But the good news isn’t isolated to Newfoundland and Labrador. While the media focus on Western Canada’s continuing boom, other provinces in Atlantic Canada are also experiencing economic growth and falling unemployment rates.
As a result, urban centres in Atlantic Canada are facing the same sort of labour shortages as the rest of the country. The effects of these shortages are likely compounded in some sectors by the relatively small population base and the decades of outmigration of skilled workers to Ontario and the west.
In response, the government of New Brunswick has committed itself to growing that province’s population and has created a Population Growth Secretariat. The most significant labour shortages are being felt, and are expected to continue, in sectors with low average retirement ages and older active workforces: for example, education and healthcare.
At the same time, employers are looking for new ways to attract workers, from signing and referral bonuses in the service sector, to a new focus on immigration, the repatriation of former Atlantic Canadians and exploring opportunities for labour supply within the aboriginal community. The response from governments in the region has varied by jurisdiction, with some provincial governments taking a more hands-on approach to managing labour and skills shortages.
Some organizations argue that there is still a public policy disconnect between perception and reality. The historical problem and focus has been unemployment, but unemployment rates in some parts of the Atlantic region are now actually lower than in Toronto. With a highly educated and mobile labour force, it is critical that employers and governments focus on retaining valuable workers and tailoring training programs and opportunities to the actual skills gaps in the region.
Benefits Plan Management
In response to skills shortages and the impending loss of talent, organizations are increasingly open to more flexible work arrangements in an effort to forestall the retirement of older workers. In certain sectors, such as healthcare, there is also an increasing reliance on employees continuing to work in some capacity even after “retirement.” This is the message in a recent report commissioned by the chief nursing officers in New Brunswick, where approximately 40% of the province’s nurses are eligible to retire in the next seven years.
Retaining older employees in the workforce forms a key part of Atlantic Canada’s HR strategy to capitalize on economic opportunity. Creative benefits plan sponsors are factoring this into ever-evolving plan design as part of the overall strategy to meet business needs.
For example, maintaining private drug coverage for employees and their dependants can be a powerful incentive for some employees to remain at work, particularly where there is limited or no access to public drug plans. Nova Scotia’s Seniors’ Pharmacare program, for example, while available to an employee taking normal retirement at age 65, would not provide coverage for a spouse under age 65.
Consumer-driven Design
While using benefits plan design to encourage worker attraction and retention is an important consideration for employers, concern for controlling increasing benefits costs is also ever-present. With the earliest introduction and greatest penetration of pay direct drug card technology in the country and mainstream adoption of such “first generation” claims management approaches as special authorization and generic substitution, Atlantic Canada has long been a leader in employee benefits innovation.
A “second generation” claims management approach spearheaded in Atlantic Canada by some notable, progressive employers is focused on recognizing plan members as consumers. Plans are designed with a focus on promoting smart shopping and value-based decision-making. This means engaging the member in decisions concerning what to buy, how to buy and where to buy. This may involve providing plan design incentives for members to maximize 90-day supplies of maintenance drugs, to comparison shop between providers to find lower fees and markups and to purchase lower-cost therapeutic equivalents over more expensive brand name drugs. Consumer-driven plan design can have a positive impact on claims trends and employee appreciation of the benefits plan. In a tight labour market, this approach, in combination with taxefficient design, has become a key part of some employers’ total compensation strategy to attract and retain employees.
Going Direct
Another benefits strategy employed by some plan sponsors in Atlantic Canada to differentiate their benefits offering and manage costs is to build direct relationships with other stakeholders, particularly with pharmacies and physicians.
For example, one major pharmacy chain is offering participating plan sponsors preferred pricing on drugs, loyalty reward credits on every prescription and in-store discount cards for employees. Direct provider arrangements are sometimes offered either as a supplement to, or as a full replacement for, traditional third-party pharmacy benefit managers.
