Pay Equity: Legislative Framework and Cases

Arlene T. McLaren was Assistant Professor of Sociology at Simon Fraser University, Burnaby, British Columbia.

For those overwhelmed by the complexities of such notions as equal pay for equal work, affirmative action (or employment equity as it has most recently been called in Canada), and equal pay for work of equal value, these reports will be very welcome indeed. They are especially useful in showing how such concepts have been applied tocombat sex-based wage differentials in Canada.

David Arrowsmith, in a clear and straightforward manner, distinguishes among these three policy responses, and examines, in particular, the implications of the equal pay concept.

Equal pay for equal work, legislated in Canada in 1956 for institutions under federal jurisdiction, is intended to ensure that incumbents of similar jobs in the same establishment are paid the same. Most jurisdictions in Canada have laws which require equal pay for equal work. In contrast, equal value legislation has only been adopted by the federal government (1977), Quebec (1975), and Manitoba (1985). Equal payfor work of equal value legislation responds to the traditional devaluation of jobs performed by women. The enforcement of such acts entails a comparison of the value of two dissimilar jobs, usually based upon some sort of job evaluation system.

In contrast to these two “equal pay” policies which are designed to eliminate wage discrimination, affirmative action is supposed to eliminate occupational segregation. Its mandate is broader than pay equity: it is to guarantee equity in all areas of employment. Affirmative action includes special recruitment and hiring programs, selective training programs, facilitating programs such as day care services, and modification of the workplace. It is designed to promote job equity for women, the disabled, Native people, and visible minorities. At present, adoption of affirmative action is voluntary and does not include quotas. Specific programs are in place in the Federal Public Service, many provincial jurisdictions, some private industry and labour organizations. The type and extent of the programs, of course, vary.

Arrowsmith (Report No. 43), along with the authors of Reports No. 45, No. 46, and No. 47, is primarily concerned with the policy of equal pay for work of equal value. The other authors focus most of their attention upon problems of job evaluation. Arrowsmith, in contrast, provides a comparative review of provincial, national and international legislation regarding pay equity, and the relevant legal cases. His overview is useful inasmuch as itreveals that the types of legislation vary widely; for example, scope of legislation, definition of equal value, kind of enforcement agency used. In addition, Arrowsmith provides a good deal of descriptive material but offers a mere outline of the various forms of legislation and related cases. For evaluations of the different forms of legislation, one will have to look elsewhere.

Unlike the other four reports, which examine pay equity policies, Mary Lou Coates (Report No. 44) focuses upon “employment equity” policies as a means of removing discrimination in the workplace. By employment equity she means “elimination of policies and practices resulting in employment barriers” which signifies that “no person is denied employment opportunities or benefits for reasons unrelated to ability” (p. 2). According to Coates, both employment and pay equity policies are necessary but employment equity is especially important: it is broader in implication; it entails pay equity; and it deals with occupational segregation — a more fundamental problem for women (and other minorities) than wage discrimination.

Coates acknowledges that some confuse employment equity with affirmative action. In arguing that affirmative action is the measure needed to make employment equity possible, she seems to separate herself from those like Marsden (1985) and Cohen (1985) who make stronger distinctions between the two terms. Marsden argues that employment equity is a beautiful term inasmuch as it Canadianizes the notion of affirmative action and drops much of its “nasty baggage.” Cohen, in contrast, argues that employment equity is far too weak a measure. Because it does not imply quotas and mandatory enforcement which are central to the notion of affirmative action, it will be woefully inadequate for addressing problems of discrimination in the workplace.

Although Coates sidesteps these issues, her study is important and timely in that it follows upon the heels of the release of the Abella Report (1984) on Equality in Employment and of the introduction in June 1985 of Bill C-62 — an Act respecting Employment Equity — in the House of Commons. To give some context to the Abella Report and Bill C-62, Coates examines a wide range of policies and programs that are concerned with employment equity: affirmative action programs in Canada; the Charter of Rights and Freedoms; a case example — CN Rail; and the U.S. experience.

