Quebec Tries to Reduce Cost of Welfare Cheats

By , Special to The Christian Science Monitor

WELFARE costs have to be chopped in Quebec. That is the word from the provincial government that is facing a budget deficit of $4.6 billion (Canadian; US$3.6 billion) for fiscal 1992-93.

Special government inspectors are scouring the province looking for welfare cheats - people who are working but claim to be unemployed and poor. Especially in small towns, everyone seems to know someone who is beating the system.

But in many cases, it is Quebec's regulations that have made cheating on welfare (a provincial matter) and unemployment insurance (a federal program) a way of life.

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Take the construction business. No one is allowed to work in construction in Quebec unless they are in a union, with some exceptions such as renovating a friend's house. The provincial government checks for union membership cards. A lot of people are collecting welfare because they are not working, or at least say that.

Near the Vermont border it is easy to compare wage rates. In North Troy, Vt., a five-minute drive from here, hourly rates for a laborer or a carpenter are half what they are in southern Quebec.

"I've got to pay a carpenter $29.67 an hour. It's $15 over the line which is what it should be here," says Fred Korman, a local entrepreneur. Construction's official constraints

Mr. Korman worked his way up from electrician to owning a thriving ski hill, a hotel, and a construction company. These days Korman is down from about 150 employees to 75, 30 of them union construction workers. Government inspectors spend days in his office scrutinizing the books to make sure his company has paid everyone the same rate, that he has contributed to a vacation fund, and deducted union dues.

Quebec has been so generous to its unionized construction workers it has priced them out of much of the market. Under some of the strictest labor legislation in North America, the Quebec government, through arbitration, imposes final wage settlements for these workers.

"You can't blame the workers or even the unions for getting more money. Everybody does that," Korman says. "It's the government. They're the ones who just gave them a 5-percent raise when there isn't any work."

It is not accurate to say there is no work. There is no union work with rates so high. Looking the other way

Many private citizens in these parts hire "illegal" carpenters, electricians, or plumbers. They do not want to pay union wages. So the work gets done under the table, paid in cash.

Every Friday night in local restaurants you can see the underground economy at work. "Illegal" carpenters, electricians, and contractors sit round tables with time records scribbled down in little books. Fifty and hundred-dollar bills cross the table. But to government officials, these people are unemployed and living in poverty.

"It's a scandal. A lot of these people are on unemployment and welfare and they don't pay taxes on the money they earn," says Korman who cannot beat the system because he is what is called a "professional employer."

"I have men coming to see me who want to work under the table for lower wages but I can't do it," Korman says. "Look here," he says, pointing to a page in a book of rules, "The fine is $1,600 if I hire someone. Just one man."

Korman Electrical Contracting used to have four trucks out doing work at farms, houses, and light industry. Korman also worked on Hyundai, Mitel, and IBM plants in Bromont's industrial park. Now there is barely enough work for one truck. Work is still being done, but not by companies that by law must pay union wages. Quebec recently passed Bill 185, relaxing union restrictions in an attempt to end the black market in construction labor. But critics say the government still sets the terms of union contrac ts.

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