Pay Equity Committee on May 2nd, 2016

[Serena Fong, Vice-President, Government Affairs, Catalyst]

Thank you, Madam Chairperson and committee members, for the opportunity to provide input on such an important issue.

I'm Serena Fong, vice-president of government affairs. It is a distinct honour for me to be here representing Catalyst. Our goal as a non-profit organization is to help businesses around the world build workplaces where women and men of all backgrounds have equal opportunities to succeed.

I'll be focusing my remarks from the perspective of working with organizations to close the worldwide gender gaps in wages, leadership, and opportunity in the hopes of providing further context for your deliberations.

Our research, along with that of many others, shows that wage inequality starts early in most women's careers and worsens over time. In fact, Canadian high-potential women earned approximately $8,000 less than men in their first post-MBA job and were more likely than men to start at a lower-level position. Women are also offered fewer career-accelerating work experiences and international job postings. These missed opportunities significantly contribute to the gender wage gap. Clearly the pay gap is all too real, and unless we act now, it's not going anywhere.

There is some positive news about the gender wage gap. These days, unequal wages usually don't happen intentionally. Outright discrimination when it comes to wages in the workplace is not nearly as prevalent. Wage and other gender gaps exist due to systemic barriers and unconscious biases.

The majority of talent, recruitment, development, and management systems aren't designed to correct early inequities, nor will giving it time even the playing field for women and men. Only intentional actions by both the business community and the government will help close these gaps.

Pay transparency is one such action that can narrow the wage gap. It provides women with the information they need to better negotiate for fair and equal pay. Government mandates requiring companies to publicly disclose salaries and/or gaps between women and men's wages, such as the U.K. government's regulations and Australia's legislation requiring companies to report on the remuneration of their employees, are examples of ways to achieve pay transparency. Similarly, organizational policies disclosing exact wages, stock option data, salary bands, and pay levels have been found to be effective pay transparency methods.

Yet pay transparency alone won't close all the gaps or break down every barrier to workplace equality. Numerous studies show that when women negotiate for higher salaries, people react more negatively than they would to a man asking for more money. No-negotiation policies and a focus on paying for the work and not the potential can help combat these and other biases. For example, in the United States, the federal government's Office of Personnel Management, which is the government's HR department, recently issued a memo advising other agencies not to rely on salary history when determining compensation. Doing so could adversely affect a candidate who's returning to the workforce after an extended leave, or their existing salary may not be reflective of their qualifications or the market rate, perhaps due to systemic gender biases.

Organizations should conduct equal pay audits on an ongoing basis in order to identify and correct anomalies based on gender. Once the audit is done, they should bring in an external organization to verify the findings. Policies and actions like these benefit employers by providing companies with the tools and knowledge needed to set salary rates appropriately. They also aid job-seekers in determining whether they want to work for a particular organization and rightly take the onus off women, who are often blamed for earning less than men because they didn't negotiate.

Government policies mandating companies to report the types of actions they are taking to address the wage gap as well as explain why they may not have policies in place force companies to address the issue. They can also provide best practices for other organizations to implement. Furthermore, consequences for non-compliance should be robust and enforced in order to bring about actual change.

There are companies that are actively implementing some of these solutions. I'd like to share one example. Gap Inc. was the first Fortune 500 company in the United States to publicly disclose and validate that it pays women and men equally. The company's pay equality is a result of its long-standing commitment to inclusion. It emphasizes Gap Inc.’s intentional efforts to promote equality through its talent management processes with remarkable results.

In addition to reaching pay equality, between 2007 and 2015 women’s representation at the vice-president level increased globally from 44% to 49.7%. At the most senior leadership level—meaning those reporting to the CEO—women’s representation has gone from 33% to 77%, and out of the 10 women, four are women of colour. Notably, between 2010 and 2015 women’s representation on Gap Inc.’s board of directors increased from 10% to 36%.

These policies are ones that organizations can and should enact and that the government should encourage and adopt.

It’s also critical to gender equality to monitor and track progress toward goals and embed checks and balances within recruitment, retention, and advancement policies. Countries with a more holistic approach toward gender equality, including guaranteed non-gendered family leave, access to affordable child care, and legislated efforts to increase gender diversity in senior leadership, can be more successful in building inclusive workplaces that benefit women, men, and society.

Thank you for your attention. I look forward to your questions.

[The Chair, Liberal, Anita Vandenbeld]

Thank you very much, Ms. Fong.

We now have, by video conference, Professor Bilson, who has testified before the committee before. We've now had the benefit of a number of other witnesses who have come since.

