑month period ending on April 30 in the year prior to the previous year. This unrounded MIE is then rounded down to the nearest multiple of $100.

In accordance with the EI Act, the first time the $39,000 threshold was exceeded was for 2007. The revised unrounded MIE for 2007 is $40,072.93^{Footnote 9}.

The unrounded MIE for 2024 is equal to the unrounded MIE from 2007 ($40,072.93) multiplied by the average of the AWE for each month for the twelve month period ending 30 April 2023 ($1,174.4817) divided by the average of the AWE for each month for the twelve month period ending 30 April 2006 ($743.5875).

Rounded down to the nearest multiple of $100, the MIE is $63,200 for 2024. This is an increase of $1,700 or 2.8% from the 2023 MIE of $61,500.

Table 23 Maximum insurable earnings ($)

Year	12-month AWE average as of 30 April	Revised unrounded MIE	Applicable MIE	% Change in applicable MIE
2006	743.5875	39,000.00	39,000	- nil
2007	764.8850	40,072.93	40,000	- nil
2008	796.6125	41,220.69	41,100	2.8%
2009	814.8283	42,930.52	42,300	2.9%
2010	830.0717	43,912.20	43,200	2.1%
2011	862.3008	44,733.68	44,200	2.3%
2012	878.4875	46,470.56	45,900	3.8%
2013	901.4475	47,342.88	47,400	3.3%
2014	919.2717	48,580.22	48,600	2.5%
2015	943.5358	49,540.79	49,500	1.9%
2016	952.9858	50,848.42	50,800	2.6%
2017	961.6483	51,357.69	51,300	1.0%
2018	985.6400	51,824.53	51,700	0.8%
2019	1,007.1858	53,117.47	53,100	2.7%
2020	1,045.1500	54,278.60	54,200	2.1%
2021	1,119.1500	56,324.55	56,300	3.9%
2022	1,141.6792	60,312.50	60,300	7.1%
2023	1,174.4817	61,526.63	61,500	2.0%
2024	N/A	63,294.40	63,200	2.8%

MIE for years prior to 2024 are not revised and are based on the legislation that applied at the time they were determined. However, the 2024 MIE reflects retroactive adjustments to the calculation in accordance with current legislation.

2024 Minimum self-employed earnings (MSEE)

To qualify for EI special benefits, self-employed individuals who opted in the EI program need to earn at least the MSEE during the calendar year before the year they submit a claim. For claims filed in 2023, in accordance with subsection 11.1 of the EI Regulations, the unrounded MSEE of 2023 was $8,255.11 of self‑employed earnings in 2022. It is adjusted annually on a compound basis by the same ratio used for the indexation of the MIE (see previous section), rounded down to the nearest dollar.

The MSEE for claims filed in 2024 is therefore set at $8,492 of self-employed earnings in 2023.

Appendix D Data, methodology and assumptions

This appendix describes the data, methodology and assumptions that underlie the projections of the earnings base and expenditures included in this report. Although the assumptions have been developed using the most up-to-date available information, the resulting estimates should be interpreted with caution. These estimates are projections, and eventual differences between future experience and these projections will be analyzed and taken into account in subsequent reports.

D.1 Prescribed data

D.1.1 Minister of Employment and Social Development

Under subsection 66.1(1) of the EI Act, the Minister of ESD shall provide the Actuary, on or before 22 July of each year, with:

• the forecast change in payments to be made under paragraphs 77(1) (a), (b) or (c) of the EI Act during each of the following seven years if any changes to the payments to be made are announced;
• the forecast administration costs to be paid under paragraphs 77(1) (d), (d.1) and (g) of the EI Act during each of the following seven years, including any forecast change in those costs resulting from any change to the payments to be made under paragraphs 77(1) (a), (b) or (c) of the EI Act; and
• the total amounts charged to the EI Operating Account as of the last day of the most recent month for which that total is known.

