Mind the gap

The gender wage gap has closed in recent decades, but still not enough. When will businesses recognize the economic advantage of being a leader on this important issue?

This past March, on International Women’s Day, Iceland became the first country in the world to require that businesses prove that they are offering equal pay for equal work.

The Nordic region has long been at the forefront of progressive policies: already, a requirement existed that mandates a minimum 40 per cent women on boards of companies with more than 50 employees, while the World Economic Forum ranks Iceland first on its annual gender gap index, followed by fellow Nordic nations Norway, Sweden and Finland. Iceland’s new law, which applies to both private and public businesses with 25 or more staff, aims to have wage parity in the nation of some 320,000 people by 2022.

Pay equity has been a workplace battle cry for decades, and while progress has been made, it has been slower than many people would like to see—especially here in North America. In Canada, there is a patchwork of regulations but no federal law for all companies, private and public; companies under federal jurisdiction (like banks and insurance companies) are mandated by the federal government to offer equal pay for equal work, as are companies operating in Ontario and Quebec. Every other province offers, at best, pay-equity protection for its public workers—and for most others, little more than a loose framework for pay-equity negotiations with public-sector employees.

THE BUSINESS SENSE OF PARITY

While pay equity is often discussed in terms of rights, an argument can be made that moving toward parity just makes business sense. Francis Fong, chief economist for CPA Canada, is one of those who thinks that pay equity is simply good for our economy.

“Some of the fastest rates of growth we’ve seen in the economy, in large part, were due to the rising female labour force participation rate through the ’60s, ’70s and ’80s,” notes Fong, who joined CPA Canada in February 2017 after nine years with TD Bank. “And there’s always a strong argument to be had that if the pool of candidates that you’re drawing from is increasingly going to be female dominated—[as it is showing to be] in an increasingly knowledge-based economy—that you would want to be known as someone that treats people equally, in order to attract the best and brightest.”

Fong says that a key barrier to eliminating the pay gap is the gender-wage disparity that exists between certain industries. Women, says Fong, are still overrepresented in lower-paying sectors and traditionally gender-roled industries, including health care, education and hospitality, while men are overrepresented in higher-paying fields such as construction, forestry and mining.

“But even if you correct for the industry that they happen to be in,” adds Fong, “women will typically be occupied within a lower level position than their male counterparts would be. An example would be in the accommodation and food industry. Whereas in 2015 60 per cent of chefs and cooks were men, almost three-quarters of what they call food counter attendants, kitchen helpers and related support personnel were women.”

ENCOURAGING FEMALE REPRESENTATION IN STEM CAREERS

While Fong is hopeful that the gap will continue to narrow as we move toward a more knowledge-based economy—noting that women with a bachelor’s degree earn 90 cents on the dollar compared to men, versus 75 cents on the dollar for those who don’t—he also thinks that more needs to be done to encourage women to pursue careers in the male-dominated knowledge cluster known as STEM: Science, Technology, Engineering and Mathematics. Perhaps most important of all is the role that corporate leadership can play in eliminating the wage gap. Fong argues that, rather than a government-mandated edict for all employees, creating a more equitable corporate board is just as likely to achieve meaningful, long-lasting change.

“It has to come from senior leadership, in terms of making it a commitment for the organization. You see it within your own senior team, address it there—and that filters down to the rest of your organization.” And creating equity at the board level sees upstream benefits too, he notes: “You set yourself up way better in the future, in terms of establishing a pipeline for future female leaders that will eventually make their way to the board level.”

KEEP THE CONVERSATION GOING

What are your thoughts on the gender pay gap in Canada and how it can be overcome? Post a comment below.

Disclaimer

The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

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