Professor Bilson, did you wish to testify again, or was there anything you wanted to add to your previous testimony?

[Prof. Beth Bilson, Former Chair, Pay Equity Task Force and Interim Dean and Professor of Law, University of Saskatchewan, As an Individual]

I don't really want to detain you long with a presentation, since I did have a chance to talk to you some weeks ago. There are just a couple of things that I want to point out.

One has to do with the complexity of determining pay equity. One of the things that has bogged down systems that have been aimed at achieving pay equity, such as joint job evaluation, is the complexity, because generally speaking the comparison is between components of jobs, not whole jobs. That's a very complex process, and there are a number of models on the market. I think one of the things that led to all that protracted litigation under the Canadian Human Rights Act was that numerous experts testified for very long periods of time about different models.

If there's something useful that you could accomplish if you decide to go ahead with some sort of pay equity legislation, it's not necessarily to choose one particular model but to provide the guidance on what kind of model might be advantageous. That really is a research project. There are lots of people with expertise in those areas who I think could provide assistance in determining what the limits should be on the possible models for implementing pay equity.

Compared to, say, employment equity, where you are just deciding how the workforce should proportionately reflect society, or equal pay legislation, which really does compare the same job and decide whether people are achieving the same pay rate, I think pay equity is always going to be a more complicated proposition, and you have to be prepared for that.

Other than that, I would just welcome your questions.

Thanks.

[The Chair, Liberal, Anita Vandenbeld]

Thank you very much.

Now we go to Janet Borowy, from the Equal Pay Coalition. You have seven minutes.

[Janet Borowy, Member and Lawyer, Cavalluzzo Shilton McIntyre Cornish LLP, Equal Pay Coalition]

Madam Chair, thank you very much.

The Equal Pay Coalition, by way of background, is an organization of over 30 women's groups, trade unions, community groups, and business organizations, first formed in 1976.

The objective is to secure action through laws, collective bargaining, policies, and programs to eradicate the gender pay gap and of course eradicate those factors creating and reproducing gender pay discrimination. Some 40 years later, the coalition continues to pursue its vision.

There's an approximately 30% gender pay gap that exists in Canada's labour market today, and that's a statistic based on earnings. Our objective is to see that this disappears to 0%.

Frankly, the gender pay gap is an urgent human rights crisis. There's an impact on our mothers and their pensions, on our daughters in the impact on their earnings over their lifetimes, and on our granddaughters who are about to enter into the labour market and face a significant human rights crisis. Frankly, for our families, our communities, and Canadian society at large, the losses brought by the gender pay gap are staggering.

The Equal Pay Coalition very much supports the committee's work in a forward-looking and progressive approach to securing pay equity in the federal jurisdiction. We have provided you with detailed submissions. We won't repeat those, obviously, and we encourage you to review them when they become available to you.

There are three points we wanted to make this evening, but to start our comments, we want to say that it's widely recognized that the gender pay gap arises from systemic discrimination against women. What has been lacking is a comprehensive government action plan, which would include proactive legislation and policies and programs to explicitly and directly close the pay gap. Pay equity is, as you've heard from many deputants, an internationally recognized fundamental human rights legal standard that guarantees men and women receive equal pay for work of equal value.

This is for three reasons: first, women are segregated from men into different work in different workplaces. Second, the gender segregation of the labour market is accompanied by wage inequality: female domination of a job and low pay are directly linked. Third, despite the attempts to explain away this gap by looking at the personal characteristics of women or the hours and the nature of their work, what fundamentally is taking place is an undervaluation of women's work, their skills, their efforts, their responsibilities, and their working conditions. It's pay equity in the form proactive legislation that steps in to help cure that undervaluation.

The coalition calls upon this committee and the federal government to develop a comprehensive action plan to accomplish a goal of 0% gender pay equity gap within 10 years. In order to do that, we argue there are three steps that need to be taken.

First and foremost, the starting point for the foundation of a comprehensive action plan is to immediately act upon the 2004 pay equity task force recommendations and introduce proactive pay equity legislation.

Those recommendations included legislation to provide a comprehensive way to cover as many federally regulated employers and contractors and as many types of employment relationships as possible. The legislation needs to apply to female-dominated workplaces and enable proxy comparison methods.

It needs to include mechanisms to maintain pay equity of all of the plans that would have been negotiated to achieve this. It needs to include a special oversight agency to administer and to interpret new plans and to receive copies of pay equity plans to ensure the transparency that Ms. Fong just testified to.

The task force itself recommended innovative processes to develop access to pay equity complaints considering multiple grounds of discrimination because of the deeper types of structural inequity that exist for the equality-seeking groups. We support all of that.