For the purposes of determining the 2024 EI 7-year forecast break‑even rate under section 66 of the EI Act, the Minister of ESD has provided the Actuary with the following information:

Table 24 Prescribed Information Provided by the Minister of ESD - Part I
($ million)

Blank	Actual 2022	Forecast
		2023	2024	2025	2026	2027	2028	2029	2030
Pilot Projects/Special Temporary Measures
Support for Eligible Seasonal Claimants in Targeted Regions	63.3	117.3	123.4	53.5	-nil	-nil	-nil	-nil	-nil
Work-Sharing Program - COVID-19	20.7	4.5	-nil	-nil	-nil	-nil	-nil	-nil	-nil
EI Transition Benefits
Regular Benefits
13.1% UR, 300 Hours Credit & Max 50 weeks	1,510.4	-nil	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Minimum Benefit Rate of $500	191.6	-nil	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Special Benefits
13.1% UR & 480 Hours CreditTable 24 Footnote *	190.0	-nil	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Minimum Benefit Rate of $500	130.6	-nil	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Fishing Benefits
Enhanced Access - Prior Years Earnings	0.5	-nil	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Minimum Benefit Rate of $500	1.1	-nil	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Minimum Benefit Rate of $300
Regular Benefits	51.5	0.3	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Special Benefits	35.1	0.2	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Fishing Benefits	0.3	-nil	-nil	-nil	-nil	-nil	-nil	-nil	-nil
EI Simplification
Regular Benefits - Flat 420-hour Entrance Requirement & Minimum 14 Weeks Benefits	494.2	111.4	0.2	-nil	-nil	-nil	-nil	-nil	-nil
Regular Benefits - Simplified Rules on Separation	835.4	195.5	0.4	-nil	-nil	-nil	-nil	-nil	-nil
Special Benefits - Flat 420-hour Entrance RequirementTable 24 Footnote **	297.9	67.0	0.1	-nil	-nil	-nil	-nil	-nil	-nil
Fishing Benefits - $2,500 Entrance Requirement	0.4	0.1	-nil	-nil	-nil	-nil	-nil	-nil	-nil
Sub-Total	3,823.0	496.3	124.1	53.5	-nil	-nil	-nil	-nil	-nil
Recent Proposed and Permanent Changes
Extending Maximum EI Sickness Weeks from 15 to 26	-nil	360.4	786.4	841.4	890.4	942.0	996.6	1,054.4	1,115.6
EI Canada Training Benefit
Training Support Benefit	-nil	-nil	21.6	285.0	294.0	296.3	296.3	296.3	296.3
Small Business Premium Rebate	-nil	-nil	26.4	27.3	28.2	28.9	29.0	29.0	29.0
Sub-Total	-nil	360.4	834.4	1,153.7	1,212.6	1,267.2	1,321.9	1,379.7	1,440.9
Total	3,823.00	856.7	958.5	1,207.2	1,212.6	1,267.2	1,321.9	1,379.7	1,440.9
Table 24 Footnotes Table 24 Footnote * Rather than receiving a credit of hours, self-employed individuals can qualify with a lower earnings threshold of $5,000. Return to Table 24 footnote * Table 24 Footnote ** Rather than receiving a credit of hours, self-employed individuals can qualify with a lower earnings threshold of $5,289. Return to Table 24 footnote **

Prescribed Information Provided by the Minister of ESD - Part II and Administration Costs
($ million)

blank	Actual 2022‑23	Forecast
		2023‑24	2024‑25	2025‑26	2026‑27	2027‑28	2028‑29	2029‑30	2030‑31
Employment Benefits and Support MeasuresTable 24 Footnote *	2,489.8	2,526.4	2,101.4	2,101.4	2,101.4	2,101.4	2,101.4	2,101.4	2,101.4
Administration CostsTable 24 Footnote **	2,708.8	2,687.8	2,419.8	1,982.9	1,964.5	1,948.9	1,948.9	1,948.9	1,948.9
Table 24 Footnotes Table 24 Footnote * Includes additional LMDA investment announced in Budget 2017 and in Budget 2023. Return to Table 24 footnote * Table 24 Footnote ** Includes administration costs for the new EI Training Support Benefit proposed in Budget 2019 and expected to launch in 2024. Return to Table 24 footnote **

In addition, the Minister of ESD provided an EI Operating Account summary that shows a preliminary cumulative deficit of $22.2 billion as of 31 March 2023, the most recent month for which that total is known.

