Status of Women Committee on Dec. 8th, 2020

[The Chair, Conservative, Marilyn Gladu]

It looks like we're good to go.

I want to welcome everybody to the eighth meeting of the Standing Committee on the Status of Women. Today we're looking forward to hearing an update on pay equity.

Welcome to our witnesses today: Parliamentary Budget Officer Yves Giroux; and from the Office of the Parliamentary Budget Officer, Robert Behrend, analyst, and Salma Mohamed Ahmed, research assistant.

Before speaking, please wait until I recognize you by name. When you want to speak, you can click on your microphone to activate it. All comments should be addressed through the chair. You can choose interpretation very much like you can at all meetings. At the bottom, select floor or either English or French. Please speak slowly and clearly for the benefit of our interpreters.

With that, Mr. Giroux, you have five minutes for your opening comments.

[Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Good afternoon, Madam Chair and members of the committee.

Thank you for Inviting me to appear here today. I will be speaking to you about the report called "Fiscal Analysis of Federal Pay Equity", prepared by my office and published on November 4, 2020. I'm accompanied today by the analysts who prepared the report, Robert Behrend and Salma Mohamed Ahmed.

The Parliamentary Budget Officer supports Parliament by providing independent and non-partisan analysis to Parliament. As the legislation states, we do so for the purpose of raising the quality of parliamentary debate and promoting greater budget transparency and accountability.

In keeping with our office's mandate, we have prepared an independent analysis of the federal pay equity system. The report provides an overview of the spending measures associated with the Government of Canada’s proactive pay equity regime within the federal public and private sectors.

Madam Chair, I would be pleased to respond to any questions you may have regarding our federal pay equity analysis or other PBO work.

Thank you.

In December 2018 the Pay Equity Act received royal assent, establishing a proactive pay equity regime within the federally regulated public and private sectors. Approximately 1.3 million employees fall under the aegis of the act—about 390,000 in the public sector and 900,000 in the private sector.

While budget 2018 and the 2018 fall economic statement identified new money to establish the government's new administrative framework for the act, no details were provided regarding the anticipated fiscal impact arising from consequential changes to remuneration.

Based on information provided to the Office of the Parliamentary Budget Officer by the Government of Canada, we estimate that the ongoing cost for regulatory oversight in federally regulated sectors of the economy is $5 million. The ongoing administration of pay equity within the federal public service is estimated to be $9 million.

The PBO requested the government's fiscal analysis of how much more money is expected to be spent to comply with the legislation. However, the government refused to share this data, citing confidence of the Queen's Privy Council for Canada. Nevertheless, we used alternative sources in our analysis of employee compensation for the core federal public service. These data suggest that once the act is fully implemented, the federal wage bill could rise by $621 million starting in 2023-24.

The core federal public service represents approximately 30% of the federally regulated workforce. It does not include Crown corporations, the Prime Minister's and ministers' offices, parliamentary institutions, or the private sector. Therefore, the impact on all federally regulated workplaces will likely be substantially greater.

Given the depth of expertise required and the possession of employee-level administrative data, the federal government itself is best placed to report on the cost implications to employee compensation. Parliamentarians may therefore wish to encourage the federal government to provide estimates of expected increases to federal public service employee salaries, along with analysis of the potential impacts on pensions and other future benefits.

[The Chair, Conservative, Marilyn Gladu]

Thank you very much. Several of our committee members sat through the pay equity special committee years ago, so you'll see lots of interest.

We'll go to our first round of questions. When people get close to the end, I will flash the one-minute card. When they get within 20 seconds, they'll get the lucky dollar.

With that, Ms. Sahota, I believe you have the first six minutes.

[Jag Sahota, Conservative, Calgary Skyview, AB]

Thank you, Madam Chair.

Thank you for being here today to discuss your recent report on pay equity and the Pay Equity Act.

Given that yesterday was the 50th anniversary of the Royal Commission on the Status of Women, and the topic of pay equity was one of the issues that the report highlighted, I believe it is fitting that today we study what the government has or hasn't done for women. It's unfortunate that the Liberals couldn't give this file the attention it deserves in ensuring that the minister responsible for pay equity, the Honourable Filomena Tassi, could make an appearance here today. I look forward to her coming in January and answering our questions. Canadians can be assured that Conservatives will always stand up for women and equality.

In your report and your presentation just a few minutes ago, you referred several times to your request to the government for the documents to help you assess what the cost would be to bring about pay equity. The government cited cabinet confidence on those documents. What specific documents were you requesting? In your experience, has it become common practice for the government to withhold information from you? Has this hindered your process at all?

