CPP hikes to cost four times more than feds project: CFIB

Ahead of next week’s federal budget, the Canadian Federation of Independent Business (CFIB) is highlighting policy-induced labour costs for Canadians businesses.

Read: Experts urge Morneau to proceed with caution in 2018 budget

In particular, Canada Pension Plan (CPP) increases will have a greater impact on jobs than the federal government projects, argues CFIB in an analysis report.

Starting in 2019, CPP premiums will rise for five straight years, followed by another two years where the maximum amount of income on which CPP premiums are levied will increase.

The CFIB study, done through the University of Toronto’s Policy and Economic Analysis Program, finds that the CPP hikes will initially cost 64,000 jobs—four-and-a-half times greater than the federal government’s projection of job losses.

“Employers will naturally respond to increased labour costs by looking for ways to streamline their labour needs, by adding new technologies or focusing hiring on higher-skill workers,” says Ted Mallett, CFIB chief economist, in a release. “The result is that lower skilled—generally younger workers or new Canadians—are likely once again holding the short end of the employment stick.”

Mallet further says that the CPP debate focused too much on employers not paying enough for employees’ retirements, and not enough on “finding the best savings model to meet Canadians’ needs.”

Read: How to keep splitting income with family members in 2018 and beyond

Also in the release, Dan Kelly, CFIB president, expresses concern for Canadian businesses: “The CPP hikes mark the latest cost increases to Canadian businesses that have already seen Employment Insurance (EI) premium increases, minimum wage hikes and other regulatory costs added to their books over the last year.”

Read: CEO optimism hits record high, while small business takes feds to task

CFIB’s analysis further shows that negative job impacts will last until the late 2020s, after which the impacts transform into constrained wage growth and higher government deficits.

Read the full CFIB analysis.

Also read:

Morneau hints at budget clarification on passive income rules

CPP increase will raise family costs by more than $2K: report

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.