Additional information with regards to the pilot projects, special measures and new permanent changes shown in Table 24 can be found below.

Pilot projects and special temporary measures

Budget 2018 first introduced a seasonal claimants’ pilot project to provide up to five additional weeks (to a maximum of 45 weeks) of EI regular benefits to eligible seasonal claimants in 13 targeted EI economic regions. Budget 2023 extended these rules until October 2024.

In March 2020, as part of the Government of Canada’s COVID-19 Economic Response Plan, the Government announced temporary changes to the Work-Sharing program. These changes included extending the duration of Work-Sharing agreements, waiving the mandatory cooling off period, expanding eligibility criteria, and streamlining the application process. Budget 2021 announced an extension to these temporary measures until 24 September 2022.

Transition measures to facilitate access to EI

Due to the COVID-19 pandemic, several interim orders were enacted over a short period of time with the aim of facilitating access to EI. Below is a summary of the provisions impacting eligible EI claims established between 27 September 2020 and 25 September 2021:

• A minimum unemployment rate of 13.1% used for all EI regions, which resulted in a uniform entrance requirement of 420 hours for eligibility to EI regular benefits (before application of hours credits).
• A one-time credit of 300 insurable hours, which combined with the minimum unemployment rate of 13.1%, resulted in benefit eligibility with 120 hours of work for EI regular benefits.
• A one-time credit of 480 insurable hours resulted in benefit eligibility with 120 hours of work for EI special benefits.
• A minimum weekly benefit rate of $500 for EI regular benefits, fishing benefits and special benefits ($300 for extended parental benefits).
• A maximum of 50 weeks of EI regular benefits.
• The allowance for fishers to have had their fishing benefits calculated using their actual fishing earnings for their current claim, or their fishing earnings from their claim for the same season from one of the two previous years, whichever was higher. This measure was extended to 18 December 2021.

Also, temporary measures were announced in Budget 2021 to facilitate access to EI in response to the COVID-19 pandemic and are summarized below. These measures were in effect from 26 September 2021 until 24 September 2022.

• A uniform entrance requirement of 420 insurable hours for eligibility to EI regular and special benefits.
• A common entrance requirement of $2,500 in earnings for fishers to qualify for fishing benefits.
• A reduced entrance requirement of $5,289 in earnings to access special benefits for self-employed workers who have opted in to the EI program.
• Ensuring that all insurable hours and employment counted towards a claimant’s eligibility, as long as the last job separation was found to be valid.
• Allowance for claimants to start receiving EI benefits sooner by simplifying rules around the treatment of severance, vacation pay, and other monies paid on separation.

Self-employed workers who have opted in to the EI program to access special benefits also benefited from a transition measure. For claims established between 3 January 2021 and 25 September 2021, they were able to use a 2020 earnings threshold of $5,000 compared to the previous threshold of $7,555.

On 30 July 2021, the Government announced a minimum benefit rate of $300 per week for EI claims established between 26 September 2021 and 20 November 2021 in order to ensure that EI claimants received a treatment similar to Canada Recovery Benefit claimants.

Recent proposed and permanent changes

Budget 2023 confirmed the commitment made by the Government to establish the EI Board of Appeal, originally announced in 2019, to replace the current EI appeals process under the Social Security Tribunal General Division.

Budget 2022 announced amendments to Part II of the EI Act to broaden client and program eligibility and the types of interventions funded under Labour Market Development Agreements with provinces and territories.

Budget 2021 announced the enhancement of sickness benefits from 15 to 26 weeks. This extension became effective on 18 December 2022.