Coates describes briefly both the Abella Report and Bill C-62 and responses to them. Many of the recommendations of the Abella Report such as mandatory employment equity were generally received well by the Canadian Labour Congress and the Canadian Advisory Council on the Status of Women, but not by business organizations. Bill C-62, she notes, fails to provide for mandatory employment equity measures such as affirmative action plans. At the most, employers covered by the legislation (all federally regulated business and Crown corporations with 100 or more employees) can be fined for not submitting annual employment equity reports to the Minister of Employment and Immigration.

Coates concludes her report by pointing out that amendments to Bill C-62 have been proposed and that other measures are being developed; for examplc, the federal government’s new Canadian Jobs Strategy relating to training which would reflect the principle of employment equity. Coates’s study, otherwise informative, ends inconclusively. It is not clear how the various measures are related to one another, how they might be translated into concrete action, and what recommendations would follow from her analysis.

Lorna Kaufman’s report (No. 45) on job evaluation systems has a much narrower focus than the preceding studies. It is concerned primarily with the notion of “equal pay for work of equal value,” but more specifically, with the mechanism of job evaluation for determining which jobs have “equal value.” The term job evaluation “refers to a formal procedure for hierarchically ordering a set of jobs or positions with respect to their value or worth usually for the purpose of setting pay rates” (p. 2). Such evaluation is based upon several assumptions: jobs ought to be differentially rewarded; particular aspects of jobs ought to be differentially rewarded; and that these aspects of jobs can be measured dependably. As Kaufman notes, job evaluation can be undertaken for a variety of reasons, least of which seems to be compliance with human rights and employment standards legislation regarding equal pay. Most schemes are used to rationalize and codify an implicit or explicit wage and salary structure.

Kaufman provides a useful overview of job evaluation systems in Canada — their history, prevalence, requirements, approaches, and scope. In particular, the author describes two qualitative (ranking and classification or grade description) and two quantitative (factor comparison and point methods) approaches that companies have adopted. She notes in some detail their flaws and difficulties. A major problem concerns the selection of individuals to participate in the job analysis. The incumbent may be the most knowledgeable about the value of his or her job, yet not the most objective. “Outside experts,” on the other hand, may fail to acknowledge important components of the job with which they are not familiar. Another major problem is the selection of “compensable factors,” that is, those aspects of a job which can be defined, compared and weighted. Four factors are usually singled out in job evaluation systems: skill, responsibility, effort, and working conditions. How these factors are defined, however, can vary substantially. For example, “skill” can have industrially oriented meanings such as on-the-job-training or can have service/technical oriented meanings such as years of education. How these factors are defined will affect the outcome of the evaluation. More generally, subjectivity and bias can enter into all stages of job evaluation systems.

Particularly worrying, according to Kaufman, is the lack of participation of unions in the process of job evaluations. Of a sample of 2095 agreements, 34 percent covering 53 percent of unionized employees had some form of job evaluation and classification provision. In only 27.3 percent of the agreements analyzed were the unions consulted or notified, and in merely 1.1 percent were joint union/management committees set up (p. 29). Increasingly, Kaufman suggests, unions are endorsing the use of job evaluation schemes, but their support tends to be conditional upon full union participation in the evaluation. Kaufman does not examine the responses of businesses to the use of job evaluation systems but implies that their primary motive is to rationalize the compensation process. Businesses have generally failed to show much regard for pay equity or for assessing the fairness and accuracy of any potential job evaluation system. Kaufman, in conclusion, calls for further research and analysis of job evaluation systems.

Stephen Shamie’s study (Report No. 46) is the most polemical and provocative of the five reports. He takes a stand against “equal value” legislation. Such legislation, he argues is impractical and unworkable. Moreover, it rests upon the problematic assumption that women suffer from discrimination in the workplace. He suggests that the wage gap between women and men is due to such factors as the infrequent entry of women into high-income jobs and differential work experience.

