WCB needs fixing, but privatization is not the answer, says AFL

EDMONTON - The Alberta Workers Compensation Board (WCB) does not always treat injured workers fairly, but replacing it with a system of private insurance will not fix the problem, says the leader of Alberta's largest union organization.

"It's true that the WCB doesn't always work in the best interests of injured workers," says Audrey Cormack, president of the Alberta Federation of Labour. "Too many legitimate claims are rejected and too many injured workers are forced to wait months or even years for the benefits they need and deserve.

But just because the system is flawed doesn't mean that it should be scrapped entirely. We have to be careful not to the throw the baby out with the bath water."

Cormack's comments come in the wake of rising criticism of the WCB and calls for the introduction of a private, for-profit system of compensation for injured workers. Cormack says she agrees with many of the criticisms that have been leveled against the WCB - but she says privatization would make things worse, not better.

"The big complaints about the current system have to do with accountability, the appeals process and the manner in which claims are assessed," says Cormack. "Many people feel that legitimate claims are being downgraded or rejected in order to save the WCB money. And they think the WCB is not open and transparent enough. But privatization won't fix any of these problems. If anything, profit-seeking insurance companies will have an even bigger incentive to deny claims - and they will be even less open to public scrutiny."

Cormack says the question of whether or not it makes sense to privatize the WCB has been studied numerous times over the past ten years. In almost all cases, she points out, academics and other people investigating the issue have concluded that Canada's current system of publicly-controlled compensation for injured workers is far superior to the private, for-profit systems that exist in places like the United States.

Among other things, the various studies have concluded that private insurance companies operating in competitive compensation systems tend to

  • provide lower benefit rates to injured workers
  • put a much lower priority on rehabilitation of injured workers
  • charge higher premiums for many employers - in fact, under some private systems, employers in high risk industries find it almost impossible to get coverage.

In addition, in competitive systems there are often no formal appeal procedures for workers who are not satisfied with decisions made by the private insurance companies. A worker's only recourse is often to hire a lawyer - at great expense - and attempt to fight it out in the court system.

Aside from all of these problems with private insurance systems, Cormack says privatization would undermine the Meredith Principle - which has acted as the cornerstone of Canada's workers' compensation system for more than 80 years.

According to the Meredith principle, individual injured workers give up their right to sue their employers in exchange for a guarantee of fair compensation. But Cormack points out that under most private compensation schemes, workers retain their right to sue. This exposes employers to much higher levels of financial liability and greatly increases costs for individual workers as they pursue their claims.

"It's a lose-lose scenario for workers and employers," says Cormack. "When you look at the systems that exist in the United States, it's clear that the interests of working people in Alberta would not be well-served by introducing a market-model for workers' compensation in the province. Privatization would mean lower benefits and fewer opportunities for rehabilitation for most workers; higher premiums for many employers; and reduced accountability to the public. With these facts in mind, I find it hard to understand how anyone could support privatization."

For more information call:

Audrey Cormack, AFL President: 483-3021 (wk) 499-6530 (cell) 428-9367 (hm)


Gil McGowan, Director of Communications:  483-3021 (wk)


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