Provincial pension plan hits farmers hard

Thursday, August 13, 2015

by SUSAN MANN

Forcing farm employers to pay mandatory contributions for seasonal agricultural or other foreign workers under Ontario’s new pension plan goes against the government’s stated goal of enhancing Ontario’s residents’ retirement and boosting the provincial economy.

Ken Forth, chair of the agricultural industry’s Labour Issues Coordinating Committee, said seasonal agricultural workers and other employees from various countries or even other provinces who come to work in Ontario will not be spending their Ontario retirement pension money in the province once they retire. The foreign and out-of-province workers also won’t be retiring in Ontario.

“If you read the dialogue from the Premier (Kathleen Wynne), the Ontario pension plan was for Ontario residents to enhance their retirement so they would spend more money in Ontario,” Forth notes.

“How does it help the Ontario economy if we do it for foreign workers?” he asked. “How does it help Ontario at all because when they (foreign workers) retire they’re going to be who knows where?”

Forth said Ontario’s pension plan would require employers to pay “a pile of money that will enhance the lives of hundreds of thousands of people outside of Ontario. That was not the reasoning they gave us to do it.”

Forth added he didn’t know if farm or other employers hiring foreign or non-Ontario resident workers will be required to pay the pension plan contribution.

Asked if the government would be making a decision on how pension contributions for those workers would be treated, Forth said “I don’t have any idea at all. I don’t know if they (the Ontario government) will change it. I doubt it.”

Earlier this week, Wynne announce there will be a staged phase in for the Ontario Retirement Pension Plan. Mandatory contributions from large companies on behalf of their workers will start in 2017, while medium companies will be required to make the contributions starting in 2018 and small ones in 2019.

In April, the Ontario government passed the Ontario Retirement Pension Plan Act. It is the foundation for the new Ontario Retirement Pension Plan. Employers and workers will be required to contribute 1.9 per cent each on an employee’s earnings up to $90,000, according to the Ontario Finance Ministry’s website. Earnings above $90,000 (in 2014 dollars) will be exempt from Ontario pension plan contributions.

Workers and companies with comparable workplace pension plans would be exempt from the Ontario plan.

Forth said several weeks ago the Labour Issues Coordinating Committee along with other groups made presentations to the Ontario government in Guelph pointing out the discrepancy in making the pension plan mandatory for employers of foreign or out-of-province workers.

“We just said we didn’t think it was fair,” he noted. Employers shouldn’t have to pay pension contributions for any workers who are non-residents of Ontario.

The pension plan will hit Ontario’s farming and agri-food sector hard. In its submission to the Ontario government in February, before the pension legislation was passed, the Ontario Federation of Agriculture said a 1.9 per cent addition to non-family wages reduces farm margins by about $20 million annually. A further $10 million annually “is taken out of the business if family labour also draws on the ORPP (Ontario Retirement Pension Plan) contribution.”

The federation noted “as this new cost is not likely recoverable in sales, farmers will look at future wage caps, fewer employees and increased mechanization.”

There will also be other impacts on the farming sector because livestock and food processors that purchase farmers’ products will have to pay the pension for their workers. When the food-processing sector is hit with higher costs, including for labour and other items, its “viability and competitiveness are threatened” and that increases downward pressure on farm prices, the federation says. It may even encourage some processing companies to move out of Ontario to a lower cost jurisdiction.

A 1.9 per cent increase in labour costs across Ontario’s food processing sector “reduces the food industry’s margins by over $100 million annually,” the federation says. “This decline will be felt, in turn, across the farm sector.”

Ministry of Finance officials couldn’t be reached for comment. BF