[Yves Giroux]

Thank you for the question.

Madam Chair, the documents that we requested contained specific information on the number of employees by classification group and the composition, whether it's female-dominated or male-dominated. That's the type of information we were looking for in the public service. The government indicated that it could not provide the information because it was a cabinet confidence, presumably because that type of information was provided to ministers when the government considered the pay equity legislation at cabinet and cabinet committees.

In my opinion, it's difficult to determine whether it is indeed information that is a cabinet confidence because my office or I didn't even get to see it. Because something is included in a memorandum to cabinet or is discussed at cabinet itself doesn't mean that the information could not be provided if it were to be provided separately from the memorandum to cabinet. I often give a simple example. If you attach a Globe and Mail article to a memorandum to cabinet, of course it's a confidence of the Queen's Privy Council, a cabinet confidence. It doesn't mean that you have to take back all of the issues within that Globe and Mail or newspaper because somebody discussed a Globe and Mail article at cabinet. I think in that instance, it may well be a case that the government considered the items or information that we needed to be a part of the cabinet's deliberations, but I'm not sure if it had provided that information to my office, it would indeed have been damaging to the secrecy of cabinet deliberations.

The other question of the member was, does that constitute normal behaviour, or has that been repeated? Fortunately, there have been only very few instances where the office has been denied access to information. Generally speaking, I've had good collaboration on the part of the government. The main exception to that, aside from the pay equity information, has been tax information. Whenever my office or I seek tax information, the government is very circumspect in providing that information to us, even if we ask for a certain level of aggregation when it comes to data.

These are the two general exceptions, tax and pay equity being specific examples of where the office was not provided information that it needed to fulfill its legislative mandate.

[Jag Sahota, Conservative, Calgary Skyview, AB]

You said the government said that it couldn't provide that information because of cabinet confidence. Now that the legislation has been tabled, is it possible to get that information?

[Yves Giroux]

The answer to that question is still no, because it remains a cabinet confidence even after the legislation has been tabled. As Madam Sahota pointed out, now that that legislation has been tabled and passed, in my opinion, that's probably a factor that favours the information being provided to us. That being said, we made the request after the legislation was tabled. The argument that we made, that the legislation had been tabled and therefore that the PBO should get access to it, didn't seem to change the government's perspective on providing information.

[Jag Sahota, Conservative, Calgary Skyview, AB]

Thank you.

As a result of the lack of transparency by this government, you had to use alternative sources to discover the cost. You stated the cost would start at $477 million, and with the additional employee benefit, the cost would rise to $621 million. Given that the government has deliberately withheld information from you, could you reasonably believe that this cost could be much higher than what you have said in your report?

[Yves Giroux]

We used information that was publicly available, but of reasonably good quality, so it's quite possible that the real cost will be higher, but I don't know how much higher without having access to the information the government holds. I'm not sure it would be significantly higher. Only the government would be in a good position to determine that with the information it holds.

[Jag Sahota, Conservative, Calgary Skyview, AB]

Thank you.

[The Chair, Conservative, Marilyn Gladu]

Very good.

Now we'll go to Ms. Zahid for six minutes.

[Salma Zahid, Liberal, Scarborough Centre, ON]

Thank you, Chair. Thanks to our witnesses for appearing before the committee today.

My first question is for Mr. Yves Giroux.

Thank you for being here to speak with us about the Pay Equity Act and Canada's first proactive pay system. It has been a long time coming. We are really looking forward to its implementation next year in 2021. I had a look at the regulations the government has put forward in Canada Gazette part 1 for consultations.

Within those regulations the department provided estimates on the cost for both the federal public service and the private sector.

Do you agree that these estimates provide important and necessary information?

[Yves Giroux]

Madam Chair, the regulations provided information on the cost for a 10-year period. This is indeed an important element in determining the potential cost of the pay equity regime. It's also important information in determining the impact of the pay gap for work of equal value across the country over the 10-year period that's covered by the regulation—at least the cost. So, yes, it is important information.

[Salma Zahid, Liberal, Scarborough Centre, ON]

We all know that pay equity legislation is necessary. I am really pleased that our government introduced and passed it in our last mandate. This is a transformational system and will finally enforce equal pay for work of equal value within the federal jurisdiction.

Can you please speak to how this system will create benefits for Canadian women and the work of advancing gender equality?