Our second major point, frankly, is that this committee should recommend the quick and immediate repeal of the Orwellian-titled Public Sector Equitable Compensation Act. It was enacted but not proclaimed by the prior Conservative government. From the coalition's vantage point, this legislation is regressive. It does not guarantee a fundamental right of equal pay for work of equal value. It introduced market forces into the calculation of the value of work, which are the same forces that created and reproduced the gender pay gap to begin with. Discrimination embedded in market mechanisms helps explain the persistent gender wage gap.

Our third argument is that in order to effectively reduce the gender pay gap, the government needs to introduce and develop a comprehensive action plan. That requires an uprooting, if you will, of systemic discrimination through a fully multi-dimensional action plan.

Included in that, as you will see in our brief to you, is a national child care program, improvement to the federal minimum wage, and improvement in and access to a robust form of collective bargaining for women in various forms of employment relationships. In order for this to be done, the government must actually apply a robust gender-based analysis to all forms of work and all forms of programs and policies that exist at the federal level.

We appreciate that getting from nearly 30% to 0% will take a tremendous effort, but it's time to put women, in all their diversity, at the head of the line in terms of economic and social priorities; otherwise, Canada leaves women languishing in lower-paid inferior jobs or without jobs because of their care responsibilities or the barriers they face to gaining decent work.

We look forward to bringing an end to systemic pay discrimination in collaboration with you and with decision-makers, policy-makers, community organizations, businesses, trade unions, and women's groups. Now is the time the federal government can take bold and innovative action to close the gender gap.

Thank you very much. We look forward to your questions.

[The Chair, Liberal, Anita Vandenbeld]

Thank you very much.

Thank you to all of the witnesses.

We will start our questions with Mr. Sheehan, for seven minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much to all our presenters. That was very good information.

My first question is to Beth. I didn't have an opportunity to ask this question because our time was cut short; we had to go vote. Since that time, we've had several witnesses. They've pointed to Quebec as having the pay equity model that is closest to what was recommended in the 2004 report of the pay equity task force. However, Ontario has had a pay equity law in place longer, I think since 1987. What is the difference between the Ontario and Quebec pay equity regimes? They do seem to be similar.

Beth, could you comment on that?

[Prof. Beth Bilson]

They are fairly similar. Certainly the framework is very similar. That's not surprising, because I think the Quebec legislation really borrowed heavily from the Ontario legislation when it was passed.

There are some differences in the Quebec legislation that are worth drawing attention to. One is that in Quebec they have dealt, I think quite imaginatively, with the problem that is caused by trying to compare jobs in small enterprises, enterprises under a certain size, for which, as you might imagine, it's very difficult to draw sensible conclusions when you have very few jobs in an enterprise.

They have made provisions to deal with sectoral jobs—those in the tourist industry, for example, or the hospitality industry—in which there are lots of small-business employers. They have made provision to develop a single pay equity plan to cover a number of employers so that they can smooth out those anomalies and actually make some accurate comparisons and start getting an accurate picture of how those employees are dealt with.

There are, I think, some differences from the Quebec legislation, but there are certainly a lot of similarities.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

In your view, which system is more effective, and why? Would you be able to comment on that?

[Prof. Beth Bilson]

I have to say that I haven't really monitored either Ontario or Quebec recently. Since our report was done, I haven't really paid close attention to how those two systems are operating, but I think the difference in Quebec is something worth looking at, because there is still a lot of employment in Canada in small organizations and small employers. I think it is worth examining whatever mechanisms can be adopted to make meaningful comparisons between male and female workers in those sectors.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much. My next question is for Serena.

Your board of directors and your supporting members represent a large number of major global companies. What do your member companies do to achieve gender pay equity? That is my first question.

[Serena Fong]

In terms of the example I gave with Gap Inc., the approach that we take and that we counsel them on is about solving all the gaps you have. Once you do that, when you build an inclusive environment, you are going to end up closing your wage gap. Having more women in leadership, evaluating your talent management systems, looking at the way you're promoting and hiring then just cascades and will bring about pay equity, so we talked to them about....

I think one of the people who testified prior to me talked about looking at talent development systems. We talk about diverse slates and counsel them a lot about the business case for doing this. That's the approach we take with them. If you try to piece it out too much, you're not really going to get to the systemic unconscious and subconscious biases that are built into the systems.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you.

I have a question for Janet. Your document is called “12 Steps to Closing the Gap”, and it was directed at the Government of Ontario. Which, if any, of the key points in your document are relevant for the federal government as well?

[Janet Borowy]

Thank you.

