Good morning, and thank you for inviting Catalyst to be part of the discussion this morning. I've had the chance to speak with some of you before.
Catalyst is a global not-for-profit that advocates for the advancement of women in business.
I'm going to talk about three areas, specifically the gender wage gap and occupational segregation; tools to strengthen women's economic security; and ways to increase women's entry, participation, retention, and representation in leadership and in high-paying positions.
I'd like to take a minute to set the stage in Canada. As many of you will know, among some, not all, of the reporting 710 companies listed on the TSX, which represents about $2 trillion in market value, only 12% of board seats are held by women, and 45% of those companies have no women—zero women—on their boards. Further, 43% of these companies have zero women executive officers, and then another 28% have only one. Finally, fewer than 5% of CEOs of Canadian companies are women. The Canadian stage is not quite what it could be with respect to women.
Let me talk a bit about this first issue of identifying the problems that affect women's income: the gender wage gap specifically. Catalyst's research, along with that of many others, shows that wage inequality starts early in women's careers and worsens over time. In fact, studies we've done show that Canadian high-potential women earn $8,000 less than men do in their first post-M.B.A. job and are more likely to start at a lower-level position despite same levels of experience and education. Earning less over a lifetime means that women receive lower pensions when they retire and are at a greater risk of either poverty or a reduced lifestyle than are men.
In our view, the pay gap and other gender gaps exist for a number of reasons, including entrenched systemic barriers and unconscious biases, not because women are less qualified than men. I would point to a couple of things.
The majority of talent recruitment, development, management, and compensation systems are not designed to correct early inequities. They're built on the notion of meritocracy, which I think we love to latch onto in Canada. Many research projects have shown that merit contains a significant amount of unconscious bias, because merit is defined by those in power.
I would also note in the area of gender wage gap that some groups of women experience much larger wage gaps than others, notably racialized and indigenous women, newcomers, and women with disabilities. I have some facts on that.
Indigenous women earn 18% less than indigenous men, and 36% less than non-indigenous men. Women with disabilities earn 16% less than men with disabilities, and 48% less than men without disabilities. Racialized women earn 19% less than racialized men, and 34% less than non-racialized men.
This should be a real concern for Canada, as our mix continues to change and we have a government that is very pro-immigration. Not only are women being left behind, but racialized women are being even further left behind.
On the subject of occupational segregation and lack of access to key growth sectors, I would say that social norms and stereotypes continue to influence girls' and young women's educational paths, and consequently their professional careers. These stereotypes start very early in life, at home and at school.
I know that education sits with the provincial governments, but to the extent that the feds can influence what's happening provincially, this education at home and at school from a very young age is critical. Further, biases in the workplace that cause women to leave industries such as high tech—and we're seeing a lot of news around that, for instance, Uber, and Salesforce, and many other companies—have to be addressed through strong leadership, training, process, and systems changes.
Turning now to identifying possible tools to strengthen women's economic security, the following actions by both business and government will help.
One way is to adopt pay transparency policies. 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 do so, are examples of ways to achieve pay transparency.
The second way is to re-evaluate negotiation policies. While women negotiate both promotions and compensation as much as men do, research shows that women are penalized when they do so.
The third way is to adopt a prohibition on compensation based on salary history. Several U.S. states and local governments have already proposed or passed this type of legislation—notably Massachusetts, New York City, and Philadelphia—because basing salary on previous salaries leads to a continuation of lower pay for women.
The fourth way is to conduct internal pay equity studies, analyses, and audits to eliminate and ensure you don’t have a gender wage gap. Another government policy example of this is the recent Iceland legislation requiring large companies and government agencies to undergo audits and prove that they are in compliance with equal pay rules.
Finally, as ways to increase women’s entry, participation, retention, and representation in leadership and high-paying positions, I would point to evaluating recruitment, retention, promotion, and talent development systems for gender bias. Analyze pools of candidates for both hiring and promotion decisions; are they reflective of a broad pool of candidates? Bring an unconscious bias spotter into promotion and high-potential discussions. That can apply to business and government, and not-for-profits for that matter. Challenge recruitment partners to bring forward a diverse set of candidates, and above all, monitor and track progress for compensation, promotion, and hiring decisions, because the data will give you the truth.
From a board perspective, in our view there's no one right way to accelerate progress for women on boards. What does matter is that companies set goals for a percentage of women as board directors, and that boards use at least one mechanism to facilitate board renewal, such as age or tenure limits, coupled with board evaluation processes. We believe governments should reinforce the setting of targets, renewal mechanisms, and written policies, and should track and publish progress. We do believe the government should adopt comply-or-explain legislation, such as has been proposed in Bill C-25.
Finally, we encourage government to seize on the opportunity to leverage groups, like the gender and good governance alliance, previously referred to in a prior testimony by Beatrix Dart, which is a tremendous alliance of like-minded not-for-profits that can be used as a think tank by governments across the country.