Despite significant progress in recent years, the gender pay gap remains a pressing issue in Canada. In 2021, women aged 25 to 54 earned approximately 11% less per hour compared to men of the same age.
Although this may be explained by the over-representation of men in highly paid jobs such as construction, manufacturing, and oil and gas extraction — as well as more women working part-time jobs — it does not explain the whole gender wage gap story.
Salary transparency
A policy that has shown promise in reducing the gender pay gap is salary transparency. This practice involves openly disclosing employee salary information within the organization and, in some cases, to the general public. Salary transparency aims to calibrate views on fairness, promote accountability, and empower women and minorities to negotiate fair pay and promotions.
However, there are also concerns about salary transparency. For instance, there are issues with employee privacy and potential negative impacts on job satisfaction and well-being as well as perpetuating higher pay for already high-paid individuals.
The implementation of salary transparency has been observed in various Canadian provinces over the past few decades, often through publicly searchable databases. For example, Manitoba and Ontario passed disclosure laws in 1996, requiring organizations receiving public funding to disclose salaries above certain thresholds. British Columbia also adopted similar transparency measures in 2007 for executive salaries.
Effects of salary transparency on gender pay equality
A recent study conducted by associate professor Elizabeth Lyons from the School of Global Policy and Strategy at the University of California, San Diego and assistant professor Laurina Zhang from the Questrom School of Business at Boston University set out to examine whether salary transparency affects gender pay equality among tenured and tenure-track faculty in Canadian universities.
The study used data from Statistics Canada’s University and College Academic Staff System survey between 1970 and 2010. The final sample included over 34,000 institution-department-year observations.
Findings revealed that salary transparency, particularly based on Ontario’s Public Sector Salary Disclosure Act of 1996, improved gender pay equality among tenure and tenure-track employees working at Canadian universities. Interestingly, the change of pay equality was seen to be greater among top-ranked Canadian universities and was primarily driven by the anticipation of higher scrutiny from the public/taxpayers if they did not reduce the gender pay gap.
Furthermore, top-ranked Canadian universities slowed the growth of men’s salaries at a faster rate compared to other Canadian universities. Nonetheless, all Canadian institutions increased women’s salaries at similar rates over the 20 years, indicating the positive impact of facilitating public monitoring of salaries.
What does this mean?
All in all, salary transparency was demonstrated to be a powerful tool in motivating gender pay equality among Canadian universities. However, this may not work across all institutions/organizations. Yet by continuing to explore and implement similar strategies — within an organization and/or publicly — an inclusive and equitable environment can be created.
Other ways to reduce the gender pay gap can include providing equal opportunities for the advancement of both men and women to reach leadership positions, as well as implementing well-paid parental leave policies for all — but specifically for women, who have historically experienced career interruptions after taking parental leave.
As evidenced by the current study, Canada has made significant advancements in addressing the gender pay gap. However, there is still ample room for further improvement and continued efforts are essential to achieve true pay equity.
