The Problem with Legislating Wage Parity: Pay Equity & Bill 148

Self-Policing is Slow

The recent Equal Pay for Equal work legislation follows on the heels of previous legislation aimed at correcting pay inequities – but with different areas of focus. Pay Equity legislation (1987) focused on gender based pay differences.  The recent “equal pay for equal work” provisions of Bill 148 (2018) focus on employment status. There is a general consensus that Pay Equity legislation has had some impact on closing the gender-based pay gap[1]. It’s too early for any assessment of whether Bill 148 will have a more significant impact on closing the employment status based gap.

One of the challenges for achieving wage parity is that both legislative frameworks are premised on employers self-policing.  Other countries have taken more direct approaches to ensure pay gaps close at a faster pace. Iceland, for example, requires companies to provided audited statements confirming compliance on a three year cycle[2].

Speed Things Up

Given the prominent roles of unions in negotiating Pay Equity, and their now broader reach under the Labour Relations purview of Bill 148, perhaps an easy fix might be to include audited Pay Equity statements into the collective bargaining process – as a means of influencing wage negotiations towards either gender or job focused wage parity. Also, compensation consultants should advise clients, as part of the risk/reward relationship, to include such audited statements as a core metric in setting executive compensation levels. Collectively, these two approaches may shorten the wage parity timelines by at least keeping the topic front and center as part of scheduled compensation related discussion.

Change the Legislative Mentality

Beyond the self-policing aspect of these two pieces of legislation, perhaps another impediment to achieving wage parity has less to do with the employer/employee relationship and more to do with what is deemed as socially acceptable. The axiom “it’s fair not to treat everyone equally” is a common reference point when developing performance-based compensation systems. It may, to some extent, explain why we tolerate report findings which showcase CEOs who earn in two days what the average worker will make in a year[3]. If these pay inequity realities are tolerated at the social level then it becomes harder to guilt organizations into a wage parity focus.

So unless Canadian societies are prepared to go the way of democracies like Iceland in order to more aggressively achieve wage parity, regardless of gender of job status, perhaps legislative bodies should shift their focus from punitive to recognition. It’s impractical to think that there will ever be enough compliance officers to enforce the specific mandates of these two pieces of workplace legislation. Accordingly, these bodies should shift their focus from punishing employers for non-compliance to rewarding for compliance. Regulatory bodies like Ontario’s WSIB already use this approach by offering business incentives for completion of their Small Business Health and Safety program[1]. As Pay Equity and the recent Equal Pay legislation disproportionately affect smaller enterprises – why not give them an incentive to establish sound gender-free compensation management approaches during their early years?

References

[1] http://business.financialpost.com/pmn/business-pmn/canadas-gender-pay-equity-strategy-likely-to-stop-short-of-icelands-experts

[2] http://business.financialpost.com/pmn/business-pmn/canadas-gender-pay-equity-strategy-likely-to-stop-short-of-icelands-experts

[3] http://fortune.com/2017/07/20/ceo-pay-ratio-2016/

[4] http://www.wsib.on.ca/

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