Employer Job Creation Incentive

June 20, 2021 | By


There is no mistaking that, until recently, what has made Alberta such an attractive place to settle was, above all else, the abundance of employment opportunities accompanying a strong and growing economy. So, a big part of attracting and retaining talent has to be making sure that there are jobs with which to keep or bring them here. That is partly about the overall health of the economy, but there is also a role for targeted policies to incent job creation.

Many favoured economic or tax policies are explained on the basis of their job-creation potential. Often, though, the link to job creation is indirect and hard to directly attribute to the given policy. This idea is a much more direct and explicit employer job creation incentive. Any organization (for-profit or not-for-profit) that increases its total net payroll year over year would receive a refund from the provincial government equal to a certain percentage (e.g., 10-20%) of the increase in their payroll.

This incentive rewards employers for creating new jobs and/or for increasing wages. It applies on a net overall basis, so employers don’t qualify for it by creating one new job or higher wages if those are offset elsewhere in their organization. Employers would only be eligible for the refund after they have added to their payroll, so this is not a grant. The intention is not to subsidize employment in an unsustainable manner, but to nudge employers toward a decision to invest in job creation that they might otherwise be contemplating for some organizational need but unsure about committing to.

The increase in personal taxes paid by the employees through either higher wages or new jobs will help offset the cost of the refunds. The refund only happens when there are more jobs, higher wages, or both, which means there will be an increase in income tax revenue for the provincial government. Because this incentive would be eligible to all industries and both for-profit and not-for-profit organizations, the government would not be picking winners and losers. Instead, we would be directly rewarding investments in what everyone says we want more of – more better paying jobs.