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Higher wages will cause WSIB cost hikes for some construction employers: OGCA

Don Wall
Higher wages will cause WSIB cost hikes for some construction employers: OGCA

The Ontario General Contractors Association (OGCA) has learned that Workplace Safety and Insurance Board (WSIB) payments for some high-wage employers could go up as much as 9.6 per cent next year even if premium rates remain the same.

OGCA director of government relations David Frame explained for 2021 and 2022, the government legislated artificially low increases for the Maximum Insurable Earnings (MIE) ceiling due to the pandemic but for 2023 the MIE ceiling will be allowed to increase from the current $100,422 to $110,030.

The 9.6-per-cent hike for higher-wage firms reflects the wage inflation of the past year plus another four per cent that the government held back last year when it kept the MEI increase to three per cent, said Frame. Firms with employees earning over $100,000 will pay the price, he said.

“It disproportionately hits the higher-wage industries like construction, like mining, like some specialty manufacturing, where employees are making over $100,000,” Frame said. “The ceiling was artificially capped but it’s not anymore.”

High-wage employers pay into WSIB at a rate reflecting the ceiling — for example, a G6 construction employer might previously have paid $1.79 on a ceiling of $100,422 but next year they might pay the same rate but on a ceiling of $110,030. Their premium rate may not increase but their payments would go up 9.6 per cent.

Changes to the MIE ceiling are linked to average earnings in Ontario as measured by Statistics Canada each July.

The government limited MIE increases for 2021-2022 because COVID lockdowns disproportionately affected low-wage earners, and so the average industrial wage took a big jump, Frame explained. To spare high-wage firms, the MIE ceiling went up only two and three per cent the last two years.

“The minister’s office talked to me last week and said ‘look, we’re going to have to let this thing self-correct,’” said Frame of the Ministry of Labour.

“‘We’re not going to artificially hold it down.’ And the problem is this: you’ve got to pay for inflation in the system one way or another.”

In 2019, with non-residential contractors still grouped with residential contractors in the WSIB’s G1 class, G1 paid $2.30. In 2021 G6 was created for the non-residential builders but premiums were frozen and G6 and G1 both paid the same, $2.30.

Last October, it was announced that the G6 class would pay $1.79 in 2022 while the residential rate rose to $2.63. There are four other ICI construction classes.

The new rates are expected to be announced in late September or October.

“I’m anticipating only small changes for that but who knows, we’ll have to see,” said Frame.

The end result of the MIE hike will be higher costs for project owners, he said.

“For most employers, it means the cost is passed on to the buyer. It means there’s a greater increase in labour costs because of this. And so, unfortunately, it hits the price of construction.”

Asked for comment, WSIB public affairs specialist Rachel dePass noted in a statement that premium rates have declined by 50 per cent in recent years, leading to the lowest average premium rate in more than 20 years in Ontario.

“Through the pandemic, we also provided financial relief to businesses, including those in construction, allowing them to defer premium payments and delivered our first-ever surplus rebate to safe Ontario businesses,” stated dePass, also indicating other savings such as rebates under the Health and Safety Excellence program.

“We will announce 2023 premium rates later this fall and continue to build on our efforts to improve service and increase efficiency, including offering expanded online service options for businesses.”

Frame said the reduction in premiums in the construction industry was close to 60 per cent in the past five years.

When he started with the OGCA over a decade ago, the average premium was $4.55.

“That rise on the ceiling at $1.79 doesn’t hit you as bad as it does at $4.55,” he remarked.

In coming weeks the OGCA will be working with the WSIB to attempt to mitigate the impact on high-wage firms.

“There are many ways to control WSIB costs. We will be working with the WSIB to look at those,” Frame said.

Follow the author on Twitter @DonWall_DCN

Recent Comments (1 comments)

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Dave Oakes Image Dave Oakes

There’s a high suicide rate among injured workers because WSIB is perpetually gas-lighting and spreading misinformation & long-term exposure to WSIB is depressing .. 13152209

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