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Industry Voices: Private workers’ compensation isn’t an option

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by Merril James O'Donnell last update:Jan 27, 2016

In a recent Vancouver Sun opinion editorial, the executive vice president of the Canadian Federation of Independent Business (CFIB) Laura Jones referred to B.C. businesses that pay premiums to the Workers' Compensation Board (WCB) as "customers."
Industry Voices: Private workers’ compensation isn’t an option

Ms. Jones says she likes to describe businesses as "customers" because it reminds her (read WCB and working class folk) that "there is always the threat of competition if the organization does not perform well".  In other words, a specter is haunting WCB - the specter of privatization - if the board fails to provide business with better customer service.

This bold utterance from the CFIB reveals an irksome misconception of the basis upon which the board was established in 1917.  As oftentimes happens, this misconception is based on a larger misconception, namely, the notion that a "free market" can resolve all social ills, the state should not interfere with the capitalist market and workers sole purpose is to make the wheels of industry roll smoothly along the rails of so-called progress.

Ms. Jones' comment was sparked by the research findings of the CFIB's recently released 2015 Small Business Workers' Compensation Index.  Focusing on seven key areas, the study examines 10 provincial WCB systems and ranks them from 0 to 10, 0 being the worst and 10 being the best.

The seven key areas are: cost of premiums; claims management; experience rating; classification and assessment; coverage; long-term financial sustainability; and customer service.  British Columbia's WCB system obtained an overall index score of 5.7, which puts it in fifth rank out of the 10 provinces.

In the report, the WCB's customer service rating is measured in six contexts: staff (accessibility, knowledge, and professionalism); communication with business (staff promptness, clarity, accuracy, and consistency); understanding business needs and change is service during the past 3 years; compliance burden (simplicity of forms/invoices, time consumed by business to deal with WCB requirements, and issuing clearance certificates); user friendliness and availability of information on the WCB website; and the overall rating of the appeal process.

While CFIB's customer service ranking of 5.7 represents the perspective of small business and evaluates issues important to them, it's no secret that the labour movement isn't enamoured with the WCB's service either.  But, I'm talking about service to workers and their advocates, of course.

So, the labour movement doesn't protest the CFIB's customer service ranking. What we do protest, however, is Ms. Jones' suggestion that WCB can be replaced by private insurers at the behest of the business community. On that matter, she's dead wrong.

Our Workers' Compensation Board was created as a result of a mutual understanding between business, labour and the state. That understanding came about as a result of myriad social, economic, political and legal realities.  As every labour history buff knows, the mid-1800s to mid-1900s were interesting and highly provocative times for working people, the business community and the state all over the world.

The Paris Commune of 1871, the Russian Revolution of 1917 and the Winnipeg General Strike of 1919 come to mind.  A lot was happening in British Columbia, too.

In the late 1800's workers in British Columbia were being injured and killed in droves as they struggled to put a roof over their family's heads and food on the table. The numbers of workers killed is legendary, so I won't repeat them here. Workers' efforts to fight back by suing their employer's when they got injured were stymied by the judicial system, which was closely aligned with the commercial interests of business.

However, at the turn of the century, employers were confronted with a number of precedent-setting court decisions that undermined their previous defences against injured workers, who sued them.  As a result, injured workers, who took their employers to court, had a better chance of winning. Naturally, the number of lawsuits by injured workers and their families (in cases of death) grew. Labour unions, aware of the judicial changes, provided workers with financial resources thereby increasing their numbers and their chances of success.

Making matter worse, B.C.'s economy was recessionary prone and this put a lot of pressure on businesses. In such circumstances, businesses were vulnerable to financial instability if and when injured workers or their dependents took them to court. Oftentimes, even if the employer won the case, the legal costs would sink the business – the classic pyhric victory.

This confluence of events put workers' protection and compensation back on the B.C. Legislature's agenda.  Through a simple twist of political fate, a pesky socialist MLA J. W. Hawthornthwaite, along with another colleague, held the balance of power in the Legislature, which enabled them to introduce the Workmen's Compensation Act of 1902.

This shifted the power of labour. Making matters worse for business, the potential pool of worker litigants dramatically increased again following a landmark case in 1912. As expected, a handful of very large judicial awards to injured workers and dependents sent shockwaves reverberating through the B.C. business community. Thus arose the notion from business, labour and the state that financial security for all parties could only come about through compromise. B.C. businesses wanted the WCB system as much as labour did – arguably more.

The principles forming this "historic compromise", called the Meredith principles after the Honourable William Ralph Meredith, form the bedrock of B.C.'s WCB system. In keeping with Meredith's principles, the WCB system is supposed to give business and labour financial security and stability.

Employers are protected from lawsuits by injured workers and injured workers are supposed to receive protection and equitable compensation benefits from the WCB fund paid by employers. This was the deal. The notion of "private insurers", as Ms. Jones threatens in her article, is not part of the deal. It never was and it never will be.

Profit-seeking – the prime motivator of all private enterprises – has no place in a system where providing injured workers with equitable and effective health care benefits, compensation, vocational rehabilitation and protection is fundamental to the proper working of the system.

Back in early 2000, the B.C. Liberals implemented a wide range of draconian changes to the WCB system at the behest of the business community. It was the wrong thing to do.

Because of those changes, workers have experienced weaker protection standards, significantly lower compensation, fewer vocational rehabilitation services and dwindling health care benefits.

If the business community wants to further undermine our WCB system, they should think twice. We might find ourselves back in the militant mid-1800s and early 1900s. Workers are fed up and I think it wouldn't take too much to push them over the edge.  Employers purchasing disability insurance from private insurers might just do it.

Merrill James O'Donnell is a workers' advocate for the B.C. Building Trades Council. Send comments or questions to editor@journalofcommerce.com.

last update:Jan 27, 2016

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