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ORPP will result in layoffs, results “disturbing”

Published by Brad Fougere on September 30, 2015

MISSISSAUGA – Nearly half of Ontario’s small manufacturers will reduce wages or lay off staff as a result of the Ontario Retirement Pension Plan (ORPP), according to a survey conducted by Canadian Manufacturers & Exporters and the Canadian Manufacturing Coalition.

“The results of this survey are disturbing,” said Jayson Myers, president & CEO of CME. “The ORPP is going to drastically change the cost of doing business in Ontario, adding up to $1074 more per employee annually to manufacturers while each employee must also contribute up to $1074 annually. That’s going to impact the overall competitiveness of the province.”    

The survey, conducted during the months of August and September, revealed that 47.5 per cent of small manufacturing companies say that they would they will lay off staff or cut wages to compensate for ORPP costs.

Other startling findings include:    

  • Several businesses stated that the ORPP will force them to shut down operations in Ontario and outsource or relocate to a more competitive jurisdiction.
  • Small businesses make up 86 per cent of all manufacturing companies in Ontario and will be the most affected by the ORPP. Less than four per cent of small businesses (those with fewer than 50 employees) have a pension they think qualifies them for ORPP exemption.  That means that up to 96 per cent of small businesses will face additional costs to doing business in Ontario.    
  • The ORPP will not help workers. First, the mandatory contribution requirement will lower the take-home pay of affected employees by 1.9 per cent. Second, the ORPP will also result in a combination of job losses and lower current or future earnings.   
  • Only nine per cent of companies surveyed currently offer a pension plan they believe would exempt them from the ORPP. In other words, as many as 91 per cent of Ontario companies will be impacted by the government pension.    
  • While 67 per cent of large companies plan to absorb the additional ORPP costs as part of their operating budget. Only 29 per cent of small businesses consider that to be an option.    
  • Nearly 70 per cent of businesses impacted by the ORPP plan to recover costs by slowing future wage growth and/or reducing future bonus payments. That figure rises to 76 per cent for small businesses.  

“CME supports retirement income security for Ontarians, but we are concerned about the impact that mandatory employer contributions will have on manufacturing competitiveness, jobs and the economy,” Myers said. “We recognize that the government has taken steps to expand the definition of comparable but it does not go far enough,” Myers added.

The survey was conducted over four weeks in August and September and had 272 respondents.       

The Ontario Government is planning to introduce the Ontario Retirement Pension Plan (ORPP) in 2017 to supplement existing federal retirement benefits with a longer phase-in for small companies or those with some preexisting retirement plan. 

Employers that have a comparable pension already in place would not be required to enroll in the ORPP. To be considered comparable, employer plans must be either Defined benefit, Multi-employer target benefit, or Defined contribution with a minimum of 8 per cent contribution (of which at least half must be made by the employer).

“There is still time to make the changes necessary to get this right," concluded Myers. "It is vital we work together to develop a plan that meets the needs of manufacturers, employees and the province.”


The full report is available here

Canadian Manufacturers & Exporters (CME) is Canada’s leading trade and industry association and the voice of manufacturing and global business in Canada.    

The association represents more than 10,000 leading companies nationwide. More than 85% of CME’s members are small and medium-sized enterprises. As Canada’s leading business network, CME, through various initiatives including the establishment of the Canadian Manufacturing Coalition, touches more than 100,000 companies from coast to coast, engaged in manufacturing, global business and service-related industries.   

CME’s membership network accounts for an estimated 82 per cent of total manufacturing production and 90 per cent of Canada’s exports.       

For more information, contact Brad Fougere (613) 447-0039

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