Journal of Commerce | by RICHARD GILBERT | Aug 8, 2016
Construction contractors in Saskatchewan are applauding a decision by the Workers’ Compensation Board (WCB) to refund a $281.5 million surplus to employers in 2016, but labour leaders want the funds invested into workplace safety initiatives.
“We are definitely one of the proponents that asked for that money to be refunded to employers,” said Karen Low, executive director of Merit Contractors Association Saskatchewan.
“There are a few things that come into consideration here. First of all, the people that are saying keep it and spend it on something else are not the ones who are paying it. It’s the employers who do. So, it’s easy for them to say keep it and use it on something else.”
The WCB announced in late June that its funded position at the end of 2015 was 144.7 per cent, which exceeded the 105 to 120 per cent funding policy target.
As a result, the WCB had a surplus of $281.5 million in 2015 that was generated from investment income.
The surplus will be distributed to eligible employers in two instalments, the first took place in July and the second is slated for December 2016.
“This is your money and we are pleased the WCB has listened to the repeated calls of the SCA (Saskatchewan Construction Association) and you, our members, to return this surplus, so it can be reinvested in your operations — creating jobs, building communities and driving our economy forward,” said SCA president Mark Cooper in a press release.
“On behalf of the SCA board, thank you to the hundreds of members who wrote letters, made phone calls and attended meetings to secure these rebates.”
In response, labour leaders in Saskatchewan argue the refund demonstrates clearly that workers and their families have taken a back seat to corporate interests.
“I would like to see more of the money going into prevention and education to improve safety,” said Terry Parker, business manager, Saskatchewan Building and Trades Council. “I know more money was collected than spent, but I think we need to look at improving the system for the workers who are hurt. I think our focus needs to be on the worker.”
Others agree.
“The WCB’s decision to use excess investment earnings to issue cash refunds to employers is reckless and irresponsible,” said Saskatchewan Federation of Labour (SFL) president Larry Hubich in a press release. “Workers, particularly those who have been injured on the job, should be the primarily stakeholders and beneficiaries when it comes to the WCB — they are the ones that should have benefited from strong investment returns.”
Hubich argues employers are wrong in their claim that the WCB’s excess investment earnings belong to premium-payers such as employers.
He said the WCB’s surplus comes from strong investments, not from premiums that employers pay. This means the two areas of revenue are separate.
“Given Saskatchewan’s poor economic climate and credit rating downgrade, and given the economic uncertainty within the European Union and other shaky conditions, what happens when the WCB’s investment earnings dry up and they have to increase employer premiums?” asked Hubich.
“I have a feeling that the same employers that currently have their hands out for free money will decry such a premium increase, claiming that instead benefits should be cut to injured workers.”
The WCB’s funded position is impacted by the WCB’s investment performance, which fluctuates depending on world economic activity.
According to Hubich, the WCB should use the surplus to inspect workplaces for dangers, as well as educating and training both employers and workers on making jobs safer, increasing benefits to workers who get hurt and other prevention measures.
“As a board, we are legislated to ensure the present and future financial security of the compensation system in our province,” said WCB chairperson Gordon Dobrowolsky.
“We carefully weighed our decision on behalf of both employers and injured workers by considering market uncertainties and investment return volatility, a funding policy review, cash flow requirements, economic uncertainty and changes in accounting and actuarial standards as well as the potential impacts of the Committee of Review recommendations.”
Employers are eligible for the 2016 distribution if their net premiums were greater than their claims costs over the three-year period from 2012 to 2014.
A three-year period was chosen to ensure employers were not disqualified based on one or two years of higher claim costs.
The amount of the distribution that each eligible firm receives was determined based on their 2014 base premiums because 2014 is the most current year of assessed actual payroll.