The news that the Workplace Safety and Insurance Board (WSIB) plans to maintain employer premiums for 2016 at current levels may seem to be good, until you look at the numbers and discover that claim rates have declined significantly and the WSIB is using the saved funds to reduce its unfunded liability (UFL), says David Frame, the Ontario General Contractors Association’s (OGCA) director of government relations.
“My members are concerned that the WSIB rates are among, if not the highest, in Canada,” he said. “As well, they aren’t responsive to good return to work outcomes, good performance, good health and good safety.”
The WSIB said in its economic statement released in November that it anticipates average rate reductions of between 10 and 15 per cent are possible over a five-year period starting in 2017, but these won’t happen this year.
“In recent years, the WSIB has made great strides toward becoming more financially sustainable, transparent, responsive and accountable to the people we serve,” WSIB chair Elizabeth Witmer said in a news release. “As a result, we now expect to eliminate the unfunded liability, or UFL by 2022 – five years ahead of the schedule required by law.”
“Fundamental changes to the WSIB’s business have brought the UFL down by nearly half, from a high of $14.1 billion in 2011 to $7.5 billion in early 2015 – all while maintaining benefit levels for injured workers and achieving the best safety and health outcomes in Canada,” she said. These changes include: safer workplaces; innovation in medical care and helping workers return to work; rising premium revenue and a strong growth in the investment fund through the addition of operating surpluses, careful management and diversification.
“Once the burden of the UFL is gone, employer premiums will consist only of new claims and administrative costs,” Witmer said. “That’s an estimated average premium rate of $1.40 to $1.50 instead of the current average of $2.46 per $100 of payroll, making Ontario one of the lowest cost jurisdictions in Canada.”
(Witmer’s rates refer to the overall WSIB premium level – rates for construction trades are significantly higher, such as $12.70 for masonry, $18.31 for formwork and $14.80 for roofing.)
In part because the construction sector’s rates are higher, the additional premium revenue collected from businesses which are operating safely contributes a disproportionate amount of funds to reduce the unfunded liability.
Frame says the WSIB probably thinks it can get away with maintaining the rates at the current level because there won’t be the outcry that would occur if they were increasing. As well, employers’ groups, including the Ontario Construction Employers Coalition (OCEC) generally are in favour of the initiative to reduce the unfunded liability and certainly are happy to see safety performance – and resulting claims – declining.
However, Frame said that the high Ontario WSIB premiums, translated to higher overall business costs, will have an impact on project decisions and opportunities. “It gets entered into the economic equation,” he said. “Other jurisdictions end up with an advantage when WSIB is much more expensive in Ontario.”