[Yves Giroux]

My understanding, Madam Chair, is that the pay equity legislation will require employers to set up pay equity committees and also to look at male-dominated and female-dominated employment groups. It will ensure that the female-dominated groups have pay or remuneration equivalent to those of male-dominated employee groups for work of equal value, including skills, work effort and so on.

The legislation sets out a series of criteria, which I won't go over because that would require much more than five or six minutes. It will be an important step in ensuring that work of equal value is recognized at the same level of pay across various groups. It goes beyond work that is identical or similar, but it provides a value to the work that is performed by various groups.

Yes, in that sense it's an important step forward in gender equality and providing for work of equal value as opposed to just the comparison between identical work.

[Salma Zahid, Liberal, Scarborough Centre, ON]

So you agree that this legislation will be beneficial to Canadian women and help in advancing gender equality? You agree with that?

[Yves Giroux]

It would be very hard to be against that. Given that the stated goal of the pay equity regime is to provide equal pay for work of equal value, I think one of the benefits will be obviously to provide enhanced pay for groups that have been disadvantaged. It's true that it will benefit some women, but it could also benefit some male-dominated groups, although no example comes to mind. But it will certainly further enhance or advance gender equality.

[Salma Zahid, Liberal, Scarborough Centre, ON]

Chair, how much time do I have left?

[The Chair, Conservative, Marilyn Gladu]

One and a half minutes.

[Salma Zahid, Liberal, Scarborough Centre, ON]

Okay.

Could you speak to the benefits this system will bring to our economy?

I know our government estimates that pay equity will create a net benefit of $28 million in the next 10 years without even considering the spinoff benefits that will come with a system like this.

Could you speak to the benefits this system will bring to the economy in the coming years?

[Yves Giroux]

I'm not sure, Madam Chair, that I can speak very well to the overall benefits. The purpose of the report was to look at the cost for the federally regulated sector, and in this specific case that we considered, to look at the cost to the federal public service. From that perspective, it will increase compensation for mostly female-dominated groups by about $600 million annually starting in 2023-24. That's probably one of the benefits I can speak to that's part of my mandate.

[The Chair, Conservative, Marilyn Gladu]

That's very good.

We'll go to Madame Larouche.

You have six minutes.

[Andréanne Larouche, Bloc, Shefford, QC]

Mr. Giroux, It's a pleasure to welcome you here today. As my colleague just mentioned, given that yesterday was the 50th anniversary of the tabling of the Report of the Royal Commission on the Status of Women in Canada, we can agree that we've come a long way in 50 years. However, in my statement yesterday, I spoke about a number of things that still require action, including the much talked about Pay Equity Act.

In fact, I truly believe that we need to use COVID-19 to rethink our economy. We also need to examine precisely how women were penalized more severely during the pandemic and whether we now need to introduce feminist measures in this economy. Pay equity is one such measure, I believe. Quebec's, Pay Equity Act has been in force since 1996. Although Canada's Pay Equity Act was adopted in 2018 here in Ottawa, it has still not come into force. We know that the federal government decided to wait until businesses within its purview got used to the idea and began to think about how to go about implementing the new act.

What, in your opinion, are the impediments within the federal government causing the implementation of this act to drag on?

At the end of the line, do you think it's women who will pay the price, and if so, to what degree?

[Yves Giroux]

Madam Chair, I can't speculate on why the federal pay equity system has taken 22 years longer than it did in Quebec to see the light of day. It's a legislative measure and it was probably dependent on the will of the legislators over time.

The benefits for women include, as the report mentions, the fact that pay for disadvantaged groups will likely increase by approximately $620 million per year as of 2023-24, based on our estimates. This money will very likely end up in the pockets of women because they are often in these disadvantaged groups. This means that they are not being paid as much as men for work of equal value.

The regulations tabled by the government for the implementation of the act indicate that additional pay of approximately $2 billion at net present value will be paid in the private sector over a period of 10 years.

[Andréanne Larouche, Bloc, Shefford, QC]

I would like a to speak about some of the other impacts of pay equity and to hear your point of view. I have in front of me a study by the Commission des normes, de l'équité, de la santé et de la sécurité du travail du Québec, or the CNESST, conducted with private businesses, which yields benefits other than strictly financial ones.

The study showed that 43% of businesses that implemented their pay equity measures noticed positive impacts on their organization. The most frequently mentioned positive impacts for employers were an improved climate, better working relations and higher productivity (44%); greater equity within the company (40%); enhanced job knowledge (29%), and the introduction or updating of a pay policy (20%).

What benefits other than financial ones might this new act have in your opinion?