Women in the Workplace Symposium May 2019 Policy approaches to address gender inequality: What should you know for your workplace? Women in the Workplace Symposium May 2019

What’s the gender wage gap? Gender wage gap is the difference between the earnings of women and men (annual or pay/hour), often expressed as a proportion of men’s earnings. According to 2018 Statistics Canada data, for every dollar a man earned in Canada, a woman earned only 88.6 cents on the dollar as measured in hourly wages for full-time workers. A proportion of the gap can be explained by observable and measurable characteristics such as education, experience, tenure, hierarchical position, etc. However, there remains a portion the gender wage gap that is largely unexplained. The causes of this are very complex and overlapping but could include factors such as: Systemic underrepresentation of women in highest paying sectors/positions, overrepresentation in lower paying occupations/positions; Caregiver/parenting penalty (emphasis on long/inflexible hours, prevalence of overtime and lack of affordable daycare); and, Discrimination over cultural gender roles/biases, societal expectations, etc.

What’s pay equity? Pay equity is equal pay for work of equal value. It aims to address systemic discrimination in compensation systems resulting from undervaluation of work traditionally performed by women. Based on an assessment of job value, female-predominant jobs are compared to male-predominant jobs and, where necessary, compensation is adjusted. Pay equity helps reduce the gender wage gap, but not close it completely.

Federal landscape and approach Since 1977, pay equity is recognized as a human right under the Canadian Human Rights Act. However, it is a complaints-based system that puts the onus on the employee to identify discriminatory pay practices. Recognizing that it is not an effective system to counter discriminatory practices, and in line with the findings of the It’s Time to Act Report from the Special Committee on Pay Equity, Canada is moving towards a proactive pay equity regime. In December 2018, the Pay Equity Act received Royal Assent. It brings about a dramatic shift in how the right to pay equity is protected in federally-regulated workplaces. Once in force, the Act and its regulations will direct employers to take proactive steps to ensure equal pay for work of equal value in their workplaces.

Challenges Ensuring the purpose and components of the Pay Equity Act are well understood and properly carried out in order to achieve the desired outcomes. Introducing new measures to advance pay equity might increase the administrative and financial burden for businesses and organizations, especially smaller ones. Implementing a culture change where equal pay for work of equal value is understood. Overall, ensuring that all stakeholders realize that the benefits of advancing pay equity outweigh the administrative, financial and resource-related costs, to the benefit of all.

Expected outcomes and benefits Addressing systemic gender discrimination in compensation systems and practices is expected to help reduce the gender wage gap. In the longer-term, reducing the gender wage gap does not only benefit women; It has far reaching effects on the economy: RBC Economics (2017) estimated closing the gender gap in labour force participation rates over the next twenty years could boost GDP by 4%. According to PricewaterhouseCoopers (2016), closing the gender wage gap and increasing female labour force participation, could increase the Canadian GDP by $105 billion. Beyond the positive economic benefits that can be expected, other positive outcomes could include: Increased self-esteem for female workers; Access to better income at retirement; Improved standard of living for single mothers; and Increased retention rates for women. Reducing the gender wage gap does not only benefit women; It has far reaching effects on the economy. In fact, RBC Economics (2017) has estimated that closing the gender gap in labour force participation rates over the next twenty years could, by the end of that period, boost GDP by 4%. Additionally, we could see the GDP increase anywhere from 100 to 150 billion dollars. According to PricewaterhouseCoopers (2016), closing the gender wage gap, combined with increasing female labour force participation, could increase the Canadian GDP by $105 billion. Finally, McKinsey Global Institute (2017) estimated that if Canada were to equal the best performing province for women’s labour force participation, hours worked, and presence in higher-paid sectors, GDP would be $150 billion higher by 2026.

Pay Transparency

What is pay transparency? Budget 2018 announced new pay transparency measures which will provide Canadians with accessible, online information on the wage gaps of federally regulated private-sector employers under the Employment Equity Act (the Act) for the four designated groups: Women; Indigenous peoples; Persons with disabilities; and, Members of visible minorities. Pay Transparency is about making certain information available so that we can help highlight any pay practices that require further analysis. Pay Transparency is widely recognized as a key step towards reducing wage gaps.

Purpose of pay transparency Pay transparency prompts employers to take action to examine their practices and show leadership in reducing wage gaps that affect the designated groups, helping to shift business culture and expectations towards greater equality. Experience in other jurisdictions has shown transparency to be helpful in raising awareness about the gender wage gap. In Canada, the intention is to extend this beyond gender to the other designated groups.

What will be published? Overall wage gap percentages and occupational groups wage gap percentages – both the mean and the median hourly wage gap in the form of aggregated percentages. Bonus gaps – aggregated percentages; Salary quartiles within each occupational group; and, Overtime information.

Pay transparency in the UK Since April 2017, all employers with over 250 employees in the UK are required to publicly report on their gender gap in pay and bonuses, annually; and on their gender representation per pay quartile The UK is using this as a platform to raise public awareness and encourage employers to take action Early findings from year one In the first year, compliance among employers was 100% The reporting website attracted more than 1.2 million users By May 2018, 48% of regulated employers had published an action plan to tackle their wage gap Key findings 57% of regulated employers have more women than men amongst their lowest paid employees 33% have more women among highest paid employees

Example – United Kingdom Wage Gap Percentages Salary Quartiles – Proportion of women in each pay quarter Hourly wages Bonus pay (UK website: https://gender-pay-gap.service.gov.uk/)

Example – City of Boston (City of Boston website: https://www.cityofboston.gov/diversity/)

Existing legislative framework In 1986, the Employment Equity Act (the Act) was created following the recommendations of the Abella Commission. The Act is a proactive framework that aims to: Bring about significant change by focusing on awareness, education, and enforcement; Achieve equality in the workplace; Correct conditions of disadvantage in employment experienced by members of four designated groups; and Identify and remove barriers to employment. It gives effect to the principle that employment equity means more than treating people in the same way but also requires special measures and the accommodation of differences.

Current employer obligations Federally regulated private-sector employers are required to: Survey their workforce to collect data on the representation, occupational group, salary distribution, and shares of hires, promotions and terminations of designated group members; Identify any under‑representation of the designated groups in each occupational group in their workforce; Review their employment systems including written and unwritten policies and practices in order to identify employment barriers; and Prepare and implement a plan to remove employment barriers and achieve equitable representation. Each year, these employers are required to file an employment equity report. The forms submitted by each employer are publicly available online.

How will pay transparency work? Changes to Annual Submission The requirement for employers to submit annualized salaries would be replaced by the requirement to submit salary data that would enable wage gap calculations. Calculation of Wage Gaps Using the reported data elements, the wage gaps will be calculated in the Workplace Equity Information Management System (WEIMS) using widely recognized formulas. Publication of Wage Gaps A new online web application will be created, providing data on representation rates and designated group wage gaps for each federally-regulated employer.