Entries in WSIB (7)

Wednesday
Mar112015

The reality of an ineffective WSIB for small business

Source: wsib.on.caWhile the amount of unfunded liability at the Workplace Safety and Insurance Board (WSIB) has been shrinking over the past number of years, a second area of contention continues to be the policies around self-employed individuals.  

More than one-third of members of the Greater Peterborough Chamber of Commerce have 1-3 employees and this Chamber member explains his frustrations with the current system:

“WSIB is a workplace insurance policy.  As an employee, I understand the need to be insured through your employer in case of an accident. However, I am self- employed, working on my own.  I have life, short term, and long term disability insurance coverage through my own insurance company. This insurance is paid into monthly on a flat rate fee and premiums aren't based on my occupation.  

My WSIB contribution is a growing rate based on a percentage of my company's performance.

This means that the greater the net profits of my business are, the more I pay in insurance.  This rate changes for every company based on the type of work they perform.  This is an insurance policy that if anything did happen and I was able to fight through the system to collect anything, my rates would increase to the point that would make me very uncompetitive with other companies in town.

For sole proprietors who work on their own, this is essentially a tax that drives the cost of doing business up for the consumer.  WSIB is basically getting an extra income through government legislation forcing those who would never collect from the system, to pay into it.”

At the end of “Are we there yet?: An employer perspective on WSIB reform” -an Ontario Chamber of Commerce (OCC) report, the authors identify future discussions on the WSIB file. Among them is the impact of mandatory WSIB coverage on sole proprietors and small business owners.  The OCC encourages the government to re-open the door to exemptions for those with private coverage.

The OCC report recognizes that small business owners cannot afford to provide both mandatory WSIB and private individual or group coverage.  The difference being “private individual or group coverage is often a superior product, covering employers for both accident and sickness – whereas WSIB provides compensation related solely to workplace injuries.” 

This Chamber member agrees with that assessment: 

“I find the WSIB on small construction-related tradespeople particularly unreasonable because (1) they are
unlikely to ever claim and risk a resulting increase to their premium and (2) if they are injured off the job they aren’t covered. My personal opinion is that they’d be much better off with proper disability insurance (which would likely be cheaper).”

What we know about the current state of the WSIB:  

  • Employers are paying the highest premiums in Canada
  • Premium rates were frozen for 2015; this is the second consecutive year for a rate freeze
  • The unfunded liability sits at just over $9 billion; down from a high of $14.2 billion five years ago
  • The number of workers 
  • returning to work after a year has more than doubled.
  • Lost time claims have dropped by 17 per cent, from 50,667 in 2009 to 41,987 in 2013.

(Hamilton Spectator, Feb 1, 2015)

A survey in 2013 by the OCC of over 2,000 businesses revealed that 36% of businesses surveyed think the WSIB provides value for Ontarians, while 35.3% do not.  This shows that business owners are almost split down the middle.  

Is the system working at its most efficient?  If not, why not? In 2013, shortly after the WSIB brought in a new chair (former Conservative MPP Elizabeth Witmer) the report was released by the OCC and offered seven key recommendations: 

  1. Continue reforming the WSIB, based on the principles of fiscal responsibility, transparency, client focus, efficiency, competitiveness, and independence and accountability.
  2. Follow through on the three-stage plan to reach a 100 percent funding ratio by 2027. 
  3. Continue to monitor and publicly report progress on implementing recommendations in the Arthurs Report.
  4. Introduce a systematic, ongoing process for reviewing group classification and making changes.  A transparent mechanism should allow for movement between classification units based on the improvement and/or deterioration of cost experience.
  5. Build upon the improved actuarial capacity and engage in regular dialogue with the expert community.
  6. Restore confidence in the WSIB’s independence and autonomy.  Amend Regulation 175/98 to codify WSIB decisions and ensure that circumstances for government intervention in the rate-setting process are clearly specified.
  7. Ensure that the WSIB is subjected to the regular oversight of the Auditor General of Ontario. 

The Arthurs Report is a comprehensive assessment called Funding Fairness: A Report on Ontario’s Workplace and Safety and Insurance System that laid out a framework for reforming the WSIB and plugging its funding gap.  

For the Chamber Network in Ontario, WSIB continues to be a great source of concern.  Chambers from across the province have voted to make this issue a priority in our lobbying efforts to the provincial government.

Tell us your WSIB stories through the "Peterborough Chamber" group of LinkedIn. 

Thursday
Sep112014

Good news for employers on EI and WSIB premiums

FEDERAL GOVERNMENT LOWERING EMPLOYMENT INSURANCE PREMIUMS
The federal government has just announced that it will be lowering Employment Insurance (EI) premiums for small businesses, paid by employers and employees, in an effort to boost hiring at a time of sluggish growth. The government is referring to this premium reduction as the Small Business Job Credit. The freeze is expected to save small businesses more than $550 million over the next two years.
The move comes shortly after Statistics Canada reported a decline of 11,000 jobs in August. Last year, the Parliamentary Budget Officer accused the government of keeping premium rates “higher than necessary” in an effort to balance the books in the short-term.
What does this mean for business? According to the Department of Finance, businesses that pay EI premiums up to $15,000 will be eligible for the break, which reduces the premium from $1.88 to $1.60, per $100 of payroll. That is a drop of 15 percent in EI costs for eligible businesses.
Close to 90 percent of all EI premium-paying businesses in Canada will be eligible for the break. 
The Canada Revenue Agency will automatically calculate the credit on a business’ return, in an effort to 
reduce paper burden.
The OCC applauds the federal government’s decision, but continues to advocate for reforms to the EI program, particularly in how benefits are distributed regionally. Because of the program’s current structure, Ontario employers and employees end up subsidizing industries and workers in other provinces, despite the fact that Ontario’s unemployment rate is above the national average. For more information on the OCC’s proposed reforms to the EI program, read the OCC's report A Federal Agenda for Ontario.
 
WSIB PREMIUMS UNCHANGED FOR SECOND YEAR
The Government of Ontario announced that Workplace Safety Insurance Board (WSIB) premium rates would be frozen for a second consecutive year. Only one rate group, Local Government Services, will see an increase in premium rates as a result of expanded coverage for firefighters--an issue that the OCC is tracking closely.
The WSIB also announced that their compensation system is more than 64 percent funded, and will be 80 percent funded by 2022 and 100 percent by 2027. The funding ratio has improved significantly, up from 56.9 percent in 2012.
The OCC is repeating its calls for more competitive business premiums. Despite a steady decline in the frequency of work-related injuries in the province, Ontario’s average employer premium rate is still one of the highest in Canada. This is due largely to the surcharge associated with paying off the WSIB’s unfunded liability, which employers have been forced to absorb as a legacy cost.
For more information, read the OCC's agenda for WSIB reform, Caution Work Ahead.
Comment throught the "Peterborough Chamber" group of LinkedIn.
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