B.C. small businesses are struggling to stay afloat in these stormy economic conditions.
At this rate, the many challenges they are facing will swallow them whole without quick intervention and cost relief.
These challenges have come in waves, starting with a tsunami of restrictions and closures during the pandemic, followed by a rising tide of Canadian Emergency Business Account (CEBA) loan repayments, inflation, labour shortages and higher interest rates. These burdens – coupled with cost increases including higher taxes, employer paid sick days and WorkSafeBC premiums – are sinking your favourite local businesses.
Bogged down by economic challenges, B.C. small businesses are looking for a life raft in the form of cost relief. Luckily, we know where to find a pile of cash: WorkSafeBC, the province’s workers’ compensation board, is sitting on a $2.5 billion surplus.
Yes, you read that right. $2.5 billion. That’s enough money to purchase the entire Vancouver Canucks franchise – twice.
So how did we get here? Back in 1917, B.C. passed the Workmen’s Compensation Act which struck a historical compromise between employers and employees. In short: Employers pay into an insurance program that compensates employees for workplace injuries. In exchange, employees waive the right to sue their employers. Fair is fair. Today, WorkSafeBC (WCB) oversees this process and is responsible for collecting employer-paid premiums.
Now, how did WorkSafeBC end up with an extra $2.5 billion? To start, B.C. business payrolls are growing, which automatically increases employers’ WCB premiums. The board then invests this premium income into the stock market and has seen high returns thanks to a successful investment strategy. So successful, in fact, they have been overfunded for seven consecutive years. If you tally up the rolling surpluses, they amount to $16.8 billion. The bottom line: WorkSafeBC is acquiring more money than it needs.
No one is questioning the need for WorkSafeBC to be well funded to support both employers and workers. The health and safety of employees has always been small business owners’ top priority. Plus, they understand the importance of having a system that ensures its financial obligations to current and future workers’ benefits. However, WorkSafeBC continues to surpass its own funding target (130 per cent) by billions of dollars, leaving many employers frustrated with the status quo.
Small business owners are being told a rebate is not possible because it would jeopardize WorkSafeBC’s financial position, despite their substantial funding buffer. Yet, last year, WCB absorbed a one-time added cost of $1.26 billion in additional employee benefits stemming from the B.C. government’s introduction of Bill 41. Going forward, Bill 41 will cost WCB an estimated $117 million annually. Not only was the board able to absorb this cost, but it did so while maintaining its current multibillion-dollar surplus.
While small business owners appreciate that a small portion of the surplus ($370 million last year) goes toward rate stability, this is mere pocket change for the board. At the end of the day, there is no reason WorkSafeBC can’t provide rate smoothing and a rebate.
So why hasn’t WorkSafeBC provided a rebate? Good question. Other provinces with lower funding levels have already proved this is possible. The Canadian Federation of Independent Business (CFIB)’s recent WCB report shows Ontario, Manitoba and Prince Edward Island kept rates stable while successfully distributing excess funds. For example, Ontario rebated $1.2 billion while reducing their average premium rate by 5.1 per cent.
Given B.C. businesses pay the second-highest effective payroll tax rate in the country, the need for relief is pressing and every bit of financial assistance would make a difference to keep local businesses above water. Other government agencies, such as ICBC and BC Hydro, have already provided rebates to ratepayers.
It's time for WorkSafeBC to get with the program and throw a lifeline to B.C. small businesses with a rebate.
Emily Boston is B.C.’s policy analyst at the Canadian Federation of Independent Business and Jairo Yunis is CFIB’s Western economist.