Budget 2019 announced a new EI Training Support Benefit to help workers cover their living expenses when they require time off work to pursue training. The benefit will provide eligible claimants with up to four weeks of income support in a four-year period at 55 per cent of their average weekly insurable earnings. In addition, the Government announced an EI Premium Rebate for Small Businesses to help offset the upward pressure on EI premiums resulting from the introduction of the new EI Training Support Benefit. This rebate would be available to employers who pay employer EI premiums equal to or less than $20,000. The EI Training Support Benefit and the EI Premium Rebate for Small Business were originally expected to launch in late 2020, but ESDC has indicated that it would be delayed to 2024.

Part II

Budget 2017 announced additional funding under the LMDAs over six years starting in 2017‑2018 to provide more opportunities to Canadians to upgrade their skills, gain experience or get help to start their own business. Budget 2023 announced additional funding under the LDMAs for 2023-2024.

D.1.2 Minister of Finance

Under subsection 66.2(1) of the EI Act, the Minister of Finance shall provide the Actuary, on or before 22 July of each year, with the following:

• the most current forecast values of the economic variables relevant to the determination of the 7-year forecast break-even rate for the following seven years;
• the forecast amounts to be credited and charged to the EI Operating Account for the current year and an estimate of the total amounts credited to the Account as at 31 December of the previous year.

Accordingly, for the purposes of determining the 2024 EI 7-year forecast break‑even rate under section 66 of the EI Act, the Minister of Finance has provided the Actuary with the following information:

Table 25 Prescribed information provided by the Minister of Finance
(thousands)

Economic variables	Actual 2022	Forecast
		2023	2024	2025	2026	2027	2028	2029	2030
Population (15+)	31,772	32,420	32,980	33,464	33,928	34,382	34,823	35,250	35,662
Labour force	20,795	21,249	21,430	21,529	21,600	21,721	21,913	22,099	22,279
Employment	19,700	20,100	20,097	20,244	20,359	20,486	20,665	20,834	21,006
Employees	17,048	17,436	17,288	17,253	17,260	17,322	17,452	17,583	17,721
Self-employed	2,651	2,664	2,809	2,992	3,099	3,163	3,213	3,251	3,285
Unemployed	1,095	1,149	1,333	1,285	1,241	1,235	1,248	1,265	1,273
Unemployment rate	5.3%	5.4%	6.2%	6.0%	5.7%	5.7%	5.7%	5.7%	5.7%
Average weekly earnings ($)	1,165	1,200	1,237	1,273	1,310	1,347	1,386	1,425	1,466
Average employment income growth	3.6%	3.3%	3.5%	3.2%	3.1%	3.0%	2.9%	2.9%	2.9%

D.2 Earnings base

The earnings base represents the total insurable earnings on which salaried employees and their employers pay EI premiums, and the earnings on which self‑employed individuals that opted into the EI program pay EI premiums. The earnings base is comprised of:

• the total insurable earnings on which employers pay EI premiums prior to any adjustment for qualified wage-loss plans or the small business premium rebate;
• the total insurable earnings on which employees pay EI premiums, adjusted to reflect employee premium refunds; and
• the earnings on which self‑employed individuals that opted into the EI program pay EI premiums.

Section 4 of the report presents an overview of the assumptions used in determining the earnings base. The following subsections provide additional information and data in support of the development of these assumptions.

D.2.1 Number of earners

In order to calculate the earnings base, an assumption is required for the number of earners, as well as the split of these earners between those who have earnings below and above the MIE.

The annual statistic on the number of employees provided by the Minister of Finance represents an average of the number of individuals who work for a public or private sector employer in a month. The number of earners provided by CRA is always greater than the average monthly number of employees since it represents a count of all individuals who received one or more T4 slips in the year and had employment income and/or insurable earnings during the year. This is mainly due to the fact that the number of earners includes all individuals who had earnings at any time during the year, whereas the number of employees only indicates a monthly average.

A historical comparison of the number of employees and the number of earners is presented in Table 26. The preliminary number of earners for 2022 is set such that the resulting insurable earnings are in line with the expected assessed premiums for 2022, which are derived from the 2022 year-to-date assessed premiums and the 2022 increase in average employment income provided by the Minister of Finance. Historical numbers might change due to data revisions.