There is no question that women may earn less than men because they bring to the labour market different productive capacities. Their level of education and training may not be as high, therefore making them less productive workers and thus affecting their earnings potential. (p. 3)

The author provides no evidence that women earn less because of their lower education and training relative to men. But what evidence there is does not generally bear out this “human capital” approach. Indeed, sociologists such as Blishen and Carroll (1978), who have examined social stratification in Canada were forced to come to conclusions opposite to that of Shamie. They discovered that women tend to be concentrated in a small number of occupations requiring high levels of education and yielding relatively low income, while men’s experiences tend to be the reverse. Women in general have less education than men. But they are disproportionately employed in occupations requiring a high level of education.

Shamie’s premises are faulty; his conclusions weak. He provides some useful criticisms of existing equal value legislation, but ends up throwing the baby out with the bath water. Since equal value legislation is problematic — for example, little has been accomplished, the procedures are costly, and the mechanisms unclear — we should, he opines, abandon the entire notion of equal pay for work of equal value. He favours letting the market adjust pay scales. Once women become better trained and have more marketable skills, he argues simplistically, they will escape female ghettos and be able to demand wages on a par with men. It is their problem — that is, lack of education, poor socialization, and domestic preferences, not discrimination, have led to the wage gap. How he knows this so unequivocally is not clear. What is apparent, however, is that his analysis blames the victims and lets the business community off the hook.

Like most of the reports considered here, the final one (Report No. 47) is primarily concerned with equal value legislation, and like Kaufman, focuses on the crucial mechanism of job evaluation systems. This study is based on a survey conducted by the Industrial Relations Centre on the use of job evaluation systems in the Ontario public sector. The Centre mailed questionnaires to a sample of Ontario organizations, covering the provincial public service, municipalities, public utilities commissions, transit authorities, universities, community colleges, boards of education, hospitals and health care organizations, and crown corporations. The aim of the study was to respond to the lack of Canadian evidence regarding the prevalence of various types of formal job evaluation plans.

What were some of its major findings? Nearly 70 percent of the Ontario public sector organizations surveyed have one or more job evaluation plans. But only about one-quarter to one-third of the organization’s workforce tend to be covered. One-third of all organizations surveyed intend to introduce a new job evaluation plan in the near future; the majority already have a plan. Most organizations use a point-rating system (see Kaufman for discussion of the various types of measures) and have developed their measurements in-house with the help of outside consultants. Almost one-half of all plans were instituted between 1971 and 1980, and another one-third between 1981 and 1985. Before 1970, the plans were primarily oriented towards blue-collar workers, but more recently, they have become primarily oriented towards white-collar workers. The majority of job evaluation systems appear to have been developed unilaterally by the employer. About 20 percent of the plans were developed in cooperation with unionized employees, about 10 percent with non-unionized employees. Incumbents were infrequently used as sources for the job description; they appeared alone or in combination with some other source in less than one-third of all plans, and were used most often in the managerial and office groups.

This survey provides useful information about the different types of job evaluation methods used, their effect, their administration, and so on. Many questions, of course, remain. What is happening in the private sector? How do employees react to job evaluation schemes? If few employees are involved in the process of job evaluation what does this suggest regarding employer-employee relations? How fair is such a process? How do job evaluation schemes affect the wages and salaries of employees? Are these schemes gender neutral? One would hope that such questions will be addressed by the Centre in the future.

Altogether these five reports provide much useful information and some analysis. It is strange, however, that the authors do not respond to one another’s work. They present their material as if it were in a vacuum. They rarely provide a review of relevant literature which would place their work in context, and more critically, they tend to suppress debate. This is done in several different ways. They often do not make their own values explicit. When they do differ explicitly amongst themselves in their evaluation of the policies of pay and employment equity, they do not acknowledge such differences. Moreover, they differ substantially from other writers in the field. These differences should be confronted and analyzed.