The brief we provided has actually updated those 12 steps and directed those at the federal government as well. For example, we've reviewed and based some of our recommendations with respect to the improvement to the labour relations regime federally on Prof. Arthurs' report on improvements to the Canada Labour Code, which called for an increase to the minimum wage.

From the coalition's vantage point as well, we're generally calling for mainstreaming equity compliance and gender-based analysis into government laws and policies. Very often policies or government programs are looked at as just simply neutral, when in fact they actually do have a gender impact.

Those are recommendations that make sense both federally and provincially. I think you'll find that in the brief we provided, we've updated this to ensure that it addresses federally regulated sectors.

[The Chair, Liberal, Anita Vandenbeld]

I'm pushing it; that's it for the time.

We now have Mr. Albas for seven minutes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you very much, Chair.

Thank you to all of our witnesses for being here.

I'd like to go over to Ms. Fong first. Ms. Fong, I want to say that your submission here today has been excellent because it touches on more than just some of the issues that are at work here. I think we've really focused too heavily on just Canada. Now, if we were focusing on Europe and other countries, I probably would then have the criticism that we haven't focused on Canada enough, but I do appreciate your taking a larger world view.

I'm intrigued when you talk about pay transparency, particularly what the U.K. experience has been. Do you know much about what the government is doing in that case, or do you just cite it as something that possibly could be looked at by the committee?

[Serena Fong]

I think both, to a certain extent, because the U.K. government has either just passed its regulations or is about to, so those measures haven't actually come into effect yet. They were just announced by the Cameron government a few months ago, and they're going to build on it, but it's about transparency.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Just so the committee.... I hate having conversations when I know nothing about it. Is it companies with 250 employees and up that have to comply—

[Serena Fong]

Right.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

— and what they do is they average out men to women and what the average employee makes, and if there's a large differential, I guess, then they can take a look at that.

Have I described that accurately?

[Serena Fong]

Yes. Basically companies with 250 employees or more have to report out on what their salaries are, but I don't think there's any kind of penalty per se, in the sense that they're going to be fined or anything like that. It's a way for them to see if there is a gap within their own organization. Also, because of the way that they're doing it—they don't have to say this is what X employee or what Y employee is making—to your point, it does give the government and the public and the companies themselves the opportunity to look at what's going on.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

In the earlier panel we had the Canadian Bankers Association, and one of the suggestions I made was that perhaps one of the banks could share some proprietary information on their policies, on their road map on how they're going to address that. Thinking about it further, I think that's highly competitive data, and I don't think anyone would want to give that out because a lot of investment goes into it.

I appreciate your third paragraph, that there is some positive news about the gender wage gap. To take an averaging of employees and what they make and then putting it out there transparently, if there is a distortion due to some....

These days unequal wages usually don't happen intentionally. I think that's a really key point, and so what I like about the pay transparency regime is that an individual business under the federal regulations might just see they have something out of whack.

Then, on the next page, you say organizations should conduct equal pay audits. Would you say that the two almost go hand in hand? If a number was put out publicly by a large company, a bank or whatnot, then the onus would be on them to ask why the wage gap was happening and then to look for internal remedies, because, as you said on the first page, unequal wages usually don't happen intentionally.

What are your thoughts on that?

[Serena Fong]

Yes, you're absolutely right. There's a reluctance around reporting out that information. It's very private. It's what you're making, and no one wants to share that. It makes people very uncomfortable, but if you report out in terms of averages and bands, then yes, companies can benchmark themselves against the other averages, and that's what we also recommend.

Earlier you mentioned that what gets measured gets done, and I think that it helps to have these kinds of transparency laws and have those requirements to put out averages.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I think we're struggling a bit here because both the public sector and the private sector are different beasts, so to speak, and I think we're trying to find tools to bring up awareness, particularly in the private sector, because, as I said, 874,000 Canadians are employed in that sector.

Would you say that pay transparency may be an option to engage the private sector? Again, I don't want to put a number out there, but perhaps this committee might want to spend more time on that.

[Serena Fong]

I think so. We've shown that pay transparency has been very effective in terms of closing the gaps, even within organizations. As I mentioned, Gap Inc., before they came out and publicly said what they did, ran a pay equity study, and they continued to do that as part of their whole program in terms of building an inclusive environment.

The other thing that I think is really interesting about what they do is not only do they continually do the audits, but they also have money set aside, reserved, just in case they find a gap, so they can correct for it.

I do think that pay transparency is very helpful, and again, you don't have to get that specific. You can do it in terms of bands, in terms of ranges that your employees are falling into.