What is the gender pay gap?

The gender pay gap (or gender wage gap) refers to the difference in average pay between men and women and gender-diverse workers. In nearly every industry in Canada, men tend to out-earn women and gender-diverse workers. These differences in pay, usually expressed as a percentage, are what’s known as the gender pay gap: one of the most pervasive examples of gender inequality in the Canadian workforce.

The importance of pay equity

Pay equity is important from a social, economic, and even moral perspective. First and foremost, willfully paying someone less based on their gender is a form of discrimination. According to the Canadian Human Rights Act (CHRA), “It is a discriminatory practice, directly or indirectly,

• (a) to refuse to employ or continue to employ any individual, or

• (b) in the course of employment, to differentiate adversely in relation to an employee,

on a prohibited ground of discrimination.”

The prohibited grounds of discrimination include race and sexuality, among others. Violating an employee’s human rights is a serious offence that carries heavy legal penalties and could damage a company’s reputation and employer brand for many years.

There are also myriad economic reasons why pay equity is important. When individuals perform equal work, it should stand to reason that they receive equal pay. By failing to follow this principle, companies devalue the work performed by their employees. Lower pay, compounded over time, can also cause economic distress for those affected. Pay equity could help reduce poverty, raise standards of living and increase educational, housing and health choices for women and gender-diverse individuals.

The benefits of pay equity may also go beyond just helping those receiving the pay. Organizations that openly promote pay transparency and equity could potentially attract a wider range of employees.

Data on Canada’s gender pay gap

All of the following data on Canada’s gender pay gap come from Statistics Canada.

• Canadian-born women earned 9.2% less than Canadian-born men in 2022.
• Canada’s gender pay gap is even more dramatic when comparing women and gender-diverse people not born in Canada to Canadian-born men. Immigrant women who arrived in Canada as children earned 10.5% less than Canadian-born men in 2022, and those who arrived in Canada as adults earned 20.9% less in 2022.
• The wage gap between Canadian-born men and Indigenous women was 20.1% in 2022.
• As of 2007, when formal data on Canada’s gender pay gap began to be collected by Statistics Canada, all groups of women from all backgrounds have on average made substantial increases in their salaries, which has helped close (but certainly not eliminate) the pay gap.
• Factors such as full-time or part-time employment status, education level and private or public sector employment tend to influence women’s and gender-diverse people’s earning power as a whole.

Closing the gender pay gap

As an employer, you have the opportunity to contribute towards closing Canada’s gender pay gap. Philosophically, maintaining pay equity at your company is similar to maintaining your obligations to pay minimum wage: if you are not in a financial position to be able to do it, you may need to re-evaluate your operations and make changes.

Using poor finances as an excuse to avoid your obligation to pay women and gender-diverse employees fairly is just as unacceptable as using it as an excuse to pay below minimum wage, or withhold overtime pay or any other legal responsibility regarding pay. The only difference is that those are violations of labour laws, while intentionally underpaying women and gender-diverse workers is a violation of human rights legislation (which is arguably more severe an infraction). Employers in industries governed by the Canada Labour Code and those in unionized environments bound by a collective agreement are required to maintain pay equity by virtue of their policies, but companies in the private sector do not have these same clear guidelines. Just because a formal piece of legislation isn’t binding you to gender pay equity, doesn’t mean you shouldn’t do it.

Closing the gender pay gap may seem as simple as evaluating all of your employees’ salaries and making adjustments accordingly, but it may not always be possible to raise so many employees’ paycheques all at the same time. That said, it also shouldn’t entirely be contingent on your new hires to negotiate equivalent salaries to their male counterparts. You should therefore apply an equity lens to raises and promotions, prioritizing those whose wages have fallen behind their peers. Implementing a human resources policy that makes pay equity a company guideline is also a good idea, so new hires will receive fair pay from day one.

When you make a concerted effort to pay your employees equally, your company benefits in myriad ways. Less turnover means less time and money spent constantly recruiting, hiring and onboarding new workers. Higher morale leads to more productivity and improved company culture, which makes your company an attractive place to work. The effort and investment required to truly achieve pay equity may seem daunting at first, but consider the money you will save on staffing your company, and the additional money you’ll make with a boost in productivity and improved employee engagement.

By working to achieve pay equity at your company, you’ll demonstrate your commitment to putting the principles of diversity, equity and inclusion into action and make a measurable difference in the lives of your women and gender-diverse employees.