Question Period Note: PAY GAP REPORTING

The Government of Canada maintains its commitment to addressing wage gaps through the introduction of pay gap reporting for private-sector employers subject to the Employment Equity Act (the Act).

Budget 2018 provided $3.0 million over five years to introduce pay gap reporting as a pay transparency measure for federally regulated private-sector employers with 100 or more employees to reduce wage gaps.

In June 2022, employers reported pay gaps that affect women, Indigenous peoples, persons with disabilities and members of visible minorities for the first time.

User-friendly and comparable pay gap information will be published on a new government website in early 2023. Canada will become the first country to make this level of information publicly available.

Publishing pay gaps will raise awareness about this issue. It will lead employers to examine their practices and show leadership in reducing pay gaps, helping to shift business culture and expectations towards greater equality.

Pay Transparency and Pay Gap Reporting

Pay transparency refers, globally, to a series of measures to address the wage gap between men and women. Pay gap reporting is one such measure.

In Canada, the pay gap reporting initiative goes beyond reporting the gender wage gaps of employers. It will make available to the public various pay gaps (hourly wage gaps, bonus pay gaps and overtime pay gaps) that affect women, Indigenous peoples, persons with disabilities and members of visible minorities.

Achievements

From 2018-19, $3.0 million (over five years) was committed to implementing pay gap reporting as a pay transparency measure.

The amendments to the Employment Equity Regulations (the Regulations) were published in Part II of the Canada Gazette on November 25, 2020, and came into force on January 1, 2021.

The Workplace Equity Information Management System (WEIMS) was modified to calculate the pay gaps for employers.

The Labour Program developed guidance for employers and program officers to support the implementation of pay gap reporting.

Employers reported pay gap information as part of their annual reporting on employment equity for the first time in 2022.

Next Steps

The Labour Program is developing an IT solution to present pay gap and representation data in a user-friendly format that will be launched in early 2023.

There is a need for initiatives to reduce pay gaps

Despite narrowing educational and work experience gaps, pay gaps persist among workers in Canada.

Among employees in permanent full-time positions that were working in 2020 for private-sector employers subject to the Act, 69.0% of men and 57.6% of women earned $60,000 and more per year. This compares to

66.7% of Aboriginal men and 49.7% of Aboriginal women

67.7% of men with disabilities and 55.6% of women with disabilities

65.4% of visible minority men and 56.3% of visible minority women

Some of the reasons cited for these ongoing disparities include inflexibility in standard hours of work; career interruptions; lower likelihood of negotiation over salary, raises, and promotions; gender discrimination in hiring; and the undervaluation of work traditionally done by women.

Budget 2018 introduced two initiatives to address the wage gap between men and women in Canada: pay gap reporting and proactive pay equity.

Pay gap reporting is about making information on pay gaps publicly available. It is expected to encourage employers to identify the underlying causes of these pay gaps and take action to address the gaps and create more inclusive workplaces.

Pay equity is designed to address the portion of the gender pay gap caused by the undervaluation of work traditionally performed by women. Proactive pay equity requires employers to examine their compensation practices to ensure that they are providing equal pay for work of equal value.

Pay gap reporting can contribute to reducing pay gaps

Transparency policies have become increasingly popular since the 1980s, most notably in the area of environmental regulation and financial disclosure. The key lesson learned has been that transparency regimes succeed when they can benefit disclosers, by allowing them to signal their effort to improve or their success in doing so, and when users of the information have a strong voice and are motivated to ensure that reporting is accurate.

Pay gap reporting will prompt employers to examine their compensation and human resources practices, and show leadership in reducing pay gaps. Making information on hourly wage gaps, bonus pay gaps and overtime pay gaps publicly available can help shift business culture and expectations towards greater equality.

Employers are required to provide salary information through the Employment Equity Act

The Employment Equity Act requires employers to create equitable workplaces and build a workforce that is representative of the four designated groups – women, Indigenous peoples, persons with disabilities, and members of visible minorities – according to relevant labour market conditions.

The employment equity reports submitted annually by employers include salary information. The new approach will provide Canadians with user-friendly, comparable online pay gap information for all four designated groups, available on a government website.

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