In dealing with physicians, a relatively new concept has emerged in which employers are seeking to provide physicians with better information about how private drug plans operate and, in turn, remind them of the generic and therapeutic alternatives that are available in certain cost-heavy therapy classes. Build into this model a way for physicians to access generic samples, and the potential for success—and lower overall drug costs—is huge.
Hark the Herald Extra, extra! With an impending job boom in Atlantic Canada, the Chronicle Herald continues to retain the majority of its employees by offering an excellent benefits package and meaningful employment. By Brooke Smith Facing a possible future talent shortage in Atlantic Canada, the Chronicle Herald has introduced several initiatives over the years that have helped keep its staff at full capacity. One such initiative is tuition subsidies. Full-time employees can continue their education and receive a 50% to 100% reimbursement. “One person took a course in photography, completely unrelated to her job,” says Theresa Williams, human resources manager for the Chronicle Herald in Halifax. “We reimbursed her 50% of her tuition just recognizing that she’s still improving herself in some way.” Employees also get their birthdays off with pay, are enrolled in a defined benefit pension plan and have a flexible benefits plan, in which any excess credits go into a health care spending account, are taken as cash or are placed into an RRSP. And for those employees ready to leave the workforce (the elimination of mandatory retirement in Nova Scotia will come into force in July 2009), the Herald offers dental and extended health coverage (e.g., physiotherapy, massage therapy and chiropractor) and $5,000 in life insurance at age 65. Despite a “very small labour shortage” in its part-time entry-level customer service department, the Herald has no need of Want Ads. Just over one-third of staff (37%) has 25-plus years of service (the average years of service is 16). There’s no doubt, then, that the Herald’s pension and benefits plans are an attraction/ retention tool, even though human resources maintains it doesn’t look at them specifically for that purpose. “We are very pleased that people want to come to work here,” says Williams. One reason, according to Williams, is the company’s excellent reputation and the fact that it’s still a private family-owned business. “We’re not owned by a chain of newspapers. People have a lot of autonomy in their work.” Furthermore, people want meaning in their jobs. “People like to be a part of something that matters,” says Williams. “And getting a newspaper or getting a webpage to people when they need it is something that matters.” |
Public Programs
Meanwhile, differences continue in the availability of public programs and funding related to healthcare throughout the Atlantic region. There are controversial distinctions between provinces in the coverage available for expensive drug therapies for critical illnesses such as cancer. Disparity in access to public programs coupled with high incidence rates for certain conditions (e.g., the four Atlantic provinces have higher rates of diabetes than the national average, and Nova Scotia has the highest cancer death rates in Canada) will likely continue to focus public and government attention on finding an appropriate and equitable level of publicly funded healthcare support.
To date, however, most public healthcare program change has been ad hoc and incremental. One notable exception to this trend is the introduction of comprehensive public drug coverage in Newfoundland and Labrador.
As part of a broad-ranging public strategy to reduce poverty and improve personal health in the province, the government of Newfoundland and Labrador has introduced significant changes to prescription drug coverage for the residents of that province. Following the launch of targeted programs focusing on low-income families and individuals, on Oct. 31, 2007, the province implemented a prescription drug program designed to provide support to all qualifying residents of the province with annual family incomes up to $150,000. The program is intended to provide protection against the financial burden of drug costs and operates by capping out-of-pocket costs for eligible drugs (those on the provincial formulary) at between 5% and 10% of net family income. Private drug plans remain the first payer, but individual plan members would be eligible to participate in this new public program when out-of-pocket costs under a private plan exceed the applicable cap for their income level.
People, Skills, Key to Future Success
With prudent management of opportunities based on valuable natural resources, further development of knowledge-based industries, smart strategies to develop and hold on to the skills sets needed for future success, and creativity in the design and management of workplace benefits structures, employers and employees in Atlantic Canada will have much to look forward to in the years to come. The challenges are significant, but the opportunities for economic success have never been greater.
Tara Anstey is a principal in health and benefits, and Lori Park is a principal in Canada law and tax at Mercer consulting in Halifax. tara.anstey@mercer.com; lori.park@mercer.com
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