Canadians will see a decrease in their take-home pay and employers will see a rise in payroll expenses as of January 1.
The changes are due to increases in Employment Insurance (EI) and changes to the Canada Pension Plan (CPP), according to the Canadian Federation of Independent Business (CFIB).
The latest adjustments include a second earnings limit to CPP and an increase in EI, leading to a higher payroll tax for employers by up to $366 per employee and up to $348 for workers. For 2024, total employer contributions for CPP and EI could reach as high as $5,524 per employee.
Corinne Pohlmann, executive vice president of advocacy at CFIB, expressed concern about the impact of these hikes on the labour market.
“This significant increase in labour costs puts employers in a challenging position, particularly as many are already navigating other financial pressures, such as the Canada Emergency Business Account repayment deadline,” she said.
Pohlmann added that business owners might have to reconsider their wage and hiring strategies for the year.
A recent CFIB survey indicated that more than three-quarters of small businesses (77 per cent) are urging the government to address rising prices and business costs. Additionally, 74 per cent of these businesses are seeking a reduction in the overall tax burden. The survey also found that more than half (57 per cent) of small businesses would increase employee compensation, including wages and benefits, if the overall tax burden were lowered.
CFIB is pushing for measures to mitigate the impact of these increases. It wants to see federal and governments to work together to offset the CPP hikes. CFIB also proposed a 50/50 split in EI premiums between employers and employees or the introduction of a refundable credit similar to the 2015-16 Small Business Job Credit, specifically aimed at aiding small businesses.
CFIB said these proposed measures would alleviate financial strain on both Canadian workers and employers.