Small Business Job Credit Modifies Employment Insurance Premiums
The Canadian Government announced yesterday that a major change will be made to small business Employment Insurance premium. The Small Business Job Credit applies to all Canadian businesses currently paying at most $15,000 in premiums between 2015 and 2016. When it is paid out at the beginning of next year, the credit will account for a reduction in employment insurance premiums for businesses from $1.88 to $1.60. The total savings to all Canadian small businesses over the next two years is estimated at over $550 million.
Employment Growth on the Agenda for Canadian Government
“We want to make sure small businesses grow… they’re the critical generator of employment growth” said Finance Minister Joe Oliver in a statement to the Business News Network, which you can view in video format here along with the network’s own commentary.
The macro-economic reasoning behind this credit, and behind this and future revisions to the EI program, is tied to efforts at increasing the rate of job creation in Canada at a time when unstable domestic and international economic conditions have removed the incentive for some businesses, especially smaller ones, to add new hires or increase wages. Data from the Canadian Federation of Independent Businesses, an organization we profiled in a recent blog, estimates that the credit will create 25,000 new jobs over the next two years.
Macro vs. Micro Effects – Does Your Business Stand to Benefit?
As with any change to fiscal policy, effects of the Small Business Job Credit will be felt both at the individual business level in the short term, and across the country in the long term. While the macro-level effects of this change will lead into further, broader adjustments to EI for all Canadian businesses in the next several years, what of the immediate potential for change made available to small businesses? Critics of the new policy have commented that the scope of savings may not make a significant dent in hiring strategy for many smaller employers. However, the credit – regardless of how it scales for individual businesses – does free up a not insignificant amount of capital for those businesses to re-invest into the growth and development of their infrastructure, inventory and future development.
“I’m sure anyone would be happy to have an extra $200, or $2,000, in their pocket. These businesses will put the money to good use; find other ways that are better to use it like upgrade equipment or put a sign up…” said Angella MacEwen, a senior economist with the Canadian Labour Congress.
What’s your take on the Credit? Will it change your hiring plan, or will business continue as usual? Do you feel like it will benefit your business directly? Let us know on Facebook and Twitter with the Social buttons below.