Table 26 Historical comparison of the number of employees and number of earners
(thousands)

Year	Number of employees	Increase in number of employees	Number of earners (CRA T4 data)	Increase in number of earners	Difference in annual increases (%)
2016	15,323	N/A	18,874	N/A	N/A
2017	15,666	2.24%	19,219	1.83%	(0.41%)
2018	15,908	1.55%	19,620	2.09%	0.54%
2019	16,286	2.37%	19,944	1.65%	(0.72%)
2020	15,310	(5.99%)	19,600	(1.73%)	4.26%
2021	16,299	6.46%	20,066	2.38%	(4.08%)
2022	17,048	4.60%	21,364	6.47%	1.87%

The projected number of earners is obtained by a regression based on a correlated historical relationship from 1991 to 2021 between the number of earners and the number of employees. Table 27 shows projected number of employees as provided by the Minister of Finance as well as the projected number of earners for the years 2023 to 2030.

Table 27 Projected number of earners (thousands)

Year	Projected number of employees	Increase in number of employees	Projected number of earners	Increase in number of earners
2023	17,436	N/A	21,507	N/A
2024	17,288	(0.85%)	21,363	(0.67%)
2025	17,253	(0.20%)	21,345	(0.08%)
2026	17,260	0.04%	21,374	0.14%
2027	17,322	0.36%	21,460	0.40%
2028	17,452	0.75%	21,618	0.73%
2029	17,583	0.75%	21,778	0.74%
2030	17,721	0.78%	21,947	0.78%

As shown in Table 28, based on information with regards to the historical number of earners across income ranges, the distribution of earners by level of average employment income is fairly stable from year to year.

Table 28 Historical distribution of earners by level of average employment income

Year	Average employment income ($)	Range as a % of average employment income
		0 - 25%	25 - 50%	50 - 75%	75 - 100%	100 - 125%	> 125%
2016	46,872	21.4%	14.6%	13.2%	12.4%	10.0%	28.4%
2017	48,200	21.6%	14.5%	13.3%	12.4%	9.9%	28.2%
2018	49,709	20.9%	14.4%	13.8%	12.7%	10.2%	28.0%
2019	51,082	20.8%	14.4%	13.8%	12.8%	10.2%	27.9%
2020	51,422	23.1%	13.8%	12.3%	12.0%	10.1%	28.7%
2021	54,958	22.2%	13.4%	13.2%	12.8%	10.3%	28.1%

The 2021 distribution of the number of earners by level of average employment income is used to determine the proportion of earners with employment income below and above the MIE for years 2022 to 2030.

Table 29 shows the resulting split of the number of earners between those with employment income below the MIE and those with employment income above the MIE. Actual data is also shown for years 2016 to 2021.

Table 29 Number of earners below and above the MIE

Year	MIE ($)	MIE as a proportion of average employment income	Proportion of earners below MIE	Thousands
				Total number of earners	Number of earners below MIE	Number of earners above MIE
2016	50,800	1.0838	65.3%	18,874	12,327	6,547
2017	51,300	1.0643	64.7%	19,219	12,425	6,794
2018	51,700	1.0400	63.8%	19,620	12,513	7,107
2019	53,100	1.0395	63.7%	19,944	12,697	7,247
2020	54,200	1.0540	63.7%	19,600	12,478	7,121
2021	56,300	1.0244	62.8%	20,066	12,611	7,455
2022	60,300	1.0594	64.4%	21,364	13,756	7,608
2023	61,500	1.0457	63.8%	21,507	13,717	7,790
2024	63,200	1.0386	63.4%	21,363	13,554	7,809
2025	65,300	1.0394	63.5%	21,345	13,551	7,795
2026	67,300	1.0389	63.5%	21,374	13,565	7,810
2027	69,200	1.0376	63.4%	21,460	13,605	7,855
2028	71,200	1.0373	63.4%	21,618	13,702	7,916
2029	73,300	1.0378	63.4%	21,778	13,809	7,968
2030	75,300	1.0364	63.3%	21,947	13,902	8,045

D.2.2 Average and total employment income

The projected increase in average employment income, provided by the Minister of Finance, combined with the increase in the projected number of earners, are used to determine the total employment income. Table 30 shows the derivation of the projected total employment income for years 2022 to 2030, as well as actual data provided by CRA for years 2016 to 2021.

