Private sector less appealing to women, minorities

Public sector better at narrowing pay gaps, also has strong anti-discrimination policies
By Kate McInturff
|Canadian HR Reporter|Last Updated: 03/09/2015

The size of someone’s paycheque should notbe determined by his gender or race — yet incomes continue to vary for exactlythose reasons, and the gaps are bigger in the private sector than they are inthe public sector.

As a result, the employees most likely to seediscrimination in their wages may opt out of the private sector and seek outpublic sector jobs. An attractive package of non-wage benefits is not the onlyreason women, Aboriginal and visible minority workers are choosing publicsector jobs — the public sector also has policies in place that contribute to aless discriminatory system of pay for those workers.

The biggest wage gap exists for Aboriginal workers.In the private sector, an Aboriginal worker with a university degree (workingfull-time) will make 44 per cent less than his non-Aboriginal peers. In thepublic sector, that same university-educated Aboriginal worker sees his wagegap shrink to 14 per cent, according to a study by the Canadian Centre forPolicy Alternatives, which used data from Statistics Canada’s 2011 NationalHousehold Survey.

The same is true for visible minority workers andwomen. University-educated women make 27 per cent less than men in the privatesector, and university-educated visible minority workers make 20 per cent lessthan their non-visible minority counterparts, found the study. 

The public sector sees most of these wage gaps cutin half. For example, in the public sector, those same university-educatedworkers see their wage gaps shrink to 12 per cent for visible minority workersand 18 per cent for women, found the study. These are still significant gaps,but the public sector provides important insights into which measures are mostlikely to see workers earning a paycheque that reflects their experience andability, and not their sex or race.

There are several factors that appear to contributeto the lower levels of wage discrimination in the public sector. Unionizationand access to collective bargaining are strongly correlated with a reduction inwage inequality. Access to benefits such as paid parental leave, family leaveand sick leave also reduce the gender wage gap by addressing the double burdenof unpaid care work borne by female workers. Finally, pay equity legislationhas an evident impact on reducing discrimination and inequality.

None of these elements are exclusive to the publicsector. The more equitable system of pay found in the public sector can bereproduced in the private sector. The first step is asking the right questions.Wage gaps can’t be addressed if no one knows they exist. Tracking rates of payand comparing, for example, the wages of men and women with the samequalifications is a first step to identifying if and where a gap exists.

Wage-setting institutions, including collectivebargaining, have also made a significant difference both in Canada and acrosscountries in the OECD (Organisation for Economic Co-operation and Development)in narrowing the pay gap.

This is particularly important at the lowest end ofthe pay scale. Ensuring that women working for low wages see the same steady increasein their wages as men narrows the gap where it makes the biggestdifference. 

Access to benefits such as paid parental leave,family leave and sick leave also reduce the gender wage gap by addressingunpaid care work often borne by female workers. Women across the economic andeducational spectrum experience a long-term lag in their earnings after havingchildren. The so-called “motherhood penalty” means women in Canada will see anestimated eight per cent decrease in their earnings, even when differences inage, employment level (part-time or full-time) and education are accounted for,according to a 2012 study in Social Politics. Coupled with the high costof childcare, this can mean experienced female workers leave the workforcebecause they can’t afford to stay.

Tracking wages, supporting wage-settinginstitutions and addressing work-life balance can make a real difference inreducing discrimination. These policies also make a difference for employers.They increase the pool of qualified candidates and ensure a bigger, morediverse and more flexible labour force.

Consider the fact that men and women in Canada tendto work in different industries and hold different jobs within the sectorswhere they work. Women are far more likely to work in education, health andsocial services, while men are more likely to work in finance, engineering andtechnology, found the CCPA study. The result is that the more highly segregatedsectors of the economy have a less flexible workforce — the field of potentialemployees is cut in half.

The arguments in favour of bringing public sectorpractices into the private sector are well-rehearsed. It’s time to considerwhat the private sector has to learn from the public.

Kate McInturff is a senior researcher at the Ottawa-based Canadian Centre for Policy Alternatives (CCPA) and director of its initiative on gender equality and public policy, Making Women Count. Follow her on Twitter: @katemcinturff. This article is adapted from the study Narrowing the Gap: The Difference that Public Sector Wages Make, co-authored by Paul Tulloch and Kate McInturff. It is available at policyalternatives.ca.

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