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The gender pay gap: How Canada can lead at the G7

Emanuela Heyninck is the pay equity commissioner for Ontario. Sarah Kaplan is distinguished professor and director at the Institute for Gender and the Economy at the University of Toronto's Rotman School of Management.

In June, Canada will lead the G7 meeting in Charlevoix, Que., and use its presidency of the Group of Seven to draw attention to gender inequality. One important indicator of the state of gender equality is the gender wage gap, which persists in all countries despite increased attention from governments and the private sector. The gap is different for different subsets of women and occurs in every sector.

Many of Canada's like-minded global partners and competitors have prioritized closing the gender wage gap as a way to achieve gender economic equality. These measures include laws that prohibit employers from asking about previous salaries, employer reporting on a number of equality metrics and requiring some form of pay transparency. Iceland's recent legislation to fine companies that did not achieve wage equality is the most recent to garner global attention. As yet, no country or jurisdiction has implemented a program that captures the full range of practices that would assure gender equality in the workplace, but Canada could be poised to set this agenda.

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The gender wage gap has important impacts on the economy. In Ontario, a recent Deloitte report estimates that closing the gender wage gap could represent a 2.5-per-cent increase in Ontario's GDP – the equivalent of the combined contribution of the automotive and auto-parts sectors. When women's economic contributions are undervalued, there is a loss of productivity, as women are more likely to exit the work force and society loses the benefit of their diverse perspectives as employees and decision-makers. A wage gap also increases the likelihood that women will be living in poverty, both during their work years and in retirement.

Compensation practices can significantly contribute to workplace gender inequality. Requiring equal pay for equal work and equal pay for work of equal value (pay equity) are effective ways to remedy the undervaluation of women's contributions and can help close internal gender wage gaps within workplaces.

What gets lost in some of the recent commentary is that Ontario has been a leader in tackling the gender wage gap by introducing pay-equity legislation in 1987, with Quebec following in 1996.

In Prime Minister Justin Trudeau's recent speech at the World Economic Forum, he outlined his government's commitment to table pay-equity legislation in 2018. At the G7, there is an opportunity for Canada to take the lead internationally by advancing the case for pay equity. Based on the experiences of Ontario and Quebec, and on the extensive international research about the gender wage gap, this legislation should contemplate two key provisions.

First, the definition of pay equity in the law should be sufficiently comprehensive to cover both equal pay for equal work and equal pay for work of equal value. Bringing these different, but related, aspects to gender pay equality could lead to more effective and efficient administration of the law.

Second, the law should provide for reporting by firms to an independent agency that is mandated with enforcing the law. Both Ontario and Quebec have independent enforcement bodies, but only Quebec requires reporting on outcomes. A reporting requirement can identify where problems exist and will enable the agency to develop tools to assist companies in analyzing and removing the gender bias that the law seeks to address. A reporting feature would level the playing field for businesses in every sector, eliminating any competitive advantage for those skirting the law's requirements. Moreover, a reporting regime actually reduces administrative burdens on business as it regularizes the process of compliance and ensures attention to emerging problems that may become problematic if left unattended.

While such legislation could be an important step toward closing the gender wage gap, research suggests a focus on pay alone will not do the trick. There are a number of business practices that prevent women from achieving economic outcomes in the workplace equal to those of men. These include, unintentionally-biased hiring practices, unequal starting salaries, differences in training and advancement opportunities, lack of career sponsorship, unequal allocation of investment resources to male and female executives and, importantly, lack of adequate childcare support. And, in the era of #MeToo, it is clear that women's experiences in workplaces have, for a very long time, forced them to move off of their career tracks into potentially lower-wage jobs when sexual harassment has made their work experiences too unpleasant to bear.

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While businesses are responsible for making the necessary changes to their workplaces to address these inequalities, governments can create the necessary conditions to support these changes by establishing an effective regulatory framework and providing access to statistical, diagnostic and assistive resources. Tangible progress can be made if support is offered to employers to diagnose which of their practices contribute to generating a wage gap, to set benchmarks for improvement and to report on outcomes on a regular basis. Many of these initiatives have already been introduced in countries such as Germany, Britain, Switzerland and Australia.

As the host for the 2018 G7 summit, Canada has an opportunity to offer its experience and advance its existing commitment to gender economic equality by enacting robust pay-equity laws and by engaging with the business community in addressing other practices that can create a welcoming work environment for people of all genders.

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