New rules proposed for pay equity

Ottawa considers proactive model, possible extension to contractors

The federal government is considering changes to pay equity that would create new obligations for all federally regulated employers as well as anyone wanting to do business with Ottawa.

After almost three years of consultation and deliberation, a three-member federal pay equity task force tabled its final report earlier this month. It’s calling for the old complaints-based system to be replaced with a proactive model, where employers take the initiative to ensure jobs of equal value receive equal pay.

According to the task force, full-time female workers still earn only 71 per cent of the salary of male workers. “Research and case studies indicate that part of the wage gap is due to discrimination resulting from female-dominated jobs being paid less than male-dominated jobs of equal value,” it said.

All federal and federally regulated employers, as well as any private-sector organizations working for the government, will have to create a pay equity committee. They must also develop and implement a pay equity plan and maintain pay equity results in close consultation with employee representatives. The proposals are part of a 535-page, 113-recommendation report presented to the Minister of Labour Claudette Bradshaw and the Minister of Justice Irwin Cotler.

Section 11 of the Canadian Human Rights Act makes it a discriminatory practice to pay men more than women for performing work of equal value, but the section has not be subject to a thorough review since 1977. In recent years the pay equity system has come under attack for a lack of clarity on key concepts, and for frequent changes to the methodologies for job evaluation and wage adjustment.

The complaints-based system is also blamed for lengthy and costly court cases.

While the government was saying little after receiving the report, labour groups and equal pay advocates commended the proposed changes. Opponents said it will be just another red-tape headache for employers.

Determining work of equal value is definitely a complex matter, but it is possible, said Beth Bilson, chair of the task force and law professor at the University of Saskatchewan.

Over the years, methodologies and mechanisms for job evaluation have been developed and refined. There are now many specialists and consultants who can help employers figure out if positions are being underpaid and entitled to a pay increase.

If the legislation incorporates the recommendations of the task force, employers would have clear criteria and standards to shape pay equity plans, she said. New specialized oversight agencies would not only monitor employer compliance but provide guidance as well, she added.

The proposed model closely reflects the pay equity rules and regulations set out in Ontario. Private-sector employers already subject to those rules likely wouldn’t have any problem meeting the requirements for the federal contractor program, said Bilson.

On the other hand, federal contractors in provinces like Alberta and British Columbia may have a harder time meeting federal requirements, she said.

The government is reviewing the report but has not set a date for a response, said Denis D’Amour, director of communications for Minister Bradshaw. “The report is a very extensive and comprehensive document, so the government will review the 113 recommendations and we will address all of its contents in a timely matter.”

Labour groups called on the government to move quickly to enact the proposed changes.

Public Service Alliance of Canada national president Nycole Turmel, said she is pleased and surprised with the task force proposals but is worried the government will ignore them. “We understood they wanted to weaken section 11. The opposite has happened,” she said.

However, there is little evidence to support the claim pay equity legislation will help close the wage gap, said University of British Columbia economist Nicole Fortin.

Along with University of Toronto economist Michael Baker, Fortin completed a study of the impact on wages of Ontario’s pay equity act between 1987-88 and 1997-98. Ontario has been called a world leader in pay equity policies and its legislation called the “most comprehensive” in North America.

“The results (of the comparison) were quite disappointing for pay equity advocates,” said Fortin. In only a few occupations did the Ontario legislation appear to have an impact and even in those cases, the effect was minor. “In Ontario it doesn’t seem to have worked.”

But the task force was made up of people who are advocates of pay equity so it’s not surprising they would make the recommendations without taking into account the scientific evidence, she said.

However, the Ontario-based Equal Pay Coalition, maintains there is evidence to prove pay equity works. By its count, Ontario’s 1988 Pay Equity Act led to significant pay gains for many but not all working women. It maintains the wage gap between men and women was reduced by about 25 per cent since 1986, due largely to the proactive legislation which forced employers to take steps to recognize the true value of women’s work.

The proposition of new pay equity legislation is even less attractive when the potential implementation problems are taken into account, said Fortin. “I find it very complicated and unlikely to work.”

Pay equity is based on the “controversial” concept of value of a job — the notion that work has intrinsic value that can be determined regardless of market conditions. This is not an easy concept for employers to incorporate into their compensation practices and it will likely take an “army of bureaucrats” to oversee, she said.

Unfortunately, pay equity is a politically charged issue which distorts the debate about real causes of the wage gap, she said. “People think we will put these laws in place and the gender problem will be solved.”

Much of the gender wage gap arises from the fact that a disproportionate number of women are stuck in low-level jobs, she said.

The real problem is that working women’s family commitments mean they are away from work more than men and are more likely to work part time. “It is more difficult for them to go after promotions,” she said. “These are the kinds of problems that women face and I don’t think this kind of legislation — pay equity legislation — is going to make a big dent in that problem. I think there are other family-friendly policies that can be a lot more effective,” she said.

Employers may complain that pay equity is complicated and difficult to manage, but it is possible, said Turmel. Female-dominated jobs are undervalued. That affects not only compensation but it impedes career progress for people in those jobs, she said. The role of administrative assistants is much more complex than it once was, she said. “If you recognize that in the classification system, then it will open more doors for them and they will be able to apply for more jobs,” she said.

Pay equity impacts in Ontario
According to the Equal Pay Coalition, Ontario’s Pay Equity Act, which served as a model for the federal pay equity task force proposals, led to the identification and correction of many instances of pay inequity. These include:

•secondary school secretaries received an annual increase of $7,680 based on their comparison with a male job class of audio-visual technicians;

•female health technicians were compared to male transportation workers, leading to an increase of $2.79 an hour;

•female-dominated mental health workers were compared to the male personnel officer’s job, resulting in a pay equity raise of $2.20 per hour;

•female-dominated police dispatchers were compared to the radio technical supervisors and received an increase of $7,179 annually;

•a female job class of law clerk was compared to the male job class of investigator, resulting in a $4.28 per hour adjustment; and

•at a baked goods manufacturer, the female job class of personnel manager was compared to the male job class of service manager, resulting in an adjustment of $4.65 per hour.

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