Ontario expands role of private firms in welfare jobs programs

Ontario Secretary of Labor Monte McNaughton takes the podium during a news conference April 28, 2021 in Toronto. Mr McNaughton says his critics’ fears about the new incentive scheme are unfounded.Chris Young / The Canadian Press

Ontario is making changes to give more oversight over job training and placement of welfare recipients to for-profit corporations, and says pilot projects in a handful of regions have helped thousands of welfare recipients bring paid work to shore.

This transformation, which has been underway for nearly two years, will split Ontario into 15 regions. In any case, oversight of the agencies that help people find work, whether they are on welfare or not, is advertised. Winners can be municipalities, non-profit organizations, educational institutions or for-profit companies.

The Progressive-Conservative government’s new system also includes funding incentives to reward these overseers for putting more welfare recipients into employment. Opposition critics and pro-poverty advocates warn that the plan will result in vulnerable people being dumped into dead-end jobs by companies whose profits depend on it.

On Thursday, Ontario Secretary of Labor Monte McNaughton will be in Peterborough, Ontario to present the recent expansion of his job placement plans to four more regions in the province, citing past experience with pilot projects in the Peel, Hamilton-Niagara region and Muskoka-Kawarthas as a success.

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In an interview, Mr McNaughton said 5,700 welfare recipients now have jobs in those very areas of the province where the new scheme launched in January 2021. His ministry could not provide exact figures on how large this increase is.

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But Mr McNaughton said that under the old system across the province, only 1 per cent of people in Ontario Works, one of the province’s two welfare programs, normally found a job each month. And almost half she usually lost soon. About 210,000 people across the province rely on OW, according to government figures, meaning only 2,100 found a job in any given month.

The fears of his critics about the new incentive system are unfounded, says the minister. He said the new rules encourage service providers to prioritize those most in need and that more money will be spent helping people with training, advice and other support. Participation in the program is voluntary, he said.

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“This is about putting welfare recipients first and helping them get trained for in-demand, meaningful jobs,” Mr McNaughton said, noting the province’s severe labor shortages. “Apparently the system has failed people on welfare for decades.”

The four new regions transitioning to the new system are: York Region, Halton Region, Stratford-Bruce Peninsula and Kingston-Pembroke. Two of them are serviced by for-profit companies.

Australian-owned for-profit WCG, which also operates the new system in Peel, is expanding into the neighboring York region. Services at Kingston-Pembroke are overseen by Serco Canada, a division of a large global government outsourcing firm, which is involved in similar programs in other countries.

In the Halton area, the coordinator will be Fedcap Canada, the Canadian arm of a US-based non-profit global network that provides job training and “social performance testing” services to governments in the US and UK, and the service provider is in neighboring Hamilton-Niagara . The Bruce County community will provide the service on the Stratford-Bruce Peninsula.

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The selection of new systems managers is now underway in a further six regions as the program is phased in.

The changes come amid debates about welfare rates and the impact of inflation on the province’s poorest, particularly those with disabilities who rely on the Ontario Disability Support Program. The government recently hiked interest rates by 5 percent, or about $60, on the typical $1,200 monthly check. The NDP has called for the rates to be doubled. Checks for those on Ontario Works remain the same and are only $733 per month.

Hamilton Mountain NDP MPP Monique Taylor said the government is wrong to privatize public services. She said the city of Hamilton shouldn’t have lost control of its system to a lower bidder.

Devorah Kobluk, a senior policy analyst at Ontario’s Income Security Advocacy Center, said the then-Liberal government tried a similar pilot program in 2008, also run by WCG, but made little difference in the results. She said the current government has not provided enough evidence to show its changes are working.

“We don’t know what jobs these people are used for,” Ms. Kobluk said. “We know from a similar model in Australia and the UK that people are often put into precarious contracts and end up returning to welfare.”

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