Comparable worth: the Canadian legislation - implementation of pay equity laws in Canada

Business Horizons, Jan-Feb, 1996 by Kenneth A. Kovach

In many ways the historical aspects of Canadian public policy on gender-based wage discrimination have undergone a development much like those in the United States. Although the concept of comparable worth is a relatively new phenomenon, it is the end result of a steady progression of pay policies dating back over 40 years.

The first equal pay laws began in the Canadian province of Ontario in 1951 with the Ontario Female Employees Fair Remuneration Act. Throughout the 1950s other provinces passed similar legislation. In practice, these laws proved to be quite restrictive in that they required the work to be identical before a comparison could be effected. Viewing this as a significant weakness in the laws, subsequent legislation broadened the definition to allow comparisons of substantially similar work that possessed slight differences in the nature or tasks of the job. This definition was broadened again to allow for comparisons of jobs that were held similar in the composite of skills, effort, responsibility, and working conditions. Consequently, the requirement that jobs be substantially similar in each area was diluted to allow comparisons as long as the overall composite of all areas was similar. This composite approach was eventually adopted in all provinces that passed conventional equal pay legislation.

At the federal level, gender-based wage discrimination was addressed in the Canadian Human Rights Act passed in the mid-1970s. Under the "Equal Wages" title of the legislation, wage differentials between men and women performing "work of equal value" was deemed illegal discrimination. The Canadian Human Rights Commission was empowered to enforce the Act.

Yet the enforcement of provincial laws concerning conventional equal pay remained problematic for several reasons. The composite approach, while providing a broader interpretation, still restricted comparisons to jobs within the same occupation. Comparisons of jobs in dissimilar occupations found to be of equal value in the composite of skill, effort, responsibility, and working conditions were not expressly permitted. Early provincial legislation also required a controversial matter to be brought in the form of a complaint under the legislation. This effectively allowed the enforcement phase of the legislation to remain moot as long as no complaint or prima facie evidence of discrimination was advanced.

At the federal level, the relative lack of progress was attributed to the prevailing narrow interpretation of the legislation and the insufficient extent of enforcement action. The burden of proof of specific intent requirement, as well as the lack of class action suits, made enforcement at this level especially difficult.

What is important to realize is that the perceived successes or failures accompanying implementation of the Canadian legislation will have tremendous consequences on legislative initiatives in the United States. Opponents or proponents of similar legal measures in this country will no doubt use the Canadian experience to bolster their arguments and show the practical implications of such government-mandated measures. Thus it is crucial that citizens on both sides of the border understand the Canadian legislation and closely monitor its implementation.

Male-Female Earnings Gap

Despite the federal legislation, surveys conducted in the 1980s revealed a consistent gender-based wage gap seven years after passage of the Canadian Human Rights Act. Kovach and Millspaugh (1989) found that female average earnings by occupation were 59.4 percent of male average earnings, with a range of 46 percent to 68 percent across all occupations sampled. Comparisons conducted by Gunderson (1988) on occupations within the same company reflected wage disparities of 10 to 20 percent. For full-year, full-time employees the ratio was found to have increased from 58.4 percent to 65.8 percent in the period from 1967 to 1989. Controlling for the male average work week of 40.9 hours and the female average work week of 35.6 hours, Gunderson and Riddell (1992) maintain it is possible that the true final ratio may actually be in the 75 to 80 percent range.

Unfortunately, no empirical studies have been undertaken to study the wage gap while controlling for possible intervening variables in the composition of the Canadian work force, such as age and experience. Shapiro and Stelcner (1987) posit that the decline in the earnings gap can be attributed not only to fewer instances of discrimination but also to women's improved potential for productivity. Studies conducted in the United States and other countries find that although controlling for differences in productivity-related factors does reduce the wage gap, a discriminatory portion of the overall gap remains. Occupational segregation has been cited as a larger part of the gap than has wage discrimination. This gap has also been observed to be larger in the private sector than in the public sector. It must be concluded, then, that all studies continue to find a significant component of gender-based wage discrimination in the overall gap in wages between male and female occupational groups.