Canadian economy can’t afford CPP/QPP hike
Report points to steep costs, far-off benefits.
TORONTO – Increasing Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits would hurt the Canadian economy and result in significant job losses, according to a new report from the Canadian Federation of Independent Business (CFIB).
In June, Canada’s finance ministers will discuss increasing CPP and QPP. One option being considered would cost employees up to $1,100 more per year, which would bring employment growth to a halt and force wages down 1.5%.
“There’s been lots of talk about increasing benefits, with very little mention of the cost,” said CFIB vice-president and chief economist Ted Mallett. “The short-term impacts are substantial, yet benefits could take decades to be fully implemented.”
CFIB’s Forced Savings report, based on a University of Toronto macro-econometric model, looks at the so-called 10-10-10 proposal that would phase in CPP/QPP increases over ten years.
Among the findings:
- Employees would pay up to $1,100 more per year in CPP/QPP premiums.
- Employers would pay up to $1,100 more per year, per employee.
- The self-employed would pay up to $2,200 more per year.
- Higher labour costs would lead to 700,000 person years of lost work.
- Overall wages would be forced down by 1.5%.
- Federal and provincial governments’ debt-to-GDP ratios would increase by 2 and 1.2% respectively.
“With a CPP and QPP increase, all signs point to trouble,” said CFIB president and CEO Dan Kelly. “Wages go down while premiums go up. It kills jobs, increases government debt. Businesses are hurt, workers are hurt. There is no up-side to hiking CPP and QPP at this time.”