Table 30 Projected total employment income

Year	Number of earners from CRA T4 data (thousands)	Increase in number of earners	Average employment income from CRA T4 data ($)	Increase in average employment income	Increase in total employment income	Total employment income ($ thousand)
2016	18,874	N/A	46,872	N/A	N/A	884,643,535
2017	19,219	1.83%	48,200	2.83%	4.71%	926,339,401
2018	19,620	2.09%	49,709	3.13%	5.28%	975,279,385
2019	19,944	1.65%	51,082	2.76%	4.46%	1,018,784,902
2020	19,600	(1.73%)	51,422	0.67%	(1.07%)	1,007,872,380
2021	20,066	2.38%	54,958	6.87%	9.41%	1,102,762,945
2022	N/A	6.47%	N/A	3.57%	10.27%	1,216,047,887
2023	N/A	0.67%	N/A	3.32%	4.01%	1,264,858,797
2024	N/A	(0.67%)	N/A	3.47%	2.77%	1,299,957,027
2025	N/A	(0.08%)	N/A	3.24%	3.16%	1,341,013,754
2026	N/A	0.14%	N/A	3.11%	3.25%	1,384,575,004
2027	N/A	0.40%	N/A	2.96%	3.37%	1,431,302,255
2028	N/A	0.73%	N/A	2.92%	3.68%	1,483,907,011
2029	N/A	0.74%	N/A	2.89%	3.65%	1,538,099,979
2030	N/A	0.78%	N/A	2.87%	3.67%	1,594,555,841

As shown in Table 31, the historical distribution of total employment income as a percentage of average employment income is usually stable from year to year.

Table 31 Historical distribution of employment income as a % of average employment income

Year	Average employment income ($)	Range as a % of average employment income
		0 - 25%	25 - 50%	50 - 75%	75 - 100%	100 - 125%	> 125%
2016	46,872	2.3%	5.4%	8.2%	10.8%	11.2%	62.1%
2017	48,200	2.3%	5.4%	8.3%	10.8%	11.1%	62.0%
2018	49,709	2.3%	5.4%	8.6%	11.0%	11.4%	61.3%
2019	51,082	2.3%	5.4%	8.6%	11.2%	11.4%	61.2%
2020	51,422	2.5%	5.1%	7.7%	10.4%	11.3%	63.0%
2021	54,958	2.3%	5.0%	8.3%	11.1%	11.5%	61.8%

The 2021 distribution of total employment income as a percentage of average employment income is used to determine the proportion of employment income that relates to earners with employment income below and above the MIE for years 2022 to 2030. Table 32 shows the total employment income split between earners with employment income below the MIE and earners with employment income above the MIE for years 2022 to 2030. Actual data is also shown for years 2016 to 2021.

Table 32 Distribution of employment income for earners below and above the MIE

Year	MIE ($)	MIE as a proportion of average employment income	Proportion of employment income for earners below MIE	($ thousand)
				Total employment income	Total employment income for earners below MIE	Total employment income for earners above MIE
2016	50,800	1.0838	30.6%	884,643,535	271,084,982	613,558,553
2017	51,300	1.0643	29.8%	926,339,401	275,896,851	650,442,550
2018	51,700	1.0400	29.2%	975,279,385	285,255,566	690,023,819
2019	53,100	1.0395	29.3%	1,018,784,902	298,240,070	720,544,832
2020	54,200	1.0540	28.3%	1,007,872,380	285,174,882	722,697,498
2021	56,300	1.0244	28.0%	1,102,762,945	308,372,705	794,390,240
2022	60,300	1.0594	29.6%	1,216,047,887	359,697,164	856,350,723
2023	61,500	1.0457	28.9%	1,264,858,797	365,983,620	898,875,178
2024	63,200	1.0386	28.6%	1,299,957,027