Workers’ Compensation: Foundations for Reform edited by Morley Gunderson and Douglas Hyatt, Toronto: University of Toronto Press, 2000, 360 pp., ISBN 0-8020-4453-0.

British Columbia enacted the first workers’ compensation law in Canada in 1902. Other provinces passed similar legislation in the following 20 years. All were based on the “historic compromise,” whereby workers injured on the job gave up the right to sue their employers and received in return a “no fault” insurance plan funded by employers. These simple concepts have evolved into a major social institution, combining elements of regulation (occupational health and safety), insurance (wage payments for time lost due to accident or disease) and health care (medical and rehabilitation services for insured workers). The system costs billions of dollars and is exceptionally complex. Poorly understood by the parties, the public and politicians, workers’ compensation generates surprising emotion and controversy. This book contains eleven academic studies of specific issues in Canadian workers’ compensation. It adds considerably to the growing Canadian academic literature on workers’ compensation systems. The editors’ premise for the book, stated in the introduction, is that workers’ compensation systems are in need of “drastic reform.” Pressures for reform include changes in work environments and labour markets, cost pressures and unfunded liabilities. Apart from environmental forces, the editors note that virtually every province and territory in the country had examined its workers’ compensation system in the 1990s. A careful reading of the volume yields many valuable insights, but the case for drastic reform simply is not made. Viewed historically, the frequent examinations of workers’ compensation systems are not rare. Through 1999, British Columbia had four royal commissions and three other government reviews of workers’ compensation, more than any other public institution. When the chapters in this book were written in the mid-1990s, many provincial boards, especially Ontario, had substantial unfunded liabilities. The 2000 annual report of the Ontario Workplace Safety and Insurance Board (WSIB) (the latest available to the public) reported a surplus of revenues over costs for six consecutive years, driven by reduced benefits, administrative reforms and robust returns on its investment portfolio. The unfunded liability, still substantial, has to be seen in light of fluctuations in financial markets, as well as compensation costs. After an introduction on labour market changes written by the editors, other chapters fall into three categories: economic issues, accidents or their prevention and administration. Looking at the most fundamental economic question, Peter Dungan examined the effects of workers’ compensation and other taxes on the economies of Canada and Ontario. His sophisticated econometric techniques found that higher workers’ compensation premiums were borne in the short run by the employer, but over the longer term these costs are transferred to workers through lower wages. To maximize efficiency, the author suggests that taxes be linked to industry and firm accident costs. In fact, Canadian jurisdictions do use “experience rating,” i.e., the application of normal insurance principles of relating cost to risk, in setting premiums. Morley Gunderson and Douglas Hyatt examine the massive unfunded liability of the Ontario system in 1996. Contrary to the conventional political wisdom of the time, the unfunded liability was not a product of the New Democratic Party regime or even the Liberals who preceded them. It had been rising for fifteen years at that time. The authors relate the problem of shifting unfunded liabilities to globalization and intergenerational transfers. They also suggest that one solution might be to expand coverage of the workers’ compensation system to cover workers who are less accident prone, thereby transferring resources to the existing claimants. As workers’ compensation systems are administered in this country, this proposal is essentially impossible. The principle of experience rating means that industry groups and employers bear the costs of their accidents. In …