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 federally regulated 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.

• Pay gap reporting will provide Canadians with user-friendly, comparable online information on pay gaps of these employers.

• Pay gap reporting will raise awareness of pay gaps that affect women, Indigenous peoples, persons with disabilities and members of visible minorities, making Canada the first country to make this information publicly available.

• Pay gap reporting will prompt 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 implement 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) has been modified to calculate the pay gaps for employers, who will report their annual pay gap data starting in 2022.

Next Steps

• The Labour Program is developing an IT solution to present pay gap and representation data, and ensure it is published in a user-friendly format.

• The Labour Program is also developing guidance for employers and program officers to support the implementation of pay gap reporting and amendments to the Regulations.
There is a need for initiatives to reduce pay gaps
• Despite narrowing educational and work experience gaps, the pay gaps persist among workers in Canada.

• Among employees in permanent full-time positions that were working in 2019 for private-sector employers subject to the Act, 65.7% of men and 52.6% of women earned $60,000 and more per year. This compares to
o 63.5% of Aboriginal men and 46.3% of Aboriginal women
o 63.1% of men with disabilities and 50.8% of women with disabilities
o 62.1% of visible minority men and 52.1% of visible minority women

• Some of the reasons cited for these ongoing disparities include inflexibility in standard hours of work; workforce 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.
o 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.
o 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 to shift business culture and expectations towards greater equality.

Employers are already 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 already include salary information. Previously, employer reports were not user-friendly and pay gap data was not highlighted.

• The new approach will provide Canadians with user-friendly, comparable online pay gap information for all four designated groups, available on a Government website.

• According to Statistics Canada, in Canada, women aged between 25 and 54 years earned 88 cents for every dollar compared to men in terms of their average hourly wage in 2019 (a gap of 12.1%), up from 81 cents in 1998.

• Other countries, including Australia, Belgium, France, Ireland, and the United Kingdom (UK), have put pay gap reporting in place. In the UK, as of January 1, 2018, employers with 250 or more employees are required to calculate and publish 14 different gender pay gap metrics on their website as well as the government website.

• The Canadian pay gap reporting requirements apply to the federally regulated private-sector employers covered by the Employment Equity Act.