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Business Commentary Ain’t no sunshine when she’s gone: The gender pay gap in the Ontario public sector

Laura McGee is the chief executive officer of Diversio and co-chair of the Expert Panel on Women Entrepreneurs. Anna Klimbovskaia is the chief operating officer of Diversio

For the past 23 years, the government of Ontario has published the Sunshine List as a means of increasing transparency and accountability. The list provides information on public sector employees earning over $100,000, and paints a stark picture of inequity that could cost Ontario upwards of $1.3-billion, according to our estimates.

For the first time, Diversio performed a comprehensive analysis on Sunshine List data to understand the gender breakdown of highly paid public sector employees. Adjusting for inflation, women represent 36 per cent of top earners on this year’s Sunshine List. This is only a 3-per-cent increase from 2008. At this rate, women won’t reach parity until 2068.

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In addition to low representation, women are concentrated at the bottom of the list. Women represent 52 per cent of employees in the bottom quartile (earning between $100,000 and $106,000) and 34 per cent in the top quartile (earning between $133,000 and $1,750,000). Just nine out of 47 people earning $500,000 or more are women. Women also earn $6,700 less salary and 30 per cent less in benefits on average than men.

To understand the driving forces and impact of these numbers, Diversio analyzed salary, gender and workplace review data for 1,830 public organizations. We made three noteworthy findings.

First, the wage gap cannot be fully attributed to differences in roles and responsibilities. The good news is that 43 per cent of C-suite roles are occupied by women – significantly higher than the private sector. Yet, female executives earn on average $21,000 less than men. The most significant earning differentials are seen in chief executive positions, where women make nearly $46,000 less than their male counterparts.

Second, there are significant differences among sectors. The hydro and municipality sectors have the lowest proportion of women on the Sunshine List at 15 per cent and 21 per cent, respectively. Education and hospitals are the only sectors to reach 50 per cent or more. On the flip side, hospitals also show the greatest pay gap, with a differential of almost $30,000. The next biggest gap is in the judiciary, where women are paid $16,000 less on average.

Third, there is a meaningful relationship between pay equity and culture. We analyzed employer reviews from Indeed.com and discovered a clear relationship between inclusivity and pay equity. Employers with the smallest pay gaps are more highly rated on things such as culture, work-life balance and approval of the CEO. This suggests that a culture of pay equity and inclusion is appreciated by all employees, not just women.

To get specific, Ontario public sector employers with the largest pay gap have an average Indeed score of 3.6, a work-life balance score of 3.8 and a culture score of 3.7. Organizations with the smallest pay gap have an average overall score of 4.0, a work-life balance score of 4.2, and a culture score of 4.0. Seven per cent more employees at pay-equitable employers reported approving of their CEO.

These findings demonstrate the importance of building a culture of inclusion that emphasizes pay equity. It’s not about simply flipping a switch and increasing any gender’s salary at the expense of another. It’s about creating a culture where all genders have equal opportunity to advance, including an unbiased compensation structure that appropriately rewards performance.

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Failing to build this kind of culture within the Ontario public sector carries a heavy price tag. In 2018, 30 per cent of millennials – the largest segment of Canada’s workforce – reported having already left a job for a more inclusive organization. Assuming the cost of replacing a highly skilled employee is the equivalent a one year salary, turnover due to exclusion on the bottom half of Ontario’s Sunshine List could be a staggering $1.3-billion – a cost borne directly by taxpayers.

There is plenty that policy-makers can do to drive change. Countries such as Britain are requiring employers to publish salary data by quartile on an annual basis. Others such as Rwanda set targets for the number of women in leadership in public sector organizations. Global leaders such as Iceland attribute their success to data, transparency and tracking.

One highly innovative approach to consider is creating an Inclusion Index that rates public sector employers by how inclusive they are, using a combination of diversity and employee engagement data. The Law Society of Ontario is pioneering this approach to drive inclusion within legal workplaces. The Progressive Conservative government could consider doing the same. Given Ontario’s newly announced deficit of $13.5-billion, it arguably can’t afford not to.

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