Companies in Mississauga and Brampton — from large multinationals to small truckers — will have to dig deeper into their pockets to pay higher worker compensation premiums next year.
Ontario’s Workplace Safety and Insurance Board said late Wednesday it will hike rates by 2.5 per cent for all companies in 2013. The board said the increase was a “necessary step” to cut the board’s unfunded liability (UFL), now at $14.2 billion.
Started in 1914, the WSIB is the worker’s compensation insurer for Ontario, legislated by the Ontario government, the WSIB is responsible for administering the Workplace Safety and Insurance Act, which protects employers from lawsuits in exchange for premiums that give workers guaranteed compensation and benefits for accepted claims.
Reaction to the rate increase was swift and negative from local businesses.
“The WSIB system is an inefficient system that is continuing to play on the backs of industry to cover up their inefficiencies and inabilities to be effective under their mandate” said Scott Tilley, president of Tandet Group, a trucking and truck leasing company in east-central Mississauga near Highway 401 and Dixie Road.
Board chair Elizabeth Witmer said the rate increase was based on “sound and detailed actuarial and financial analysis” and will allow the board to meet provincial rules to be 60 per cent funded by 2017.
“While this premium rate increase may add costs today, the retirement of the UFL will result in lower premiums and strengthened competitiveness for Ontario businesses in the longer term,” she said.
Tilley strongly disagreed, citing the effect of the increase in WSIB premium on business input costs and the reduced ability to reinvest.
“It affects efficiencies, effectiveness,” he said. “In our business, it’s competitiveness with the world. Raising government taxes in any way, shape or form — and WSIB is a tax– causes an uncompetitive situation.”
Meanwhile, the Canadian Federation for Independent Businesses, a lobby group for small companies, said the hike will hit the already struggling small business sector the hardest.
In an example given by CFIB, this announcement could mean a small trucking company with five employees would have to fork over an extra $394 to the WSIB; bringing their total 2013 premiums to $16,532.
A small roofer would be on the hook for an additional $1,061; bringing their 2013 premiums to $43,602.
Regardless of the business, increasing taxes on payroll could not have come at a worse time for the Ontario economy.
“Small business confidence in Ontario is lower today than it was at the beginning of 2012,” said CFIB’s Ontario vice president Satinder Chera. “Rolling the dice on higher taxes will further jeopardize jobs and the province’s economic recovery.”
“At the end of the day, there will be less jobs across the board if government burden is too high,” said Tilley.