Underground Economy

 

Labour Minister Chris Bentley has announced a campaign against the underground economy.

The provincial government will aggressively target the underground economy to stem an estimated $2 billion annual loss of government revenue from the construction industry alone.

“The underground economy is insidious,” Bentley said in a speech to the Economic Club of Toronto.

“It places tremendously unfair pressure on legitimate businesses, deprives governments of tax dollars, and jeopardizes the health and safety of workers.”

Over the next months, the government will, in collaboration with other partners,

• train inspectors to deal with issues related to the underground economy
• expand efforts to identify unregistered operators in construction
• undertake a public awareness campaign
• look to expand and improve enforcement.

Bentley said the underground economy “threatens the financial viability of many Ontario firms and places a serious financial strain on the entire province.”

Many of the costs associated with the underground economy are hidden.

Estimates are that the underground economy is today costing the Ontario government up to $500 million and the federal government $1.5 billion.

“That’s money that could go to improve health care or education systems or fund our cities,” Bentley said.

Danger to Workers

In Labour Minister Chris Bentley’s words, the underground economy “jeopardizes the health and safety of workers.”

CSAO fully supports the Ministry of Labour’s campaign against the underground economy for several reasons.

Unregistered contractors

• do not pay WSIB premiums
• do not help to maintain the industry’s coverage base
• do not help to fund the initiatives of the Ministry of Labour (inspection and enforcement) and of CSAO (training, consultation, and information).

Contractors in the underground economy either take advantage of CSAO products and services without paying for them or avoid health and safety intervention altogether without being detected.

These practices erode the coverage base and threaten the funding of vital health and safety services.

As a result, legitimate contractors are left to carry the entire costs of insurance, compensation, and prevention.

Moreover, there is no countervailing reduction in injuries to offset the lost revenue.

Premiums are not being paid and the industry still gets stuck with the serious compensation claims that can’t be ignored or left unreported.

Recommendations

• Enforce the rules.
• Make every construction employer help to fund the prevention, inspection, and enforcement measures that benefit all workplace parties.
• For purposes of assessment and compensation, require that all workers be covered.
• End the situation in which honest contractors are paying more than their fair share of insurance and other costs.
• Move to a system where each and every worker is insured by name and given proof of coverage.

CSAO’s board of directors has already gone on record against the underground economy and supports Minister Bentley’s initiative 100%.